Elon Musk: Tesla’s biggest challenge is supply chain, but it’s not a long-term issue

Tesla CEO Elon Musk reported that his firm ’s biggest problem in the short word is supply chain, particularly when it comes to microcontroller chips.

“Our main barrier would be supply chain, particularly microcontroller chips. Never seen anything like it,” ” Musk said in a Tweet during the early morning hours Wednesday. “Fear of exercising is causing every company to overorder. ”

Our main obstacle would be supply chain, particularly microcontroller chips. Never seen anything like this.

Fear of exercising is causing each company to overorder — like the toilet paper deficit, but at epic scale.

Having said that , it’s obv not a long term issue.

— Elon Musk (@elonmusk) June 2, 2021

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For many years, the automotive industry has been confronted with a lack of semiconductors and microcontroller chips. These chips help control the “brain” of a vehicle and may operate everything from fuel injection systems in combustion engine automobiles to infotainment systems in electrical automobiles. This season, there’s been a major deficit because of overbuying by large automotive manufacturers, a situation that has been caused by tensions between the United States and China. China is a worldwide powerhouse in semiconductor chip manufacturing, and firms have panic bought large quantities of those chips to compensate for the potential for exercising.

Many automakers have shut down production lines in various areas globally because of not having enough semiconductors or microcontrollers to handle regular production prices.

Musk compared the problem to this toilet paper deficit that happened annually during the COVID-19 pandemic. Consumers fear bought toilet tissue as a result of fear of being quarantined for an protracted time period. This ultimately caused a huge deficit, and huge retailers were forced to limit the quantity which could be purchased per family to remain stocked.

Despite the short-term problems this has generated Tesla and many other large car companies in the world, Musk considers that it won’t affect his automobile company down the road. “It’s obv[iously] not a long term dilemma,” that the CEO added.

Tesla managed to avoid a number of the semiconductor shortages by withdrawing from the technology altogether. From the firm ’s Q1 2021 Update Letter, Tesla outlined how it navigated through supply chain shortages by utilizing microcontrollers instead.

The company wrote:

” In Q1, we were able to navigate through global chip supply deficit issues in part by pivoting extremely quickly to fresh microcontrollers, while concurrently developing firmware for new chips produced by new providers. ”

Tesla has been able to distance itself in manufacturing halts at its own factories, aside from a rumored two-week hiatus in Model Y manufacturing lines at Giga Shanghai in China. Rather, Tesla has invented its own goods and continued to work on releasing the new Model S and Model X vehicles that the company redesigned and published in January. Deliveries on the new Model S will be expected to begin on June 10th having a dedicated Shipping event at Tesla’s Fremont Factory in Northern California.

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