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Wednesday, 05 January 2022 10:55

Tesla’s Vertical Integration, Preparation Were Keys to Avoiding Chip Shortage: Reuters

Written by Joey Klender, Teslarati

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Tesla seemed to be made of Teflon in 2020 and 2021, as the company seemed to avert the semiconductor chip shortage with relative ease, while longstanding and prestigious automakers scaled back production due to the lack of supplies.

Tesla avoided these chip shortages by using its vertical integration and preparation, along with some other strategic moves, to solidify its position as the big winner of the uncertain 2020 and 2021 global automotive market.

 

After reporting it had crushed Wall Street consensus expectations regarding Q4 2021 deliveries, Tesla shares skyrocketed more than 13% on Jan. 3. The unlikely, small-but-mighty car company now based in Austin, Texas, after a more than a decade-long relationship with Northern California, which had its ups and downs, averted crisis over the past two years and continued its streak of manufacturing growth, by keeping itself stocked on the various chips and semiconductors that keep its vehicles moving.

 

Strategies like delivering some cars with missing parts, like USB ports or Bluetooth chips, or even axing lumbar support in others, helped make things easier to build. These strategies, along with various price raises to address higher part costs and expedited shipping measures, helped keep the balance sheet healthy.

 

Customers may have paid more for their cars than they would have in early 2021, but it did not affect sales figures like one might expect. Tesla beat Wall Street estimates by 16% when it released delivery figures for the final quarter of 2021.

 

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