2021-09-20 Chip Shortage And Auto Makers

Rob Maurer’s Tesla Daily episode


About car makers in general, Rob said, “These companies want things to stay the same. They want to take the path of least resistance, and that is continuity. … Those results are visible now as these companies work through the chip shortage.”

Tesla is faced with the same logistics problems that other car companies are faced with: they need hundreds of thousands of subassembly modules supplied on a regular basis so they don’t have to maintain a huge inventory of the modules. The subassemblies have to meet specifications given in datasheets. These may include the requirements to meet government regulations. But the major requirement is cost. When they make a million vehicles, each with 2 dozen nearly identical subassemblies, and chip makers want to sell them newer chips that are better, faster, smaller – all of which the automakers *do not need*, and by the way the chips will cost fifty cents more, well there goes a dozen million dollars!!

If the modules have to meet government regulations, any module with new or major changes most likely has to go through recertification by an independent lab, which may cost hundreds of thousands of dollars.

Sure, Intel’s Gelsinger and other chip makers want automakers to advance to the latest technology and “bring automakers out of the stone age” of chips that were designed in the last century. But these chips are doing the same mundane tasks they have always done; there is no need whatsoever of using faster, better, newer chips. Just make them cheaper so the modules can be mass produced for low cost. And make them meet reliability requirements so a vehicle doesn’t die and cause an accident that could kill many people.

And I should also bring up software. The software could cause more problems if it must be rewritten and tested. And it could add more costs onto the module and cause more delays. So all the hiccups that have been caused by this chip shortage have added up to a lot of costs and delays for automakers and other manufacturers that are also dependent on these chips.

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