Musk compares chip shortage to toilet paper shortage at start of COVID-19 pandemic

Musk compares chip shortage to toilet paper shortage at start of COVID-19 pandemic

Tesla Motors CEO Elon Musk has admitted that supply chain issues like volatility in supply microcontroller chips are the EV giant’s biggest challenges, but he stressed that such issues would not trouble the company in the long run. Musk compared the shortage of microcontroller chips to the shortage toilet paper that Americans faced near the onset of the deadly COVID-19 pandemic. He pointed out that many people were afraid of running out of toilet paper, so they hoarded.

The billionaire entrepreneur, however, stressed that such issues are not permanent. Using the example of toilet paper, he hinted that the shortage of chips will be no more once companies feel secure and stop hoarding chips.

Commenting on the shortage of microcontroller chips, he added, “There's not an ongoing toilet paper shortage, since situations like this are temporary. Once people feel secure and stop hoarding – or stock up on an overabundance of what they need – they no longer need to worry and buy more.”

Intel CEO Pat Gelsinger recently said that the industry might need at least two years to catch up to the increasing demand for chips. Gelsinger’s comment worried several EV makers, including Tesla, as Intel is one of the biggest semiconductor manufacturers, and its inability to meet demand is enough to cause worries.

While demand for Tesla EVs has been on the rise for the last couple of years, Tesla is suffering production issues due to shortage of chips. However, it managed to contain the issue during the first quarter of this year by pivoting some chips to microcontrollers, while at the same time developing firmware for new chips produced by new suppliers.

However, Tesla the shortage of chips remains harassing Tesla. It was the shortage of chip that forced Tesla to postpone the production of its all-electric heavy duty truck, called Tesla Semi.

The demand for chips is on the rise, thanks to soaring demand for EVs that use chips for everything ranging from computer management of electric motors for better fuel economy to driver-assistance features like emergency breaking.

Tesla is not the only manufacturer that has been forced to curtail production and postpone some of its EV projects as several other automakers, including General Motors Co. (GM), Ford, Volkswagen (VW), Subaru, Toyota, have also scaled down production due shortage of chips.