Musk says Tesla faces 'extreme supply chain limitations'

The EV maker, which delivered 201,250 vehicles in the second quarter, said the supply constraints will affect the rate of delivery growth

Elon Musk, co-founder and chief executive of electric vehicle maker Tesla, earned about $6.7 billion last year. AFP

Tesla's billionaire chief executive Elon Musk said the electric vehicle maker faces severe supply chain constraints and the “most problematic” is to source components from Japan’s Renesas and Germany’s Robert Bosch.

“As publicly disclosed, we are operating under extreme supply chain limitations regarding certain 'standard' automotive chips. Most problematic by far are Renesas & Bosch,” Mr Musk, who is also the co-founder of the company, said on Twitter.

Renesas Naka factory, which produces automotive chips for global companies, was temporarily shut down after a March 19 fire incident that delayed the supply for several months.

Last month, the company, based in Tokyo, warned of tight chip supply throughout mid-next year when it announced its earnings results.

The Renesas fire, along with the widespread power cuts in Texas in February that forced many chip factories in Austin to shut down, exacerbated the global chip shortage.

Global chip scarcity will dent automotive production by about 3.9 million units this year, costing manufacturers nearly $110 billion in revenue, according to the US consultancy AlixPartners.

In its earning call last month, Tesla, which delivered a record 201,250 vehicles in the second quarter of the year, said continued supply constraints will have a “strong influence on the rate of delivery growth” for the rest of this year.

To accelerate its production capacity to meet rising demand, the technology and parts supplier Bosch opened a $1.2bn chip factory in Dresden in June. The plant is the single largest investment in the company’s history and will mainly supply components to automotive customers.

Mr Musk, who earned $6.7bn last year, also commented on the company’s local and export strategy from its plant in China.

“Tesla makes cars for export in first half of quarter and for local market in second half,” Mr Musk said on Twitter.

He was responding to a tweet that said “Tesla seems to understand that China would like local champions to dominate EV sales inside the country but is pleased that Tesla is exporting from China high-quality/high-end EVs, especially to Europeans whose standards for fit-finish-design are quite high”.

The company’s wholesale figures for its made-in-China vehicles stood at 32,968 last month (start of the July-September quarter), out of which 24,347 units – or more than 73 per cent – were exported (majority to Europe), according to the figures released by Chinese Passenger Car Association.

A Tesla model X at Auto Shanghai 2019 motor show. EPA

In June, Tesla sold 33,155 vehicles, and only 5,017 were exported abroad.

The company's second-quarter net profit surged more than 98 per cent to $1.1bn, almost $1bn more than the same period last year.