Tesla cut a steering component to deal with chip shortage

Employees work at Tesla Gigafactory in Shanghai, eastern China, 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 Images

Under pressure to reach fourth-quarter sales targets while coping with widespread semiconductor shortages, Tesla decided to remove one of the two electronic control units normally included in the handlebars of some 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 UK, 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 its factories and sales going from the final weeks of 2021, as the world faced a persistent chip shortage that has affected everything from cars for laptops. It also means that Tesla can not turn all of its existing cars into driverless vehicles with a pure software update, undermining what CEO Elon Musk recently said in an earnings call:

“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 will essentially become self-driving via software update, I think, may end up being the biggest increase in the asset value of any asset class in history. We’ll see. “

Internally, Tesla employees said that the addition of “level 3” functionality, which would allow a driver to use their Tesla handsfree without steering in normal driving scenarios, would require the dual electronic control system and therefore require retrofitting at a service visits. They also said the exclusion would not cause security issues as the removed part was considered to be a secondary electronic control unit, primarily 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 supply chain nightmare and it’s not over!”

Tesla has struggled with production challenges throughout its history, but the completion of its Shanghai plant in 2019 helped it increase production, expand margins and gain market share across North America. This latest decision reveals new pressure as the company pushes further into the mainstream, aiming to fulfill Elon Musk’s promises of a self-driving future.

What the omitted part does

The specific point 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 and gears to convert 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.

“Of course, there is still a mechanical component. But in today’s vehicles, when you ‘turn the steering wheel’, you give an electronic signal telling your car to drive left or right.”

Electric power steering systems today also enable driver assistance features, Wallace notes, such as the ability to automatically hold a car in the middle of a lane.

Tesla removed the component because engineers considered it redundant, primarily installed as a backup. Omitting the controller will also save Tesla money in the short term, as long as no problems arise as a result of the changed system.

There is a precedent for the company to remove options or components for business reasons. For example, last spring, Tesla removed lumbar support from passenger seats in Model 3 and Model Y cars to lower costs.

On January 26, 2021, Musk said during a earnings call that Tesla had faced a “chip hell with a lot of chips” in 2021. The company had a hard time getting “the little chip that allows you to move your seat forward. and back, “he remarked along with other” basic chips. “

He did not mention the changed power steering systems.

Other automakers have taken similar steps, but typically make temporary cuts to options that are not part of a vehicle’s core functionality.

For example, in March 2021, General Motors said it was building some of its 2021 light pickup trucks without a fuel management module, a move that damaged the fuel economy of those trucks. It blamed the chip shortage for the move.

Tesla’s self-driving future

Tesla currently offers multiple 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 per month (in the US).

When Tesla made the decision to exclude an electronic control unit from its handlebars, there was an internal discussion about whether to notify customers, two employees told CNBC. These individuals 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 any functionality in 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 tweak did not rise to the level of customer communication – 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 operating 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 get a retrofit of the handlebar from a Tesla service center.

In general, Tesla relies on service technicians to install missing parts or to repair or replace damaged parts before a car is delivered to a customer, making service a kind of extended arm of Tesla production.

Most of the cars with the individual electronic control unit were originally intended for customers in China, where FSD does not experience significant uptake. According to internal communications, seen by CNBC, just over 1% of all Tesla customers in China opted for the premium driver assistance package at the time they placed an order for a new car.

Recently, tens of thousands of the affected vehicles were exported to customers outside China, including in Australia, the UK, Germany and across Europe, employees told CNBC.

The security issue

CNBC asked HWA Analytics’ Richard Wallace whether removing an electronic controller 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 additional 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 little bit of space. I can reassign 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 if it was there for a good reason, and we hope that does not happen. something.” 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 would really need a lot of validation. “

Most automakers would spend 1,000 hours testing or more to make major changes, he estimated. It can take up to four months. It can also take years for quality or safety issues to 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 consider it a big deal – more a chip-hunger survival tactic.

The company had previously produced previous models that had a power steering system with only one electronic control unit, and this gave them greater confidence. Similarly, Tesla’s often touted ability to push software updates “over-the-air” to vehicles to refine their functionality if necessary.

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