Some second-hand trucks now cost more than their original sticker price in a red-hot market – a 2-year-old Toyota Tacoma went for $1,000 more than its price when new

Cars sit outside a used car dealership with spray paint on the windows advertising the vehicles.
Used car and truck dealers have bought models for more than their original sticker price.

  • Used trucks have been sold for above their original sticker price in a red-hot market, Fox Business reported.
  • A supply crunch from factory closures and worldwide chip shortages for new vehicles have contributed to price rises.
  • But prices have climbed at a slower rate this week, according to vehicle data site Black Book.
  • See more stories on Insider’s business page.

Some car dealers have sold used trucks for more than the original sticker price thanks to rocketing demand and a global shortage of chips needed to make new cars, Fox Business reported.

Used vehicle prices have risen by an average of 30% over the past year, according to automotive data site Black Book, per Fox Business.

Alex Yurchenko, Black Book’s senior vice president of data science, told Fox Business that he had found 73 models of vehicles between one and three years old that were being sold to dealers at auctions for more than their original price.

“The market is very strange right now,” Yurchenko told Fox Business. “Dealers need the inventory, so they are paying lots of money for their vehicles on the wholesale market.”

A vehicle’s sticker price is the manufacturer’s recommended price for retailers.

While many of the models were high-value trucks and SUVs, such as the Ford F-150 Raptor pickup, Yurchenko told Fox Business that he found modestly priced vehicles sold above their sticker price, too. For example, Yurchenko found a 2019 Toyota Tacoma SR double cab pickup, originally priced at $29,000, going for nearly $1,000 more in 2021, Fox Business reported.

“Before we get through this, prices for many mainstream vehicles will get closer to their manufacturer’s suggested retail price,” Yurchenko told Fox Business.

The inflated prices are thanks to vehicle supply shortages caused by factory closures last year, a global shortage of automotive chips, and strong demand in the vehicle market, which is even leading to some sellers making a profit on cars with broken engines.

Used vehicle prices climbed 7.3% in May, and used vehicle price rises accounted for about one-third of overall inflation, according to data from the Bureau of Labor Statistics.

And used vehicle prices have also soared across the Atlantic – the UK’s Vehicle Remarketing Association (VRA) reported double-digit price increases over the past few months, and predicted that prices will rise further.

“We are in a kind of ‘perfect storm’ where stock is in very short supply, demand is high, and buyers are ready to spend freely,” VRA chair Philip Nothard said. Nothard said that dealers are also happy to sell older vehicles than they would’ve done previously.

The increase in used vehicle prices in the US has started to slow, with used cars climbing 0.75% last week – the lowest weekly rise in 17 weeks, Black Book told Fox Business.

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Nio rises as Citi upgrades the car maker and says the stock could soar 50% on demand for electric vehicles in China

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A Nio EVE EP9 All-Electric Supercar is on displayed during the 19th Shanghai International Automobile Industry Exhibition at National Exhibition and Convention Center on April 21, 2021 in China.

  • Nio rose Tuesday after Citi upgraded the Chinese EV maker to “buy” from “neutral.”
  • Citi raised its price target to $58.30 from $57.60, implying potential upside of 50%.
  • In May, Nio’s vehicle delivery was adversely impacted for several days due to a semiconductor supply shortage.
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Shares of Nio rose 4% on Tuesday after Citi upgraded the Chinese car maker to “buy” from “neutral,” citing a surge in demand for electric vehicles in China.

Citi lifted its 2021 sales estimate for electric vehicles in the country to an estimated 2.52 million units from 1.79 million units. For 2025, the firm also boosted sales estimates to 7.84 million units from 6.86 million units.

Citi said it expects that the uptick in the second quarter order backlogs will increase Nio’s revenue and market share in the second half of 2021.

Citi’s new price target of $58.30, raised from $57.60, represents a potential 50% upside from Friday’s closing price of $38.62. The bullish new target comes despite a rough year so far in 2021 for the electric vehicle maker, and the industry broadly, as supply chain and manufacturing constraints weigh on car makers’ delivery guidance.

“Based on the current production and delivery plan, the company will be able to accelerate the delivery in June to make up for the delays from May,” Nio said in a statement Tuesday. “The company maintains and reiterates the delivery guidance of 21,000 to 22,000 vehicles in the second quarter of 2021.”

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Ford will temporarily shut 8 factories and cut production of its F-150 pickups and Mustang due to the global chip shortage, a report says

2020 Ford Mustang Shelby GT350R Heritage Edition_6.JPG
2020 Ford Mustang Shelby GT350R Heritage Edition.

  • Ford will temporarily shut factories in the US, Canada, and Mexico due the global chip shortage, CNBC reported.
  • Ford told CNBC it planned to cut production of its Ford Mustang, Bronco Sport SUV, and F-150 pickup.
  • The automaker unveiled its new fully-electric F-150 Lightning pickup this week.
  • See more stories on Insider’s business page.

Ford plans to temporarily shut eight factories due to a global shortage of semiconductor chips, according to an internal memo viewed by CNBC.

The automaker told CNBC that it plans to cut production due to the chip shortage, including its Ford Mustang, Bronco Sport SUV, and F-150 pickup models.

The eight plants to close include facilities in Chicago, Mexico, and Canada, the memo reportedly said.

“Our teams continue making the most of our available semiconductor allocation and will continue finding unique solutions to provide as many high-quality vehicles as possible to our dealers and customers,” Ford said in a statement to CNBC.

The company plans to close its Dearborn, Michigan truck plant for two weeks starting May 31, and reopen on a reduced schedule from June 14, according to the memo.

Ford recently showed off a fully-electric version of its popular F-150 pickup, the F-150 Lightning EV, which will be produced at the Rouge Electric Vehicle Center in Dearborn, Michigan. This is a separate factory, and was not mentioned in the memo.

President Joe Biden visited the new facility earlier this week to promote his $2 trillion infrastructure plan, which includes a $174 billion investment in electric vehicles.

In April, Ford said that it expected production to drop 50% in the second quarter due to the chip shortage, before bottoming out and then increasing during the rest of 2021.

Ford said the chip shortage would cost the automaker about $2.5 billion this year.

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The US produces just 12% of the world’s computer chip supply. Here’s why it’s trailing China when it comes to manufacturing and how it plans to get ahead.

computer chip biden
President Joe Biden holds a semiconductor chip at the White House in Washington, U.S., February 24, 2021.

  • The US relies heavily on outsourcing chip-making since it’s cheaper and easier to go overseas.
  • The country’s reliance on foreign manufacturers is even more glaring amid the global chip shortage.
  • The solution, as President Biden has said, is to invest in domestic chip production.
  • See more stories on Insider’s business page.

A crushing computer chip shortage continues to choke the global supply chain.

Automakers are producing vehicles without smart technology – which requires chips – Apple’s MacBook and iPad production was reportedly delayed, and PlayStation 5s are being produced in limited amounts due to the squeeze.

It’s an effect caused over time by pandemic-driven shutdowns and soaring demand for products that need chips.

But one question that has emerged during the crisis is where chips are produced – and why the US doesn’t manufacture much of the global supply.

Here’s why it doesn’t.

Chips are difficult to produce, and it’s cheaper for US companies to outsource

In 1990, the US produced 37% of the world’s chip supply, according to a September 2020 report from the Semiconductor Industry Association. But now, the country is responsible for just 12% of global chip production.

Seventy-five percent of the world’s chip manufacturing comes out of Asia, per the report, and China is positioned to become the largest chip producer by 2030.

Why the decline in the US? It became cheaper to build chip facilities in countries outside of the US. Those foreign governments offer more attractive financial incentives to construct semiconductor factories, like tax breaks and grants. There’s also less regulation in places like Asia. On top of that, there aren’t as many jobs in the US created to run such high-tech factories.

There was a recent attempt to do so under the Trump administration – Apple supplier Foxconn was slated to build a Wisconsin facility that would produce large-screen TV displays and said it would create 13,000 jobs, but the whole project never panned out.

foxconn apple wisconsin factory
The ground breaking for the Foxconn Technology Group on June 28, 2018 in Mt Pleasant, Wisconsin.

Some of the country’s largest chip manufacturers are also some of the biggest in the world. Intel still produces much of its chip supply at home, as the Wall Street Journal reported. But other major US chip producers outsource manufacturing to companies in Asia due to costs. One of those foreign contract companies is Taiwan Semiconductor Manufacturing Company, which produces more than half of the world’s computer chips and is also Apple’s primary supplier.

Making computer chips is a complex process. It’s also difficult and expensive to build new facilities to manufacture the vital silicon component, which means companies have to rely on existing plants. A new semiconductor factory can cost up to $20 billion, as ON Semiconductor CEO Keith Jackson wrote in Fortune, and that price tag is much higher in the US.

There are economic and national security benefits to ramping up US chip production

There could be risks in depending on foreign chipmakers if the US continues to fall behind China in the chip race, as the Journal notes.

President Joe Biden is aware of the issue and the threats posed by relying too heavily on foreign manufacturing. As part of Biden’s $2 trillion infrastructure plan, there’s a $50 billion allotment for domestic chip manufacturing incentives.

In a Monday meeting, Biden said the key to navigating the current chip shortage crisis is to invest in the country’s chip production.

“We need to build the infrastructure of today and not repair the one of yesterday,” Biden said, according to NBC News. “The plan I propose will protect our supply chain and revitalize American manufacturing.”

But as Recode notes, it won’t be a simple task to transition reliance to homegrown chip production. There will be a handful of factors to consider over time, like weaning off of foreign contract manufacturers and ensuring there are enough US workers to power new facilities.

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Tesla reveals record quarterly sales despite supply chain struggles

Tesla Shanghai China Factory
Tesla TKed Wall Street’s expectations.

  • Tesla sold 184,800 vehicles in the first three months of 2021.
  • The number is slightly above what analysts on Wall Street had expected.
  • The carmaker battled supply-chain snafus including a worldwide shortage of semiconductor chips.
  • See more stories on Insider’s business page.

Tesla on Friday announced better-than-expected car sales for the first three months of 2021, despite major production and supply-chain headwinds.

The electric-car maker delivered 184,800 vehicles in the first quarter, topping Wall Street’s expectations. The carmaker sold 182,780 of its Model 3 and Model Y, along with 2,020 of its higher-end Model S and Model X. Tesla does not break down its sales by individual model.

Tesla said it saw strong demand for the Model Y in China and that it will continue to speed up production of the refreshed Model X and Model S.

Shares of the automaker sank slightly, about 0.5% in extended trading Friday, though most major stock exchanges were closed for Good Friday. The stock sold off just shy of 1% on Thursday in the lead-up to the announcement.

Analysts largely expected Tesla would continue the rapid pace of production it achieved during the last three months of 2020, as it pulled out all the stops to deliver 499,550 cars before the year’s end. Consensus on Tuesday stood at 173,800 units for the quarter.

Overall production numbers came in at 180,338, Tesla said. Both figures could change slightly, about 0.5%, as paperwork is finalized.

The carmaker faced major headwinds in the first quarter including a global shortage of semiconductors that has kneecapped auto manufacturing worldwide, idling production lines and forcing automakers to build cars without certain components as they await chips.

Read more:The CEO of a top battery startup shares what he learned about business from joining Tesla as employee number 7

In January, Tesla CFO Zach Kirkhorn warned of obstacles Tesla would face in the first quarter, including the semiconductor issue.

“Specifically for Q1, our volumes will have the benefit of early Model Y ramp in Shanghai,” Kirkhorn said on a conference call. “However, S and X production will be low due to the transition to the newly architected products. Additionally, we’re working extremely hard to manage through the global semiconductor shortage as well as port capacity, which may have a temporary impact.”

In February, Tesla temporarily halted production at its Fremont, California, factory, and CEO Elon Musk attributed the break to “parts shortages.” Production stoppages aren’t uncommon for carmakers, and they’ve become more frequent as the chip shortage drags on.

Wall Street expects Tesla to sell more than 800,000 vehicles in 2021, with production capacity aided by new factories that are set to come online in Germany and Texas.

Wedbush Securities analyst Daniel Ives said in a Friday note that he now expects Tesla to deliver more than 850,000 cars in 2021, as demand for EVs grows globally and as President Joe Biden signals a commitment to green infrastructure.

“We believe these delivery numbers are a paradigm and sentiment shifter for the space going forward. Its been a brutal sell off for Tesla and EVs, but we believe that will now be in the rear view mirror,” Ives said.

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Your morning coffee is about to get more expensive

coffee shortage
There’s a coffee shortage.

When it rains, it pours, and when there’s a drought, prices go up.

In this case, the drought is in Brazil and it has the US running low on coffee. That means your morning cup of joe is about to get more expensive.

The drought has decreased crop production just as congested shipping ports have caused US coffee stockpiles to hit the lowest they’ve been in six years, Bloomberg reported. So far, roasters have been relying on their inventories instead of hiking prices, but that will only last so long and wholesale prices have climbed.

Potential losses from the drought could affect half of Brazil’s coffee crops next year, soft commodities expert Judith Ganes told Reuters in December. She said it was hard to determine how badly Brazil’s Arabica beans were hit, but “there will be major failure,” she said. “I saw areas with 100% losses, 50% losses, 30% losses.”

Arabica-coffee futures in New York have increased by nearly a quarter since the end of October, per Bloomberg. And Marex Spectron recently upgraded its global coffee deficit forecast from 8 million bags to 10.7 million bags, citing the drought.

Logistic problems have only compounded the shortage brought on by declining crops. Some facilities in Dinamo, Brazil, told Bloomberg don’t have enough containers to ship out coffee. Some containers and charter vessels aren’t currently available, causing back ups and delays at shipping ports.

David Rennie, head of Nestle’s coffee brands, told Bloomberg it could take two to three years for take-away coffee to return to pre-Covid levels.

But coffee isn’t the only goods shortage hitting the global economy as it reopens this year.

US shipping ports have become unusually congested as imports pick up speed due to surging and unpredictable consumer demand, delaying shipments of all types, from sneakers to meat. Companies struggled to estimate demand correctly, partly explaining the pileup, while factory production was halted off and on during the work-from-home economy of 2020.

The shortage is particularly acute in certain spaces, such as in the semiconductor chips needed to make personal electronics and products with electronic components such as cars. Finally, February’s Texas Freeze suspended much of the US oil sector and the manufacturers who rely on it, making gas harder to come by and things refineries produce, like plastics, more expensive.

That’s not to mention the shortage of things like bikes, fitness equipment, and even lumber, the latter of which has added to already high housing prices. As supply dwindles, all of these things become things Americans could end up paying more for.

But you know what they say, when it rains, it pours.

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Nvidia slips as concerns over global chip shortage weigh on 4th-quarter earnings beat

NVIDIA computer graphic cards
  • Shares of Nvidia fell on Thursday as investor concerns about a global chip shortage weighed on an otherwise positive earnings report.
  • The stock fell 3% in premarket trades on Thursday.
  • The semiconductor industry has been struggling to meet global demand, thanks to an unexpected boom in online activity brought about by the pandemic.
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Shares of chip maker Nvidia fell 3% in premarket trading on on Thursday as investors’ concerns over the global chip shortage weighed on fiscal fourth-quarter earnings that beat expectations.

Nvidia CEO Jensen Huang during the Wednesday earnings call said he expects the shortage to continue this 2021. But Huang assured investors that the shortage would not affect some segments. 

The semiconductor industry in the past year has been struggling to meet global demand, thanks to an unexpected boom in online activity brought about by the pandemic. Nvidia, which outsources from Asia, Taiwan Semiconductor Manufacturing and Samsung Electronics, in particular, is stuck in the middle. Both Asian companies are having difficulty keeping pace with demand, and the bottleneck has trickled down to Nvidia. 

Nvidia sells semiconductor parts for gaming, artificial intelligence, data centers, and automobiles, among other sectors.

The company reported that revenue jumped 61% to $5 billion for the quarter ending January 31 and adjusted earnings of $3.10 per share, both considerably higher than Wall Street’s $4.82 billion and $2.81 per share estimates.

For the current fiscal first quarter, the chip maker set a forecast of $5.3 billion in revenue versus analysts’ expectations of $4.49 billion. 

For the coming year, the Santa Clara, California-based company remains bullish. Nvidia announced that it is working on graphic cards for mining cryptocurrencies like ethereum, even if the CEO said it will not be a huge part of its business.

Last year, Nvidia announced plans to buy Arm, Softbank’s chip division, for $40 billion. Arm is not a chip maker, but licenses chip designs, widely used in mobile phones, to customers such as Apple, Samsung, and Intel.

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