IT HAPPENED The Real Reason Tesla Overcame The Chip Shortage TESLA WINS AGAIN

IT HAPPENED The Real Reason Tesla Overcame The Chip Shortage TESLA WINS AGAIN

Tesla is growing while other auto makers are struggling to build cars due to a shortage of microchips. How come?

The data is easy to grasp even if the reason for the results remains mysterious.

General Motors (ticker: GM) U.S. dealers delivered 446,997 vehicles in the U.S. in the third quarter of 2021, down 218,195 units, or almost 33%. Tesla (TSLA) delivered 241,300 vehicles in the third quarter, more than investors expected and up about 73% compared with the third quarter of 2020.

Tesla investors expected growth and got it. For GM, it was a steep drop, but not an unexpected one. GM warned investors in the middle of the quarter unit shipments would be down about 200,000 units. The chip shortage is the reason GM management saw the drop coming. A global shortage of automotive semiconductors has roiled the industry all year and will end up trimming global light vehicle production by about 5 million to 6 million units.

For Tesla, the third quarter was another record. The company has delivered about 627,000 vehicles in the first three quarters of the year, up almost 100% compared with the first three quarters of 2020. Tesla is, essentially, running at full capacity while other auto makers shut plants due to lack of parts.

Demand, profits, and industry size might be three reasons for the Q3 conundrum.

Demand for all cars in 2021 is strong, but demand for EVs around the world is exceptional. Chinese EV sales through August are up about 220% year over year, according to Citi analyst Jeff Chung. And EVs tend to be higher priced vehicles than traditional cars in comparable vehicle segments.

What’s more, EVs are still a small portion of the overall global total of new vehicle sales. Taken together, these could be reasons chip makers are sending more chips, relatively speaking, Tesla’s way. It’s simply easier and more profitable to supply EV makers.

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