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Tesla’s vertical integration and preparation were keys to avoiding chip shortage: Reuters
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, a company run like no other, avoided these chip shortages by using its vertical integration and preparation, along with some other strategic moves, to solidify its company’s position as the big winner of the uncertain 2020 and 2021 global automotive market.
After reporting that it had crushed Wall Street consensus expectations regarding Q4 2021 deliveries, Tesla shares skyrocketed over 13% yesterday. The unlikely, small-but-mighty car company now based out of 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 some cars, 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.
Momentum started when Tesla stated in its Q2 2021 Earnings Call that it had developed a series of 19 microcontrollers in-house that would help avoid the chip shortage. “Our team has demonstrated an unparalleled ability to react quickly and mitigate disruptions to manufacturing caused by semiconductor shortages,” the company wrote in its Shareholder Deck for Q2. “Our electrical and firmware engineering teams remain hard at work designing, developing, and validating 19 new variants of controllers in response to ongoing semiconductor shortages.”
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Tesla delivers record 241,300 cars in Q3, handily beating consensus estimates
This is just one part of Tesla’s vertical integration, which helps the company avoid the massive shipping bottlenecks that kept cars away from customers for the majority of 2021. Other companies were forced to delay production and deliveries; there just were not enough chips to go around. However, Tesla’s key advantage over other OEMs was the fact that many elements of its products are designed in-house, down to the most complex portions of a design. “We’re designing and building so much more of the car than other OEMs, who will largely go to the traditional supply base and like I call it, catalog engineering. So it is not very adventurous,” CEO Elon Musk said during the Q3 2020 Earnings Call.
Reuters spoke to a Tesla insider who is involved in the engineering of the company’s chips, which shed light on how effective the vertical integration advantage is. “We design circuit boards by ourselves, which allow us to modify their design quickly to accommodate alternative chips like powerchips,” the employee told Reuters.
The series of in-house chips, which were easily modified to accommodate other types of chips that Tesla was in need of, was not the only strategy the automaker used to avoid bottlenecks. Tesla also prepared by not halting the number of chips it had ordered from suppliers, a move that other car companies did not replicate. Instead, Tesla never reduced its production forecast because of the pandemic or supply chain shortages, which may have been its most crucial move. “They’ve just been smarter about it than other companies in terms of making sure there’s buffer stock,” a supplier executive for Tesla indicated.
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In a new interview on Wednesday, Tesla uber bull Ron Baron said that anyone looking to buy the company’s stock should do so as soon as they can.
Baron, founder and CEO of Baron Capital and one of Tesla’s most persistent institutional bulls, used a CNBC Squawk Box appearance on Wednesday to deliver a familiar message with fresh urgency: In his opinion, Tesla stock is a buy:
“The time to buy the stock is now. FSD is catching on, and it’s going to be bigger and bigger. 55% of new buyers are buying it (Teslas) with FSD. It’s going to be everywhere. It’s safer.”
The Baron Capital frontman’s case is built around Full Self-Driving. Tesla reported 1.48 million active FSD subscriptions in the second quarter, up 56 percent year over year, and company officials have said roughly 55 percent of new North American deliveries left with a subscription enabled.
Baron framed that attach rate as proof the product is moving from enthusiast extra to default expectation, and as a reason software, not just vehicle volume, should drive the next phase of value.
His conviction on Tesla shares is not theoretical, as Baron Capital made its first Tesla investment in 2014, after years of meetings that began around the 2010 IPO roadshow. The firm later built a large SpaceX position starting in 2017.
Ron Baron today in new interview on Tesla:
“The time to buy the stock is now. FSD is catching on, and it’s going to be bigger and bigger. 55% of new buyers are buying it (Teslas) with FSD. It’s going to be everywhere. It’s safer.” pic.twitter.com/Rv5PB0bVZ2
— Sawyer Merritt (@SawyerMerritt) September 16, 2026
Baron said those Musk-led bets have generated about $30 billion of the $71 billion in profits Baron Capital has produced for clients. He put the firm’s current exposure at roughly $25 billion in SpaceX and $5 billion in Tesla. Personally, he described SpaceX as his largest holding, at about $5 billion, with about $1.5 billion in Tesla and additional Tesla exposure through the firm’s funds.
That concentration is also a statement of loyalty. Asked about talk of a SpaceX-Tesla combination, Baron said he had already walked Elon Musk through arguments for and against a deal, then declined to repeat them on air. His public position was simpler: “Whatever you decide is better is what I’m going to support,” he said to Musk.
Baron also said that he picked up the farewell edition of the Model S after Tesla decided to sunset the vehicle earlier this year, calling it his favorite car he’s ever driven.
Elon Musk
SpaceX’s next Starship launch is about to attempt its biggest leap yet
SpaceX targets September 22 for Starship Flight 14, its first attempt to reach real orbit.
SpaceX has set September 22 as the target date for Starship’s 14th test flight, and this one carries a different goal than any of the 13 that came before it. Every previous Starship mission has intentionally flown a suborbital arc, reentering the atmosphere within the same hour it launched. Flight 14 is designed to send the craft into a genuine orbit around Earth for the first time.
The launch window opens at 7:15 a.m. Central time at Starbase in South Texas and runs for 75 minutes, pending regulatory approval, according to SpaceX’s mission description published Tuesday. If the flight goes as planned, Starship will circle the planet roughly six times at an altitude near 275 kilometers over about ten hours before a deorbit burn sends it toward a splashdown in the Pacific Ocean west of Chile, a departure from the Indian Ocean recoveries used on the last several flights.
The mission also marks the first attempt to put a working batch of Starlink V3 satellites into actual service. Flight 13 carried 20 of the new satellites in July, but because that mission never left a suborbital trajectory, the payload reentered along with the ship instead of separating into orbit.
SpaceX tells the FCC that Starship Flight 14 is going to orbit
Each V3 satellite is rated for roughly one terabit per second of downlink capacity, so a successful deployment on Flight 14 would be SpaceX’s largest single jump in network bandwidth since Starlink began flying on Falcon 9.
Flight 13 still did the heavier lifting on the technical side. That July mission flew a deliberately more stressful reentry profile to test Starship’s heat shield, and the ship survived its softest splashdown yet, intact enough for drone inspections shortly after landing. Elon Musk said the flight delivered “all the heat shield data we needed and then some,” a result Teslarati covered in detail when he later said SpaceX had solved the vehicle’s biggest reusability challenge. Flight 14 is where SpaceX starts spending that confidence on an actual orbital insertion rather than another controlled fall back to Earth.
One thing Flight 14 will not attempt is a tower catch of the ship. Musk floated the idea right after Flight 13, but walked the timeline back in August, saying a catch attempt was more likely “in a few months.” The Super Heavy booster will still aim for its own recovery, targeting an offshore landing point in the Gulf of America, the same approach used on recent flights.
September 22 is SpaceX’s own target, not a locked date. Starship’s schedule has slipped before over hardware readiness and FAA sign off, and the company has said as much in its own mission notes. But the plan itself represents the clearest marker yet that Starship is moving from a suborbital test program into something meant to carry paying payloads and, eventually, people.
Elon Musk
Elon Musk gives his most telling Tesla-SpaceX merger conversation yet
Elon Musk hinted a Tesla-SpaceX merger could be coming, and Wall Street is taking notice.
Elon Musk gave his clearest signal yet that Tesla and SpaceX could eventually combine, telling the All-In Summit in Los Angeles that the two companies’ deepening collaboration makes the question worth asking. Sawyer Merritt first surfaced the highlight on X Tuesday.
Asked directly why Tesla and SpaceX remain separate given how closely they already work together, Musk told hosts at the summit: “Great question there. With all this collaboration, on so many levels, who can imagine what action one might take when there’s so much close collaboration in so many areas.” SpaceX President Gwynne Shotwell, who joined Musk on stage, added that SpaceX personnel have already moved into xAI to fill leadership and engineering gaps, saying the businesses are integrating “faster than I thought,” though “not fully integrated yet,”
The comments landed on top of merger speculation that has been building on Wall Street for months. JPMorgan has called a tie-up “strategically coherent on paper,” pointing to overlapping ambitions in AI, robotics, energy, transportation and space. Jefferies went further, estimating Musk could retain roughly 55.3 percent voting control in a deal structured without a premium, a scenario that would still leave room for Tesla shareholders to come out ahead. On Kalshi, traders now put the odds of a merger before 2028 at 66 percent.
Tesla’s stake in SpaceX, still under one percent, traces back to its earlier investment in xAI, which converted to SpaceX equity after SpaceX absorbed the AI company. The two are also jointly building Terafab, a chip facility in Austin meant to serve both Tesla’s AI computing needs and SpaceX’s satellite ambitions. Wedbush analyst Dan Ives has stood by a 2027 merger timeline for months, and Cathie Wood’s ARK Invest recently floated a similar case, an idea Musk pushed back on directly at the time.
Another Tesla SpaceX merger prediction by ARK Invest has Elon Musk talking
The timing adds another layer. Tesla has scheduled an October 1 unveiling for its next generation Roadster at a venue near SpaceX’s McGregor, Texas test site, using the phrase “Go for launch” in its promotional material. Both stocks dipped roughly 2 percent Monday before recovering slightly in premarket trading Tuesday, with SpaceX shares up about 0.4 percent and Tesla essentially flat.
Musk stopped short of confirming anything is in motion. But unlike his past denials of a corporate restructuring, this response didn’t rule one out, and it came with Shotwell sitting next to him describing an integration that’s already underway.
Tesla uber bull Ron Baron says ‘the time to buy the stock is now’
SpaceX’s next Starship launch is about to attempt its biggest leap yet
