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General Motors vehicles sit in a holding lot September 2, 2021 in Lansing, Michigan; Photo: Bill Pugliano/Getty Images

Supply chain issues related to the Delta variant have become the latest round of “whack-a-mole” for the auto industry.

Catch up quick: GM is halting or continuing to halt production at eight of its North American assembly plants because of chip shortages. 

  • The impacted plants in Indiana, Missouri, Michigan, Tennessee, Canada and Mexico are expected to be offline for a few weeks.
  • “During the downtime, we will repair and ship unfinished vehicles from many impacted plants, including Fort Wayne and Silao, to dealers to help meet the strong customer demand for our products,” a GM spokesperson tells Axios.

Why it matters: The rise of the Delta variant in Southeast Asia, where many chip plants are located, could take months to resolve — impacting already-dwindling vehicle inventories, driving up consumer costs and limiting car manufacturers’ future earnings through 2023.

By the numbers: U.S. light vehicle inventory is down 70% compared to two years ago, as of the end of August, Dave Whiston, U.S. autos equity analyst at Morningstar, tells Axios. 

  • In GM’s case, inventory was down 86% in August this year over August 2019.
  • The average transaction price for a new car reached a new record of $42,736 in July, according to Kelley Blue Book, up 8.2% from July 2020. Among makes, Cadillac prices grew the most — by 32.8%.
  • Minivan (16.7%), mid-size (12.6%), and luxury full-size SUV/Crossover (12.6%) vehicle prices rose the most.

What they’re saying: “GM’s been doing what everyone else has — taking what chip inventory they can get and putting them toward more profitable cars like pickup trucks,” says Whiston.

  • One plant where GM hasn’t lost production is Arlington, Texas, which produces the GMC Yukon and Cadillac Escalade, he adds. "It’s not a coincidence that it’s spared."

The big picture: Nearly every automaker has paused production at some point during the pandemic. 

Yes, but: Even if the health crisis was resolved immediately, it would still take about six months for chips to reach automakers, says Whiston.

  • “The chip shortage is not going to be abruptly over. It could go well into 2022 and 2023,” he said. 

What to watch: Other variables, like skyrocketing steel prices, aren’t helping with production problems. 

A GM spokesperson says that “although the situation remains complex and very fluid, we remain confident in our team’s ability to continue finding creative solutions to minimize the impact on our highest-demand and capacity-constrained vehicles.”

The bottom line: It’s been like a game of whack-a-mole, according to Whiston. “One problem gets fixed [and then] another comes up.”

Go deeper

Toyota to build $1.3 billion U.S. battery plant in North Carolina

The all-electric Toyota bZ4X, the company's first battery-electric vehicle, at the Los Angeles Auto Show in Los Angeles, California on Nov. 17. Photo: Frederic J. Brown/AFP via Getty Images

Toyota announced Monday it's investing $1.3 billion to construct an electric vehicle battery "megasite" near Greensboro, North Carolina, set to open in 2025.

Why it matters: The Greensboro-Randolph Megasite will employ 1,750 people and have four production lines, each capable of delivering enough lithium-ion batteries for 200,000 vehicles when it opens, per a Toyota statement.

Axios-Ipsos poll: Omicron's big numbers

Expand chart
Data: Axios/Ipsos poll; Chart: Kavya Beheraj/Axios

Two new Biden administration initiatives — mailing at-home COVID-19 tests to those who ask and making free N-95 masks available — are hugely popular, each backed by 84% of Americans in the latest installment of the Axios/Ipsos Coronavirus Index.

Yes, but: Those who may need these most — the unvaccinated — are less likely to take advantage of the offerings, the survey found. And neither has boosted President Biden's numbers so far, meaning it's too little too late, or too soon to see a change.

Updated 2 hours ago - World

Pentagon: 8,500 troops on high alert for possible deployment to eastern Europe

Photo: Anna Moneymaker/Getty Images

Defense Secretary Lloyd Austin has placed 8,500 U.S. troops on "heightened preparedness to deploy" to eastern Europe in case NATO activates its rapid-response force over tensions with Russia, the Pentagon announced Monday.

Why it matters: No decisions have been made to deploy U.S. forces, but the heightened alert level will allow the military to rapidly shore up NATO's eastern flank in the event that Russia invades Ukraine. The Pentagon warned that Russia has shown "no signs of de-escalating," and continues to amass troops on Ukraine's borders.