Tesla cut a control component to deal with chip shortages
Employees will work at the Tesla Gigafactory in Shanghai, East China, on November 20, 2020. In 2019, the American electric car company Tesla built its first Gigafactory outside the United States in the new Lingang area, with a designed annual production capacity of 500,000 units.
Ding Ting | Xinhua News Agency | Getty pictures
Under pressure to reach fourth-quarter sales targets while tackling extensive semiconductor shortages, Tesla decided to remove one of the two electronic control units typically included in the control racks of some manufactured-in-China Model 3 and Model Y cars, according to two employees and internal correspondence seen by CNBC.
Tesla did not disclose the exclusion, which has already affected tens of thousands of vehicles shipped to customers in China, Australia, the United Kingdom, Germany and other parts of Europe. It was not immediately clear whether Tesla would make similar changes to cars manufactured in or shipped to the United States
The omission indicates that Tesla had to make changes beyond what the company has publicly revealed to keep factories and sales going from the last weeks of 2021[ads1], as the world faced an ongoing chip shortage that has affected everything from cars to laptops. It also means that Tesla can not turn all its existing cars into driverless vehicles with just one software update, which undermines CEO Elon Musk recently said in an earnings interview:
“My personal guess is that we will achieve Full Self-Driving this year at a safety level that is significantly higher than one person. So the cars in the fleet that are mainly self-driving via software update, I think may end up being the biggest increase in asset value for any asset class in history. We’ll see. “
Internally, Tesla employees said that adding “level 3” functionality, which would allow a driver to use the Tesla handsfree without steering in normal driving scenarios, would require the dual electronic control unit system and therefore require retrofitting during a service visit. They also said that the exclusion would not cause security issues, since the removed part was considered a secondary electronic control unit, mainly used as a backup.
At the time this production change was underway in Shanghai, CEO Elon Musk wrote in a tweet: “Oh man, this year has been such a nightmare in the supply chain and it’s not over!”
Tesla has struggled with manufacturing challenges throughout history, but the completion of the Shanghai plant in 2019 helped it increase production, expand margins and gain market share outside North America. This latest decision reveals new pressure as the company pushes further into the mainstream, and aims to deliver on Elon Musk’s promises of a self-driving future.
What the omitted part does
The specific element omitted is an electronic control unit in the electric power steering systems, which translates steering wheel movements into wheel turns on the street.
Before cars used so many electronic components, vehicles would rely on a pump, steering wheel rack and gears to translate steering wheel movements into turns.
Richard Wallace, chief consultant for HWA Analytics at Ann Arbor and veteran researcher in transportation safety, explains how that has changed.
“It’s still a mechanical component of course. But in today’s vehicles, when you ‘turn the steering wheel’ you give an electronic signal telling your car to go left or right.”
Electric power-assisted systems today also enable driver assistance functions, Wallace notes, such as the ability to automatically keep a car in the middle of a lane.
Tesla removed the component because engineers considered it redundant, primarily installed as a backup. Leaving out the control unit will also save Tesla money in the short term, as long as there are no problems as a result of the changed system.
There is some precedent for the company to remove alternatives or components for business reasons. For example, last year Tesla removed our lumbar support from passenger seats in Model 3 and Model Y vehicles to reduce costs.
On January 26, 2021, Musk said during a earnings interview that Tesla had faced a “chip hell with a lot of chips” in 2021. The company had a hard time getting hold of “the little chip that allows you to move the seat back and forth,” he noted, together. with other “basic chips.”
He did not mention the changed power steering systems.
Other car manufacturers have taken similar steps, but usually make temporary cuts in options that are not part of the vehicle’s core functionality.
For example, in March 2021, General Motors said they would build some of their light trucks from 2021 without a fuel management module, a move that damaged those trucks’ fuel economy. The lack of chips was to blame for the move.
Tesla’s self-driving future
Tesla currently offers several levels of driver assistance functionality in its cars. A basic version, called Autopilot, comes with each car. Drivers can also purchase a more advanced version, called Full Self-Driving, or FSD, for $ 12,000 or $ 199 a month (in the US).
When Tesla made the decision to exclude an electronic control unit from the control racks, there was an internal discussion about whether they should notify customers, two employees told CNBC. These people asked to remain anonymous because they were not authorized to speak on behalf of the company.
Employees also discussed whether omitting the part would impair the functionality or reliability of customers’ cars. They were concerned about whether “depop” or exclusion of this component could interfere with customers’ ability to use FSD features.
In the end, they decided that the adjustment did not rise to the level of customer alert – at least until Tesla is ready to launch “level 3” or hands-free driver assistance features.
Tesla vehicles can still use the current “level 2” versions of their driver assistance systems, Autopilot and Full Self-Driving (or FSD), without the dual steering system.
But employees told CNBC that if Tesla launches a more sophisticated FSD update, owners of the affected cars using the premium system will have to retrofit the steering rack from a Tesla service center.
Usually, Tesla relies on service technicians to install missing parts or repair or replace damaged parts before a car is delivered to a customer, making service a kind of extended arm of Tesla production.
Most cars with the electronic control unit were initially intended for customers in China, where FSD does not see a significant increase. According to internal communications seen by CNBC, just over 1% of all Tesla customers in China chose the first-class driver assistance package at the time they placed an order for a new car.
Recently, tens of thousands of affected vehicles were exported to customers outside China, including Australia, the United Kingdom, Germany and across Europe, CNBC staff told staff.
The security issue
CNBC asked HWA Analytics’ Richard Wallace whether removing an electronic control unit from a power steering system in a modern vehicle could pose a safety risk.
“If something like a chip or an ECU does not provide extra functionality, if it is really redundant, you may be able to turn it off or leave it out. With chips and software there is a bit of a wiggle room. I can reassign it. Things here and there ,” he said.
Much depends on the vehicle architecture of a vehicle, said IHS Markit Senior Principal Analyst Phil Amsrud.
He said, “I can not think of a case where a car manufacturer would say ‘You know what? We’re taking a component out of that module, even though it was there for a good reason, and we hope nothing happens. “Going from a dual chip to a single chip variant in a vehicle can make a system simpler and better in some cases. But they will really need a lot of validation. “
Most automakers would spend 1,000 hours testing or more making major changes, he estimated. It can take up to four months. It can also take years before quality or safety issues become apparent after changes have been made.
Tesla employees told CNBC that the company spent less than a few weeks discussing the change before moving on and did not see it as a big deal – more as a survival tactic for chip hunger.
The company had previously produced previous models that had a power steering system with only one electronic control unit, and it gave them greater confidence. Similarly, Tesla’s often designated ability to send “over-the-air” software updates to vehicles to improve their functionality if necessary.