News

Tesla’s vertical integration and preparation were keys to avoiding chip shortage: Reuters

A Tesla employee at the company's facility in Fremont, California. (Credit: YouTube/RoadShow)

Published

3 years ago

January 4, 2022

Joey Klender

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.

I’d love to hear from you! If you have any comments, concerns, or questions, please email me at joey@teslarati.com. You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.

News

Tesla UK sales see 14% year-over-year rebound in June: SMMT data

The SMMT stated that Tesla sales grew 14% year-over-year to 7,719 units in June 2025.

Published

9 hours ago

July 4, 2025

Simon Alvarez

Credit: Tesla

Tesla’s sales in the United Kingdom rose in June, climbing 14% year-over-year to 7,719 units, as per data from the Society of Motor Manufacturers and Traders (SMMT). The spike in the company’s sales coincided with the first deliveries of the updated Model Y last month.

Model Y deliveries support Tesla’s UK recovery

Tesla’s June performance marked one of its strongest months in the UK so far this year, with new Model Y deliveries contributing significantly to the company’s momentum.

While the SMMT listed Tesla with 7,719 deliveries in June, independent data from New AutoMotive suggested that the electric vehicle maker registered 7,891 units during the month instead. However, year-to-date figures for Tesla remain 2% down compared to 2024, as per a report from Reuters.

While Tesla made a strong showing in June, rivals are also growing. Chinese automaker BYD saw UK sales rise nearly fourfold to 2,498 units, while Ford posted the highest EV growth among major automakers, with a more than fourfold increase in the first half of 2025.

Overall, the UK’s battery electric vehicle (BEV) demand surged 39% to to 47,354 units last month, helping push total new car sales in the UK to 191,316 units, up 6.7% from the same period in 2024.

EV adoption accelerates, but concerns linger

June marked the best month for UK car sales since 2019, though the SMMT cautioned that growth in the electric vehicle sector remains heavily dependent on discounting and support programs. Still, one in four new vehicle buyers in June chose a battery electric vehicle.

SMMT Chief Executive Mike Hawes noted that despite strong BEV demand, sales levels are still below regulatory targets. “Further growth in sales, and the sector will rely on increased and improved charging facilities to boost mainstream electric vehicle adoption,” Hawes stated.

Also taking effect this week was a new US-UK trade deal, which lowers tariffs on UK car exports to the United States from 27.5% to 10%. The agreement could benefit UK-based EV producers aiming to expand across the country.

News

Tesla Model 3 ranks as the safest new car in Europe for 2025, per Euro NCAP tests

Despite being on the market longer than many of its rivals, the Tesla Model 3 continues to set the bar for vehicle safety.

Published

14 hours ago

July 4, 2025

Simon Alvarez

Credit: Tesla Asia/X

The Tesla Model 3 has been named the safest new car on sale in 2025, according to the latest results from the Euro NCAP. Among 20 newly tested vehicles, the Model 3 emerged at the top of the list, scoring an impressive 359 out of 400 possible points across all major safety categories.

Tesla Model 3’s safety systems

Despite being on the market longer than many of its rivals, the Tesla Model 3 continues to set the bar for vehicle safety. Under Euro NCAP’s stricter 2025 testing protocols, the electric sedan earned 90% for adult occupant protection, 93% for child occupant protection, 89% for pedestrian protection, and 87% for its Safety Assist systems.

The updated Model 3 received particular praise for its advanced driver assistance features, including Tesla’s autonomous emergency braking (AEB) system, which performed well across various test scenarios. Its Intelligent Speed Assistance and child presence detection system were cited as noteworthy features as well, as per a WhatCar report.

Other notable safety features include the Model 3’s pedestrian-friendly pop-up hood and robust crash protection for both front and side collisions. Euro NCAP also highlighted the Model 3’s ability to detect vulnerable road users during complex maneuvers, such as turning across oncoming traffic.

If you love them, put them in a Tesla pic.twitter.com/4AKZOEBB8j— Tesla Europe & Middle East (@teslaeurope) July 3, 2025

Euro NCAP’s Autopilot caution

While the Model 3’s safety scores were impressive across the board, Euro NCAP did raise concerns about driver expectations of Tesla’s Autopilot system. The organization warned that some owners may overestimate the system’s capabilities, potentially leading to misuse or inattention behind the wheel. Even so, the Model 3 remained the highest-scoring vehicle tested under Euro NCAP’s updated criteria this year.

The Euro NCAP’s concerns are also quite interesting because Tesla’s Full Self-Driving (FSD) Supervised, which is arguably the company’s most robust safety suite, is not allowed for public rollout in Europe yet. FSD Supervised would allow the Model 3 to navigate inner city streets with only minimal human supervision.

Other top scorers included the Volkswagen ID.7, Polestar 3, and Geely EX5, but none matched the Model 3’s total score or consistency across categories. A total of 14 out of 20 newly tested cars earned five stars, while several models, including the Kia EV3, MG ZS, and Renault 5, fell short of the top rating.

Elon Musk

Why Tesla’s Q3 could be one of its biggest quarters in history

Tesla could stand to benefit from the removal of the $7,500 EV tax credit at the end of Q3.

Published

1 day ago

July 3, 2025

Joey Klender

(Credit: Tesla)

Tesla has gotten off to a slow start in 2025, as the first half of the year has not been one to remember from a delivery perspective.

However, Q3 could end up being one of the best the company has had in history, with the United States potentially being a major contributor to what might reverse a slow start to the year.

Earlier today, the United States’ House of Representatives officially passed President Trump’s “Big Beautiful Bill,” after it made its way through the Senate earlier this week. The bill will head to President Trump, as he looks to sign it before his July 4 deadline.

The Bill will effectively bring closure to the $7,500 EV tax credit, which will end on September 30, 2025. This means, over the next three months in the United States, those who are looking to buy an EV will have their last chance to take advantage of the credit. EVs will then be, for most people, $7,500 more expensive, in essence.

The tax credit is available to any single filer who makes under $150,000 per year, $225,000 a year to a head of household, and $300,000 to couples filing jointly.

Ending the tax credit was expected with the Trump administration, as his policies have leaned significantly toward reliance on fossil fuels, ending what he calls an “EV mandate.” He has used this phrase several times in disagreements with Tesla CEO Elon Musk.

Nevertheless, those who have been on the fence about buying a Tesla, or any EV, for that matter, will have some decisions to make in the next three months. While all companies will stand to benefit from this time crunch, Tesla could be the true winner because of its sheer volume.

If things are done correctly, meaning if Tesla can also offer incentives like 0% APR, special pricing on leasing or financing, or other advantages (like free Red, White, and Blue for a short period of time in celebration of Independence Day), it could see some real volume in sales this quarter.

You can now buy a Tesla in Red, White, and Blue for free until July 14 https://t.co/iAwhaRFOH0

— TESLARATI (@Teslarati) July 3, 2025

Tesla is just a shade under 721,000 deliveries for the year, so it’s on pace for roughly 1.4 million for 2025. This would be a decrease from the 1.8 million cars it delivered in each of the last two years. Traditionally, the second half of the year has produced Tesla’s strongest quarters. Its top three quarters in terms of deliveries are Q4 2024 with 495,570 vehicles, Q4 2023 with 484,507 vehicles, and Q3 2024 with 462,890 vehicles.