- Elon Musk, CEO of Tesla compared chip shortages to the frenzy of buying toilet paper in 2020.
- He said supply problems have caused companies to “overorder” semiconductor chips.
- Tesla has been in discussions to get the chips filled in bulk ahead of time.
- See more stories on the Insider activity page.
Elon Musk, CEO of Tesla, said the biggest problem the electric car maker has to deal with is ongoing supply chain problems.
“I’ve never seen anything like it” Musk tweeted in March. “Fear of failure [of computer chips] makes every company exceed – like the
lack, but on an epic scale. ”
—Elon Musk (@elonmusk) June 2, 2021
Last year, at the beginning of the pandemic, many buyers rushed to bring toilet paper from fear of lack of supply chain. The buying frenzy has left behind empty shelves, making valuable products like toilet paper and Clorox cloths precious. goods sold on the secondary markets for record prices.
Similarly, in recent months automakers have been quick to stick to computer chips that count about 40% of the cost of a new car. Lack of chip led to a lack of new cars and record sales prices of used cars, as well as rising raw material costs.
Tesla has not been exempt from the buying fury. Last week, the Financial Times said that one Musk’s company was in talks to pay for the chips in advance placing deposits on large orders of increasingly scarce commodities. Tesla is also in the preliminary stage of looking at a potential plant acquisition which would allow the carmaker to create its own computer chips.
The global shortage of computer chips has been driven by the closures of COVID-19 plants, as well. port delays and the shortage of global shipping continents. Last month, consulting firm AlixPartners estimated automakers will lose about $ 110 billion this year due to the shortage.
Many vehicle manufacturers have been forced to shut down manufacturing plants and give priority to the most profitable car models they produce because of the shortage. Some have started sale of cars without navigation and collision detection systems – items that require chips – to achieve manufacturing goals. Tesla has avoided the elimination of high-tech features and has also has continued to add more automated elements to its vehicles, despite its reliance on fries, but society has not been immune to the impact of the shortage.
Last month, during the company’s earnings call Musk said supply chain problems have caused “insane difficulties.” for the electric car manufacturer and the scarcity of chips had influenced Tesla’s manufacturing goals.
Supply chain problems have forced Tesla to raise prices. Musk replied on Monday complained about rising car prices on Twitter and cited raw material inflation costs and supply chain pressure.
—Elon Musk (@elonmusk) May 31, 2021
Tesla was also forced to delay the release of many of their vehicles due to chip shortages, including its Plaid Model S which is due out later this month. In February, Tesla briefly stopped production of its Model 3 at its car assembly plant in California, citing supply chain problems.