Tesla deleted steering component from some cars to deal with chip shortage

Tesla Inc decided to remove one of the two electronic control units from the steering racks of some made-in-China Model 3 and Model Y cars to meet fourth-quarter sales goals while coping with global chip shortage, CNBC reported.

The electric-car maker did not disclose the deletion, which affected tens of thousands of vehicles being shipped to customers in China, Australia, the United Kingdom, Germany and other parts of Europe, the report said, citing two employees and an internal correspondence.

Tesla decided against notifying customers as the part is considered a redundant backup and was not needed for the level 2 driver-assistance features, the report said, nor adding it was not clear if Tesla would make similar changes to the cars built in or shipped to the United States. Other automakers such as Ford and GM have left components off their vehicles during the chip shortage, but have done so publicly.

Removing the part means Tesla can’t turn all its existing cars into "level 3" driverless vehicles merely by pushing out software, as CEO Elon Musk as promised. An owner wishing for that functionality would have to have the missing part installed. 

Tesla made the decision while under pressure to hit fourth-quarter sales goals, according to two employees and internal correspondence seen by CNBC.

Tesla has fared better than most automakers in managing supply chain issues by using less scarce chips and quickly re-writing software.

It expects chip shortages to last through this year before easing next year. Chief Executive Elon Musk told an earnings call last month the shortage was not a long-term issue, with factories increasing capacity and automakers guilty of panic buying of chips which slowed the supply chain.

CNBC quoted HWA Analytics’ Richard Wallace on whether removing an electronic control unit from a power steering system could pose a safety risk.

“If something like a chip or an ECU is not providing additional functionality, if it is truly redundant, you may be able to turn it off or leave it out. With chips and software, there’s a little bit of wiggle room. I can reassign stuff here and there,” he said.

And IHS Markit Senior Principal Analyst Phil Amsrud said, “I cannot think of a case where an automaker would say ‘You know what? We’ll take a component out of that module, even though it was there for a good reason and we’ll hope nothing happens.’ Going from a dual chip to a single chip variant in a vehicle can make a system simpler and make it better in some cases. But they’d really need to do a lot of validation.”