Tesla to Prepay for Chips, Mulls Acquiring Plant to Deal with Global Shortage: Report

According to the Financial Times, Tesla is said to be taking matters into its own hands to deal with the global chip supply shortage.

Unnamed sources claim Tesla is going to prepay for chips to secure its supply, while it is also mulling acquiring a plant.

“The US electric-car maker is discussing the proposals to secure chip supply with industry operators in Taiwan, South Korea and the US, said the people, who work at semiconductor industry suppliers, chipmakers and consultancies,” reports the Financial Times.

The idea of buying a plant outright is at a preliminary stage, with sources citing the high costs involved would mean the idea may prove difficult. A new-age chips lab would require up to $20 billion in investment, to go with the high skill to master such supply chains.

One thing is for sure–don’t bet against Elon Musk and Tesla when it comes to managing its own supply chain. The company plans to eventually produce its own 4680 battery cells in the near future.

“They will buy capacity at first, but they are actively considering buying their own foundry,” said Ambrose Conroy, founder and chief executive of Seraph Consulting, a supply chain consultancy, of Tesla.

Semiconductors are in short supply worldwide, due to the huge demand for electronics and more during the COVID-19 pandemic. The shortage is affecting all industries, from electronics to automobiles and more.