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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

Commerce Secretary presses for chips funding

Illustration: Aïda Amer/Axios

U.S. Commerce Secretary Gina Raimondo will call on House lawmakers to pass a bill boosting funding for semiconductor manufacturing during a speech in Detroit on Monday.

Why it matters: A global chip shortage is slowing production of everything from appliances to vehicles. The Senate in June passed a bill that includes $52 billion for domestic semiconductor manufacturing, but the House has yet to act.

22 mins ago - World

U.S. announces diplomatic boycott of Beijing Winter Olympics

An Olympic-themed sculpture in Beijing on Dec. 1. Photo: Hou Yu/China News Service via Getty Images

The U.S. announced Monday that it will not send officials to the 2022 Beijing Winter Olympics in protest of human rights abuses committed by the Chinese Communist Party.

Why it matters: The diplomatic boycott — which won't prevent American athletes from competing — marks a major escalation between the U.S. and China amid already heightened tensions over the CCP's treatment of Muslim minorities, military threats to Taiwan and economic tariffs.

Stuck jet stream brings blowtorch December in Lower 48, frigid Alaska

Short-term climate outlook for Dec. 13-19, 2021, from the Climate Prediction Center at NOAA. (NOAA/CPC)

The Lower 48 states have seen record-shattering warmth so far this December, with temperatures running as high as 35°F above average for this time of year. The warmth has been so pronounced that during the weekend, brush fires broke out in a snowless, unusually mild Denver metro area.

The big picture: The jet stream, which is a river of air that rides at about 30,000 feet along the temperature contrast between air masses, steering storms as it goes, has been stuck in a position well north of the continental U.S., keeping storms and cold weather at bay.