First up, from SupplyChainDive, July 28:
Tesla works with suppliers to source alternative chips amid semiconductor shortage
Dive Brief:
- Tesla worked to mitigate the semiconductor shortage's effects on its vehicle production by substituting in alternative chips and writing new firmware, CEO Elon Musk said on the company's earnings call Monday.
- Tesla held many calls with its suppliers to resolve shortages and find new chips, Musk said, but the company still had to make difficult production decisions due to the limited supply. Tesla prioritized car production over production of the Powerwall, a home battery that stores solar energy, during the quarter.
- "It was an incredibly intense effort of finding new chips, writing new firmware, integrating with the vehicle and testing in order to maintain production," Musk said, adding that writing the firmware took weeks to accomplish.
Dive Insight:
Tesla's growth for the remainder of the year "will be determined by the slowest part in our supply chain," Musk said. For Tesla and other automakers, that's finding enough semiconductors to meet production needs. Tesla is taking matters into its own hands by swapping in substitute chips....
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And from the Institute for Energy Research, August 4:
Chip Shortage May Extend into 2023, But Not for China’s Electric Vehicles
The worldwide chip shortage is not expected to go away soon. It could take one or two years to get back to a reasonable supply-and-demand balance in the semiconductor industry, according to Intel. Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, however, recently indicated that the chip shortage that has hampered car makers could start to ease in the next few months after it ramped up its production of auto chips. While TSMC and Intel are adding new chip-production plants, some of that capacity will not be ready for two more years. The long and complex manufacturing process of semiconductors makes new capacity-building capital-intensive and time-consuming.
While gas and diesel automakers are struggling due to the chip shortage, Chinese assemblers of electric vehicles, like NIO, Xpeng and Li Auto have secured enough chips to keep their production lines going for the foreseeable future. Electric car manufacturers have done better during the chip shortage because of their smaller production volumes and reliance on higher-end chips like artificial intelligence (AI) processors, used for complex data processing tasks that can cost $100 apiece. Chipsets with AI processors support intelligent driving technology including cruise control, level 4 autonomous driving, and self-parking. Also, China’s carmakers, even those that assemble internal combustion engine vehicles, have larger stockpiles of chips. Ford, which makes Focus, Mondeo and the Territory EV in China, indicated its five factories are unaffected by the shortage.....
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