Tesla CEO Elon Musk Says Global Chip Shortage ‘Remains Quite Serious’

Photo: The B Word

Tesla CEO Elon Musk said some opening remarks during its Q2 webcast the global chip shortage situation “remains quite serious”.

Musk said the growth rate of Tesla is being controlled by chips, which are the slowest to appear in its supply chain. The company said all parts are ready except for these chips, with Musk saying the chip supply is “fundamentally the governing factor”. The CEO said “it’s unknown how long this will last,” referring to the chip shortage.

The CEO said the chip shortage is “out of our control”, however, he did mention “it does seem like it’s getting better”.

To deal with the chip shortage, Tesla had to substitute chips and re-write firmware “in weeks”, calling it an “incredibly intense effort”. Tesla had to integrate and test these replacement chips while maintaining production.

Musk also thanked Tesla’s suppliers, saying there were “many calls at midnight and 1AM to resolve shortages”, suggesting calls to supply chains in Asia.

As for the launch of Full Self-Driving subscriptions, Musk said Tesla needs to have its FSD build available for “subscriptions to kick off at a high rate”, citing how in 2022 this will probably be a big factor.

Musk also applauded the pace of construction of its new Gigafactories in Berlin and Austin. He also detailed how it was “hard to explain to people who have not been through the agony of a manufacturing ramp,” and why the company can’t just turn on production and make 5,000 cars per week.

According to Elon, with 10,000 unique parts and processes for manufacturing and producing a Tesla, numerous parts are not in the company’s control. He again emphasized, “prototypes are easy and production is hard”.

Musk again said, “of all American car companies there are only two that have not gone bankrupt: Ford and Tesla.”