Biden Admin Willing To Get Help From Tesla On Auto Chip Shortage

President Biden is ready to “say Tesla” on the condition that Tesla helps to solve the semiconductor supply chain crisis. More specifically, President Biden wants to know how Tesla did so well while the so-called EV leaders as well as other automakers and manufacturers have been struggling. This sounds like one of those fake “I’ll only be your friend if you give me candy” things that kids used to say to me when I was in elementary school.

The Biden administration is ready to consult with both Tesla and Elon Musk for help with resolving the semiconductor shortage. Secretary of Commerce Gina Raimondo said on CNBC that she was ready to consult with Elon Musk on how to improve the semiconductor supply chain shortage that is having such a negative effect on the auto industry (hat tip Tesmanian and Bloomberg). Despite that, the President of the USA’s tongue still seems to be held hostage by the United Auto Workers (UAW), since the government still hasn’t publicly acknowledged Tesla’s leadership in EV markets.

In the interview with CNBC, Raimondo shared thoughts about the Biden administration and Tesla along with its reason for not acknowledging Tesla’s leadership. “None of this is personal. These issues are way too important for anyone to have, you know, feelings hurt. Like — let’s just do the work. And as I said, anyone who has good ideas or is willing to help us, absolutely we want the help.”

She added that Tesla dealt with the chip shortage better than the traditional Detroit automakers that are still “learning quickly.” She pointed out that Tesla is also a tech company and then tried to downplay President Biden snubbing Tesla, claiming that she was unaware of any administration policy that wouldn’t allow her to seek advice from Tesla.

Tesla Already Has Shared How It Is Surviving The Chip Shortage

The idea that the chip shortage isn’t affecting Tesla at all is not accurate. During the latest Tesla earnings call (and previously), Elon Musk shared how Tesla was able to get through the worst. In Tesla’s Q1 2021 earnings call, Elon Musk said:

“So Q1 was — had some of the most difficult supply chain challenges that we’ve ever experienced in the life of Tesla and some difficulties with supply chain, with parts — over the whole range of parts. Obviously, people have heard about the chip shortage. This is a huge problem. But then in addition to that, for example, we had quite a difficulty scaling, driving our production in China, because we’re unable to get critical engineers there because of COVID quarantine restrictions. So — which meant that Tesla worldwide was dependent on drive units made at our factory in Nevada, Giga Nevada. So that was a very challenging situation.

“The team has really done an incredible job of dealing with really severe supply chain shortages.”

He further added:

“As we continue to work through the instability of the global supply chain, particularly around semiconductors and port capacities, while the Tesla team in partnership with our suppliers did tremendous work keeping our factories running, we did experience high expedite costs in the quarter, and they were also higher than they were in [Q3], with some minor interruptions to production over the course of the quarter. We believe that this landscape is improving, but it does remain difficult, and it’s an evolving situation.”

Although that last paragraph was more about the financial goals and aspects, he pointed out that Tesla was able to work through the instability of the issue while partnering with suppliers. Despite these challenges, Tesla did exceptionally well for the first quarter — and we know now it wasn’t just the first quarter. Last year was a phenomenal year for Tesla.

In Tesla’s shareholder letter for the Q1 2021 earnings call, Tesla wrote:

“In Q1, we were able to navigate through global chip supply shortage issues in part by pivoting extremely quickly to new microcontrollers, while simultaneously developing firmware for new chips made by new suppliers.”

Last month, Automotive News published an article titled, “How Tesla weathered global supply chain issues that knocked rivals.”

The article addressed how Tesla was able to survive the shortage while other automakers struggled. These included:

  • Allowing customers to take delivery of vehicles with missing parts such as Bluetooth chips and USB ports.
  • Removing radar and lumbar support from the front passenger seats.
  • Increasing vehicle prices to address the higher costs.
    • These included “expedite costs” for parts.
  • Substituting alternative chips for some that were in short supply.

The article also noted that Tesla designs more hardware and writes more software than other automakers, and reminded readers of Elon Musk’s description of Tesla as “absurdly vertically integrated compared to other auto companies.”

A Tesla insider told Automotive News, “We design circuit boards by ourselves, which allow us to modify their design quickly to accommodate alternative chips like powerchips.”

How The Response Should Be

Despite Tesla’s leadership, the Biden administration still refuses to admit that it’s wrong about GM doing the hard work Tesla’s employees actually have done. This may sound little or petty, but it’s all about honesty and integrity.

If I can’t trust the President’s word when he says GM is leading the EV markets, I can’t trust him on anything else. Seriously, y’all, these are cars we are talking about. Not war, intelligence, guns, or elections. If the President of the United States is telling lies about cars, then he’ll lie about everything else.

That said, here’s what I think Tesla and Elon Musk should do. I think Tesla should only help officially when President Biden apologizes for not being truthful about Tesla’s role in the EV markets. As for Elon, well, he’s already shared how Tesla survived. Perhaps a simple reminder in a thoughtful tweet or comment could help ease some of the tensions — tensions that President Biden started by allowing UAW to take leadership of the situation.

Neither Elon Musk nor Tesla owe this administration anything, but helping would show a sense of patriotic duty. Although both Elon and Tesla have shown how much they truly care for America, many refuse to see that and I think Elon has a chance to put a spotlight on his love for America by navigating this situation with grace and kindness.

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