How Tesla weathered global supply chain issues that knocked rivals

San Francisco – Tesla Inc’s ability to structure parts in-house gave the automaker agility in building tweaks to components and coping with provide chain troubles that strike other automakers a lot tougher, sources and professionals claimed.

Tesla boosted its deliveries by 87% to a file high in 2021, pushing up its shares up around 13% on Monday.

Listed here are some of the methods Tesla navigated offer chain challenges.


Tesla informed some prospects they could choose vehicle shipping and delivery with some missing sections, this sort of as Bluetooth chips and USB ports. Tesla also taken off some features this sort of as radar sensors and lumbar guidance for front passenger seats, which made the vehicle fewer complicated to develop. Tesla did not reply to Reuters’ ask for for remarks.

Tesla also increased car or truck rates to tackle increased costs, like “expedite prices” for elements. American people have to hold out for seven months if they buy a Design Y model, whose price ranges went up 18% previous calendar year.

Tesla main government Elon Musk explained Tesla was also ready to substitute different chips for some that had been in quick supply. Volkswagen CEO Herbert Diess claimed Tesla’s skill to rewrite software to guidance the new chips in 2-3 weeks was outstanding.


Tesla types a lot more components and writes additional computer software than several rivals, who count on vehicle suppliers’ endeavours. Musk has called the organization “absurdly vertically integrated as opposed to other automobile corporations.”

“We design circuit boards by ourselves, which permit us to modify their style immediately to accommodate alternative chips like powerchips,” a Tesla insider reported.

In-residence engineers layout the bulk of the complicated computer software that runs the Tesla autos, which Musk has described as a “computer on wheels”.

Tesla also designs the chips utilized in its driver assistant techniques and helps make elements ranging from seats to battery cells in-dwelling. It also owns its individual direct revenue, support and charging networks.

“We are designing and constructing so a lot a lot more of the motor vehicle than other OEMs (first products companies) who will largely go to the common provide foundation and like I simply call it, catalog engineering. So it is not incredibly adventurous,” Musk reported.

Ambrose Conroy, CEO of Seraph Consulting, reported: “They control what is actually likely on in that vehicle at a level that no other automaker wishes to do it. It is significantly additional aligned to the integration that Henry Ford had initially with the Product T.”


In 2020, quite a few automakers reduce chip orders as the pandemic and lockdown measures strike need. But Tesla in no way minimized its generation forecast with suppliers, considering that it predicted speedy growth, which aided it climate the chip lack, Tesla chief economic officer Zach Kirkhorn has stated.

“They have just been smarter about it than other corporations in phrases of earning confident there is certainly buffer stock,” a Tesla supplier government stated.

Tesla’s immediate ties with chip suppliers allowed it to transfer quicker than conventional automakers, which rely on 1st-tier suppliers who have associations with chipmakers, Kevin Anderson, Principal Consultant at Create-Tek, claimed.

(Reporting by Hyunjoo Jin Modifying by Peter Henderson and Richard Pullin)