In 2021, the world is caught in the challenge of chip supply shortage and supply chain chaos, but Tesla has become one of the biggest winners in the auto industry. Its success is due in part to its Silicon Valley roots, and its unique automotive software design has helped it continue its rapid development in the past year.
Analysts predict that the Elon Musk electric car manufacturer’s car production in 2021 will increase by about 80% over 2020, which will be the fastest annual production growth since 2018. According to data from IHS Markit, the global automotive industry, which has been hit hard by supply chain disruptions, is expected to increase car production by about 1% compared to 2020, but decrease by 15% compared to 2019.
Industry executives and consultants said that Tesla was able to keep the production line running normally, partly because of its in-house software engineering expertise, which made it more comfortable than many rival automakers in adapting to global chip supply shortages. From controlling motors to charging mobile phones, chips are used everywhere. Musk said earlier this year that in the face of shortages, Tesla was able to quickly rewrite the software and integrate replacement chips into its vehicles.
Semiconductor industry executives and consultants said that as a still relatively young car company, Tesla’s advantage lies in designing cars from scratch, rather than adding new features piecemeal in decades like many traditional automakers. Many of them believe that this allows Tesla to better integrate the system.
Bain & Co. (Bain & Co.) based on a study of Model 3 in 2019 showed that in this model, only a small number of chips can achieve speaker control, voice and gesture recognition and other functions. In many other cars, these functions will be independently controlled by more chips.
Tesla did not respond to a request for comment on its chip procurement strategy. A number of semiconductor executives and analysts said that traditional automakers usually let parts suppliers be responsible for purchasing chips, while Musk prefers to produce auto parts on his own, which means that Tesla has more visibility in the supply chain in certain areas. Gao has established close relationships with semiconductor companies before the crisis hit.
Nakul Duggal, head of Qualcomm’s automotive business, said: If they (Tesla) decide to make something on their own, then they must have a direct relationship with the semiconductor supplier. Qualcomm is responsible for the design. Chips and supply for Tesla.
The chip shortage can be traced back to the end of 2020 when car demand rebounded faster than expected from the low point of the new crown pneumonia epidemic, which caught automakers by surprise.
According to data from consulting company AlixPartners LLP, if there are not enough semiconductors, the global production of automobile companies in 2021 will be about 77 million vehicles, which is about 9% lower than expected in January of that year.
Tesla is not immune to supply chain problems. The company’s factory has always been in a state of insufficient capacity. In February 2021, due to a shortage of parts, the company briefly closed its factory in Fremont, California. According to people familiar with the matter, Musk told employees at the time that the company also solved the shortage by manufacturing cars with missing parts, which will be replaced after delivery.
Musk delayed the launch of the new model on the grounds of a shortage of chips. Tesla’s long-awaited electric pickup and heavy-duty trucks were originally scheduled to go into production in 2021, and are now scheduled to go into production in 2022 and 2023, respectively.
Tesla executives and lawyers said that the world’s acceptance of electric vehicles and the rise in Tesla’s valuation have made Musk’s company more attractive to component suppliers. Dan Sharkey, a Detroit area lawyer representing auto suppliers, said many of his clients are willing to do things for Tesla that they don’t want to do for other automakers.
Sharkey said: They think they have caught a rising star, and Tesla’s relatively small output will sometimes benefit them and will not immediately arouse the alarm of the auto giant.
Tesla is easily achieving its expected goal of increasing car deliveries by 50% on the basis of nearly 500,000 vehicles in 2020. In the first nine months of 2021, the company delivered more than 627,000 vehicles to customers. In order to increase deliveries, Tesla also prioritizes delivering vehicles to customers, even if they lack some parts.
Mo Siddiqui, who lives in Hamburg, Germany, said that he received a text message from Tesla earlier in December that due to supply chain issues, the Model Y SUV he ordered may not have a USB port or mobile phone. Delivered with the charging function, but Siddiqui can refurbish the vehicle within two weeks after picking up the vehicle. In response, he said: “I can accept this.