Tesla Is Taking Careful Steps To Combat Chip Shortages

Tesla has probably been well aware of the chip shortage for some time. The supply chain is breaking down, so It also may serve Tesla well to make sure they have enough steel since prices of steel have tripled. The rising gas prices could help Tesla but they will only have a significant impact if prices start hitting $4 or $5 per gallon.

Tesla looking at purchasing a plant

There have been some indications that Tesla is looking to purchase a plant to make their own chips. It was said that Tesla might have a hard time buying a plant due to costs. Not much more detail has been given on why Tesla is looking to buy a plant to make chips. Tesla is already devoted to making many the parts on their cars themselves. Chips could be another thing checked off on that list.

Some also believe that Tesla shouldn’t run their own plant. This is similar to the idea that Tesla should stop making their own chargers. A plant would cost Tesla 20 billion dollars. This is a lot of money even for someone like Elon Musk.

Different entities are fighting over chips

Due to the limited supply of chips, big companies have been scrambling to get what they need. This has lead to a debate over whether a company should be able to swoop in and stockpile a massive percentage of the chips made. This is only able to be done because the companies will put up huge payments up front which will guarantee that they get a certain percentage of capacity. Some semiconductor design houses reportedly struck a deal with the United Microelectronics corporation to give out a bigger slice of what was produced. These semiconductor makers have to keep all their customers satisfied though. Excluding certain customers in this industry can cause backlash and a reduction in profits in the long run.

The chip industry is highly specialized

The most advanced chips tend to come out of Taiwan. This has of course led to shortages. More companies should try to take up the mantle of making high quality chips for Tesla and other entities. Tesla would benefit greatly if they built their own foundry, but the immense costs would likely outweigh the benefits.

More carmakers are now in the mix

The number of electric cars sold globally increases with each passing year. Other carmakers want a seat at the table so they can get their own chips. This is only going to exacerbate the shortage. This is why it was smart for Tesla to get out ahead of this. However, Tesla or any other corporation can’t completely escape the chip shortages and the shortages of the broader supply chain.

Image: Tesla

Daniel Cappo reports Tesla developments at Torque News. He has had a passion for cars ever since age five when his grandparents let him drive their old golf cart around their property in Upstate NY. He has attended numerous auto shows, and even got the chance to drive a Ferrari California on the track. Ever since Tesla opened up a dealership at his local mall, he's been an avid follower of their cars and technology. Dan has a B.S. in Public Communication from U Vermont. Follow Daniel on Twitter and LinkedIn for daily Tesla News.