World

Why Tesla Soars While Other Automakers Struggling to Make Cars


For much of last year, established automakers like General Motors and Ford Motor operated in a different reality than Tesla, which makes electric cars.

GM and Ford closed plant after plant – sometimes for months on end – because lack of computer chips, leaving many dealerships empty and car prices skyrocketing. However, Tesla got ahead record sales quarter after quarter and ended the year with nearly twice as many vehicles sold as in 2020, unencumbered by the industry-wide crisis.

Tesla’s ability to incorporate key components means more than a year’s car sales. It shows that the company, and possibly other fledgling electric-car businesses, can threaten the dominance of giants like Volkswagen and GM earlier and more aggressively than most automakers do. Executives and policymakers in the industry realize. That will help efforts to reduce emissions that cause climate change by replacing more gasoline-powered cars sooner. But it could hurt millions of workers, thousands of suppliers and many local and national governments that depend on traditional auto production for jobs, businesses and taxes.

Tesla and its enigmatic chief executive, Elon Musk, have said little about how the automaker circles the rest of the auto industry. Now, it’s clear that the company simply has superior command over its own technology and supply chain. Tesla seems to forecast demand better than businesses that make more cars than it does. Other automakers have been amazed at how quickly the car market has recovered from the sharp drop earlier in the pandemic, and they simply didn’t order enough chips and parts fast enough.

When Tesla couldn’t get the chips it trusted, Tesla took the ones that were available and rewrote the software that ran them to suit its needs. The larger auto companies can’t do that because they depend on outside vendors for their software and computer expertise. In many cases, automakers also rely on these suppliers to deal with chipmakers. When the crisis hit, the automakers didn’t have the power to negotiate.

Just a few years ago, analysts saw Mr. Musk’s insistence that Tesla do more work on its own as one of the main reasons the company was having trouble ramping up production. Now, his strategy seems to have been vindicated.

Cars are becoming increasingly digital, defined by their software as much as engines and transmissions. It’s a fact that a number of used car companies increasingly acknowledge. Many, including Ford and Mercedes-Benz, have said in recent months that they are hiring engineers and programmers to design their own chips and write their own software.

“Tesla, born in Silicon Valley, has never outsourced their software — they write their code,” said Morris Cohen, professor emeritus at the Wharton School of the University of Pennsylvania, who specializes in manufacturing and logistics. only me. “They have rewritten the software so that they can replace the missing chip with the non-missing chip. Other automakers have not been able to do that.”

“Tesla was in control of her destiny,” added Professor Cohen.

Tesla sold 936,000 cars globally in 2021, up 87% from the same period last year. Ford, GM and Stellantis, the company formed from the merger of Fiat Chrysler and Peugeot, both sold fewer cars in 2021 than they did in 2020.

Measured by global deliveries, Tesla has already surpassed Volvo and Subaru in 2021, and some analysts predict that it could sell two million vehicles this year, as plants in Berlin and Austin, Texas, opened and a factory in Shanghai ramped up production. That would put Tesla in the same league as BMW and Mercedes – something few in the industry thought possible just a few years ago.

GM and Ford, of course, sell more cars and trucks. Last week, both companies said they sold about two million vehicles last year in the United States alone.

Tesla, which rarely responds to questions from reporters, did not respond to requests for comment for this article. It has said little publicly about how it managed to soar in a bear market.

“We used replacement parts and programmed software to mitigate the challenges posed by this shortage,” the company said in its third-quarter earnings report.

Performance is a significant change from 2018, when Tesla production and supply issues making it the laughing stock of the industry. Many manufacturing defects stem from Mr. Musk’s insistence that the company manufacture many of the parts itself.

Other auto companies have realized they need to do some of the things Musk and Tesla have been doing and are in the process of taking control of their onboard computer systems.

For example, Mercedes plans to use fewer specialized chips in upcoming models and more standardized semiconductors, and to write its own software, said Markus Schäfer, a member of the company’s board of directors. German car manufacturer, who oversees the procurement, said.

Going forward, Mercedes will “make sure we have standardized, custom chips in our cars,” Schäfer said in an interview on Wednesday. “Not a thousand different chips.”

He said Mercedes will also design its own vehicle hardware. Without mentioning Tesla, Mr. Schäfer added, “It’s possible that someone else has gone down this route before.”

Doing more on its own also helps explain why Tesla avoided the battery shortage that has limited companies like Ford and GM from selling many electric cars. In 2014, when most automakers were still debating whether electric cars were ever worth it, Tesla broke ground on what it called a gigafactory outside of Reno, Nev., for production. battery with its partner, Panasonic. Now, that factory helps ensure a reliable supply.

“It was a big risk,” said Ryan Melsert, a former Tesla executive who helped build the Nevada factory. “But because they made the decision early on to bring furniture into the house, they have more control over their own destiny.”

As Professor Cohen at Wharton has pointed out, Tesla’s approach is in many ways the reverse of the early days of the auto industry, when Ford owned its own steel mills and rubber plantations. In recent decades, conventional automotive wisdom has suggested that manufacturers should focus on final design and assembly and leave the rest to suppliers. That strategy has saved big companies money tied up in factories, but left them vulnerable to supply chain chaos.

It also helps that Tesla is a much smaller company than Volkswagen and Toyota, which in a good year each produce more than 10 million vehicles. “It’s just a smaller supply chain to start with,” said Mr. Melsert, now chief executive officer of American Battery Technology Company, a recycling and mining company.

The Tesla lineup is also more modest and easier to deliver. The Model 3 sedan and Model Y sport utility vehicle make up nearly all of the company’s sales in 2021. Tesla also offers fewer options than many traditional automakers, which simplifies the process. production process.

“It’s a more sensible approach,” said Phil Amsrud, senior principal analyst specializing in automotive semiconductors at research firm IHS Markit. “They’re not trying to manage all these different configurations.”

Tesla software, which can be updated remotely, is considered the most complex software in the auto business. Even so, the company’s cars could use fewer chips, analysts say, because the company controls functions like battery cooling and autonomous driving from a smaller number of centralized computers. center on the board.

“Tesla has fewer boxes,” Mr. Amsrud said. “The fewer ingredients you need right now, the better.”

Of course, Tesla may still have problems trying to replicate the growth it achieved in 2021 – it is aiming to increase sales by about 50% annually over the next few years. The company admitted in its third-quarter report that its creative work around supply chain chaos may not have worked because it had increased production and needed more chips and other parts.

The electric vehicle market is also becoming much more competitive as traditional automakers belatedly respond to the models people want to buy rather than the small electric vehicles typically built to appease the muscles. management agency. Last week, Ford said it would nearly double production of Lightning, the electric version of its popular F-150 pickup truck, because of strong demand. Tesla’s pickup trucks won’t go on sale for at least another year.

The outlook for traditional automakers is likely to improve this year as shortages of semiconductors and other components ease, and as manufacturers become better able to cope.

Tesla cars still have quality problems. The company told regulators in December that it has a plan recall more than 475,000 cars for two separate faults. One can cause the rearview camera to fail, and the other can cause the front hood to open unexpectedly. And federal regulators are investigating the safety of Tesla’s Autopilot system, which can accelerate, brake and steer a car on its own.

“Tesla will continue to grow,” said Stephen Beck, managing partner at cg42, a management consulting firm in New York. “But they are facing more competition than ever before, and the competition is getting stronger.”

However, the automaker’s fundamental advantage, which has allowed it to weather the chip crisis, will remain. Tesla produces nothing but electric cars and is unencumbered by habits and processes obsoleted by new technology. “Tesla starts with a clean sheet of paper,” Mr. Amsrud said.



Source link

news7d

News 7D: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button