Sunday, October 2

How has Tesla overcome the chip shortage?

The pandemic not only brought the virus, but it also brought crisps to the market. Many sectors were hit hard by this, such as the automotive section. In the midst of this problem, Tesla knew how to take advantage of internal experience in software engineering to rewrite the necessary software and integrate alternative chips to your vehicles. With this, improve your production forecasts according Rebecca Elliott en The Wall Street Journal.

The electric vehicle manufacturer is prepared to manufacture approximately one 80% more vehicles this year than in 2020analyst forecasts indicate, on track for its fastest annual production growth since 2018.

While the industry is expected to global level produce a 1% more than last year and 15% less than in 2019, according to IHS Markit.

Tesla has been able to keep production lines running by relying on in-house software engineering expertise that has made it more adept than many rival automakers in adapting to a global semiconductor shortage, industry executives and consultants said.

“Faced with shortages earlier this year, for example, Tesla was able to quickly rewrite the software needed to integrate alternative chips into its vehicles,” said the CEO of the company, Elon Musk.

Semiconductor executives and consultants said that Tesla, as a still relatively young car company, had the advantage of design your vehicles from scratch, rather than adding parts piecemeal over decades, as many legacy automakers have done. That allowed Tesla to consolidate systems, some of them said.

At Tesla Model 3 sedan, a single group of semiconductors enables functions such as speaker control and voice and gesture recognition that in many other vehicles would be controlled separately using more chips, according to a study by Bain & Co. based on a 2019 Model 3.

Ganesh Moorthy, CEO of semiconductor provider Microchip Technology Inc., He said producers focused on electric vehicles benefit from being more embedded in technology than traditional automakers.

“They are more connected, in many cases, and I think that as a result they have also been able to be more flexible in what they have built,” Moorthy noted.

In the hands of suppliers

Traditional automakers have often let parts suppliers take care of the buy chips. Musk’s preference for manufacture vehicle components in-house it meant Tesla had greater supply chain visibility in some areas, having forged close relationships with semiconductor companies before the crisis hit, some semiconductor executives and analysts said. Tesla, for example, designed the computer that enables its advanced driver assistance technology in newer vehicles.

“Anything where they decided to do something themselves, well then they had to have a direct relationship with the semiconductor supplier,” he said. Nakul Duggal, who runs Qualcomm Inc.’s automotive business, that designs chips and supplies Tesla.

The chip shortage dates back to late 2020, when demand for vehicles rebounded faster than expected from pandemic lows, surprising automakers.

“Without enough semiconductors, auto companies are on their way to making roughly 77 million vehicles worldwide this year, about a 9% less than expectations in January ”, according to the consulting firm AlixPartners LLP.

The Tesla CFO Zachary Kirkhornsaid in October that Tesla’s expertise in the chip industry and constant messaging to suppliers had helped the company manage supply chain challenges.

“We never lowered our production forecast with our suppliers as we are adding capacity as quickly as possible,” Kirkhorn told analysts.

Not totally immune

Tesla has not been immune to supply chain problems. The company has operated factories below capacity and briefly closed its Fremont, California plant in February due to parts shortages. It also fixed the shortcomings by building cars that were missing parts that needed to be added later, Musk told employees, according to a person familiar with the matter.

Musk has cited chip shortages to delay the launch of new models. The long awaited Electric pickup truck and Tesla semi-trailer truck, which were scheduled to go into production this year, will now go into production in 2022 and 2023, respectively.

Towards chip production

Traditional automakers are now focusing more on chips. Ford Motor Co. y General Motors Co. They announced deals with semiconductor companies last month to develop computer chips.

The research firm Gartner Inc. forecasts that by 2025, half of the top 10 automakers by market capitalization will design at least some of their own chips.

Meanwhile, the global adoption of electric vehicles and the rising valuation of Tesla have made the company a more attractive customer for some parts suppliers, executives and lawyers said.

Dan Sharkey, a Detroit-area attorney representing auto suppliers, He said some of his customers are willing to do things for Tesla that they are not for other automakers. “They think they are catching a rising star,” Sharkey said, adding that Tesla’s relatively small production can sometimes work in the company’s favor. “Easy to say, okay, we’ll just take care of these little ones.”

Tesla is on track to easily exceed its target of increase vehicle deliveries by 50% from last year’s total of nearly half a million. Put more than 627,000 vehicles in the hands of customers during the first nine months of the year. The relatively small size of the company and increasing demand for electric vehicles have made it easier to sustain rapid growth. It also prioritized bringing vehicles to customers, even if some parts are missing.

Example of a client

Mo Siddiqui, who lives in Hamburg, Germany, said he received a text message from Tesla earlier this month informing him that due to problems in the supply chain, the approximately $ 70,000 Model Y compact sport utility vehicle he had purchased could be delivered without some USB ports or power supply capability. wireless phone charging.

Siddiqui, 39, was able to schedule the vehicle upgrade within two weeks of pickup. “I can live with that”.

Tesla closed the session on Wednesday at $ 1,086 and the Ei indicators are practically bullish.

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