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Kallanish Kallanish

Knowledge matters Knowledge matters

September, 17th 2021

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JUL 27

Semiconductor shortage now biggest EV limiting factor: Musk


The global semiconductor shortage is becoming perhaps the most serious limiting factor to the production of electric vehicles, says Tesla frontman Elon Musk in the company’s second quarter earnings review. 

“I think almost everyone agrees that electric vehicles are the only way forward,” he says. “Regarding supply chain, while we're making cars at full speed, the global chip shortage situation remains quite serious. For the rest of this year, our growth rate will be determined by the slowest part in our supply chain which is...a wide range of chips that are at various times the slowest part in the supply chain.”

Musk notes that prototypes are easy; production is hard. 

“I mean, it's worth noting that if we had everything else, if we had vast numbers of vehicles themselves, we would not yet be able to make them,” he says. “The chip supply is fundamentally becoming a factor on our output. It is difficult for us to say how long this will last...this is out of our control, essentially. It does seem like it's getting better, but it's hard to predict.”

Ultimately, achieving volume production - 201,250 vehicles in Q2 - is the make-or-break point for any auto company, and Tesla appears to have passed the threshold, Kallanish understands from Musk's statements.

“It's always worth noting, that of all the American car companies, there are only two that have not gone bankrupt, and that is Ford and Tesla,” he says. “The seeds of defeat are sown on the day of victory. And we must be careful that we do not do that.”

Dan Hilliard USA