Tuesday, January 31, 2023
News Tesla Had a Record Breaking Q3, Despite Industry-Wide Chip Shortages

Tesla Had a Record Breaking Q3, Despite Industry-Wide Chip Shortages

Tesla is less affected by supply problems because it produces most of what it needs

  • Tesla sold 241,300 vehicles in Q3 2021, its best quarter ever

  • The company makes most of the electronic chips it needs

  • Suppliers want to keep Tesla as a customer, so they prioritise it over other companies

In the midst of an industry-wide shortage of components such as electronic chips and semi-conductors that slows down every manufacturer and will probably make General Motors lose its sales leadership in the United States, Tesla broke its production record.

How did the company manage that? It produced most of the components it needs in-house.

Tesla is one of the most vertically integrated automakers in the world, meaning it produces its own components instead of buying them from the company that can provide them for the smallest sum, as is the case for other companies.

One of the components Tesla produces is computer chips, since its cars require some that are not available from suppliers in order to offer exclusive tech features.

Integrating the supply chain requires a lot of investment up-front, but it can end-up costing less than to rely on outsiders, as well as guaranteeing a constant and predictable production.

Tesla’s new factory in Germany is even supposed to produce all the parts it needs in-house, without the assistance of third-party businesses.

Despite this, Tesla is still reliant on suppliers for many parts of its vehicles, and these companies don’t want to lose Tesla as a customer since it is constantly expanding and it requires more and more parts.

This desire for a continuing partnership with the automaker means these companies prioritise Tesla over their other clients because if they don’t deliver the number of parts it needs, at the moment it needs them, Tesla could likely just build their own and abandon the supplier.

This is why Tesla was able to surpass its sales record at a time where every other automaker is struggling.

 

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