More On Tesla's Startup Ethos & How It Can Avoid Chip Shortage

Can Tesla avoid the worst of the global chip shortage?

By: EVANNEX

May 11, 2021 at 9:51am ET

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Posted on EVANNEX on May 11, 2021 by Charles Morris

Even if you clicked on the headline because you thought we were talking about the kind of chips that are served with salsa, you may want to read on anyway, because semiconductor chips are in almost everything these days (no, they are not found in COVID vaccines).

Above: The view from inside a Tesla (Twitter: Tesla Greater China)

Thank you, ladies and gentlemen—try the veal! However, we assure you, auto industry execs are not laughing about the global semiconductor shortage. GM, Ford, Nissan, Toyota, Volkswagen, Subaru, Fiat Chrysler, Renault, Stellantis—they have all had to temporarily shut down production lines, and the delays will end up costing them (and car buyers) heavily. In February, Electrek explained why the semiconductor shortage is such a big deal.

Tesla was also affected, but only had to close its Fremont factory for a few days—a short shutdown compared to those that have plagued some other automakers.

During Tesla’s recent Q1 earnings call, Elon Musk acknowledged the company’s logistics lapses and compared them to the sort of shortages suffered during World War Two. “This quarter—and I think we’ll continue to see that a little bit in Q2 and Q3—had some of the most difficult supply chain challenges that we’ve ever experienced in the life of Tesla...over the whole range of parts. Obviously, people have heard about the chip shortage.”

However, Tesla did not passively accept the production interruption—the company quickly devised workarounds in order to minimize the damage. “In Q1, we were able to navigate through global chip supply shortage issues in part by pivoting extremely quickly to new microcontrollers, while simultaneously developing firmware for new chips made by new suppliers.”

We’ll probably never know the details of the changes Tesla made, but this certainly sounds like the sort of on-the-fly recalibration that startups are known for, and that giant companies with layers of bureaucracy (read: legacy automakers) are constitutionally unable to pull off. Over the years, several execs who came to Tesla from older and larger firms have expressed amazement at the California carmaker’s ability to implement in a matter of days changes that would have taken their former employers months of meetings and reams of reports to accomplish.

Tesla is no longer a small and scrappy startup, but its startup mentality is deeply woven into its corporate culture, as many current and former employees have noted. This way of thinking should serve the company well in the turbulent years to come—the EV business is rapidly evolving, from both the technical and business standpoints, and the ability to quickly respond to changing trends will be critical for success.

The current crisis is not over. As Electrek reports, Intel CEO Pat Gelsinger recently predicted that it may take “a couple of years” for the global supply of chips to catch up to the accelerating demand. If this proves to be true, Tesla’s nimble startup-style ethos could soon prove to be a major competitive advantage.