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How buoyant Tesla has managed to circumnavigate the chip shortage

by SEP Editor
3 mins read

The global microprocessor shortage has hobbled traditional automakers, and yet Tesla continues to record record output.

Tesla Q4 2021 Vehicle Production & Deliveries

In the fourth quarter of 2021, Tesla produced nearly 305,000 electric cars and delivered nearly 308,000. In 2021, they delivered over 936,000 vehicles.

While the chip shortage has dominated auto-industry headlines this year, How tesla coped with the global chip shortage

Here are some of the ways Tesla navigated supply chain challenges.

Vertical Integration Capability

Unlike traditional car manufacturers who still rely heavily on suppliers, Tesla has a relatively high degree of self-research in hardware and software, with a strong vertical integration capability that allows it to communicate and improve at any time.

Self-developed chip capability

Much of the complex software for Tesla’s electric cars is written by the company’s engineers, and the most well-known self-published chip is its Autopilot chip, which is capable of reaching 36 TOPS of AI arithmetic power on a single chip, with autonomous design capabilities that allow it to flexibly adapt components. 

Last year Musk revealed that Tesla was able to quickly rewrite the software needed to integrate alternative chips into its vehicles earlier when faced with chip shortages.

Suppliers bullish on Tesla’s long-term growth

As the industry benchmark of the smart car track, suppliers are generally optimistic about Tesla’s development in the next few years. The industry predicts that Tesla’s total global production capacity will reach 2.1 million units in 2023, and it is a good choice to supply Tesla on a priority. Now maintain a good relationship with Tesla, the future can continue to get stable orders from Tesla, such a choice has more long-term value.

Lower configuration delivery

Tesla told some customers they could take vehicle delivery with some missing parts, such as Bluetooth chips and USB ports. Tesla also removed some features such as radar sensors and lumbar support for front passenger seats, which made the car less complicated to build. 

Our take: Tesla is not immune to supply-chain problems and it faces increasingly fierce competition, but its fundamental advantage of surviving the chip crisis will remain. With factories coming online in Berlin and Austin, Texas, and the Shanghai Giga factory ramping up production, Tesla will continue to set records in 2022.

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