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How Tesla Survived the Global Computer Chip Shortage

How Tesla Survived the Global Computer Chip Shortage
Industries across the world are struggling to manufacturer products with a computer chip shortage, apart from Tesla…

 

Elon Musk is changing the world, with electric cars, helping accelerate the world’s transition to sustainable energy, but how have they excelled their competitors with no problems in the global computer chip shortage crisis?

Tesla is often criticised for being an expensive car, and expensive to maintain, however sales show Tesla has delivered 936,172 cars in 2021 alone.

That’s an 87%, in a world that auto-manufactures have struggled with the supply chain, slowing production down – but how come Tesla had a record year in 2021?

Why has computer chip supply become a problem?

 

During the pandemic, computer chip production was put on hold globally.

From auto manufactures to computer supplies and consumer electronics, industries struggled to keep producing computer chips, especially there was no demand for it.

However, now productions have had the green light and the demand is back up, higher than ever before, manufactures don’t have enough resources to push out their products and services, causing huge inflation and massive delays for the consumer.

The domino effect has impacted industries worldwide, apart from Elon Musk’s Tesla.

How Tesla survived the global chip shortage

 

Tesla went years without any profit, as they truly stood by their belief of stainability. This means to build their own cars, in-house. From car seats, to programming their car systems – Tesla has done solo, without any third-party help.

This meant that Tesla can design software; the way they want, with whatever they want.

When Tesla couldn’t get the computer chips they initially used for their vehicles, they took ones that were available and rewrote the software that operated them to suit its needs and keep production flowing.

A few years ago, Elon Musk was heavily critiqued for in-house productions, and it was one of the reasons the company was struggling to increase production.

 

Like other big global carmakers, Toyota has also been forced to cut output due to the pandemic’s impact on global supply chains.

Sky News (2021)

 

 

But now, it looks like Ford, Hyundai and other larger auto-manufactures are looking to do the same and take control of their own supply.

What about other car manufactures?

 

Tesla nearly doubles deliveries in 2021
Tesla benefited from its software-driven approach to car manufacturing, which allowed it to rewrite software in order to use other chips in its vehicles.
Source: Statista

Larger auto manufactures like Ford or General Motors were unable to produce cars during the pandemic, as they were hit most by the chip shortage, and relied heavily on third party supplies for their software and materials. As material became scarcer and demand was higher, prices started to climb, for the consumer and the manufacture.

Many car makers, including Ford and Mercedes-Benz, have said in recent months that they are hiring engineers and programmers to design their own chips and write their own software.

Automakers and other manufacturing industries are to see a massive downfall in production for 2022 and warns consumers price inflation and delays.

Like other big global carmakers, Toyota has also been forced to cut output due to the pandemic’s impact on global supply chains.

In an interview with Mercedes over the chip supply shortage, Markus Schäfer; Chief Technology Officer and Board Member of Mercedes said that Mercedes will “make sure we have customised, standardised chips in the car, not one thousand different chips.”

He also included that Mercedes will also design its own vehicle hardware.

Without mentioning Tesla, Mr. Schäfer added, “probably some others were earlier going down this road.”

 

[In the future, Mercedes will]…“make sure we have customised, standardised chips in the car, not one thousand different chips.”

Chief Technology Officer of Development & Procurement – Markus Schäfer

 

 

Mercedes, like many other manufacturers, is considering how to manage their own suppliers for the future.

 

But what does quick development mean for Tesla?

Elon Musk on Twitter talking about the computer chip shortage
Tesla’s Elon Musk says that 2021 has been a ‘nightmare for the supply chain’ and ‘it’s not over!’ via a Tweet to a concerned Cybertruck fan.
Via Twitter

When carmakers were debating whether electric cars would ever be successful, Tesla started to build giga-factories, which allows them to self-make all the material and computer chips for their cars.

Tesla have recently partnered with Panasonic to start mass producing next-gen Tesla batteries, in-house, ready for 2023, giving Tesla more access to it’s supplies and materials.

Doing more on its own also explains why Tesla was able to avoid battery shortages, which prevented businesses like Ford and General Motors from selling large numbers of vehicles, and was a reason behind delays.

However…

 

Tesla has fewer options than many traditional carmakers, making the manufacturing process simpler and more straightforward in terms of materials. Tesla has it easy compared to the big automakers, selling only four vehicle models – the Model S, Model 3, Model X, and Model Y.

However, due to rushed production and a push for additional features, the business began recalling over 475,000 vehicles in December due to two key flaws and quality difficulties.

One of the issues are the cause of a rear-view camera failure and the other is the front hood unexpectedly opens.

Federal regulators are investigating the safety of Tesla’s autopilot system as well as how a 19-year-old managed to remote hack into Tesla cars.

What’s next for companies that require computer chips?

 

The supply has gradually begun, but due to strong demand and inflation, the computer chip shortage will last for several years, and large manufacturers will continue to suffer, increasing consumer frustration and forcing corporations to lose significant sales.

It’s not only Tesla…

 

Apple has decided to move away from Intel chips and processors in favour of in-house technology development, which has proven successful so far.

Many companies are turning toward AI-designed chips, which eliminates the human middleman and reduces the time it takes to produce the chip.

 

 

 

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