Tesla Won’t Produce Any New Models Amid ‘Chip Hell’ Semiconductor Shortage

Electric car manufacturer Tesla is not producing any new models in 2022 because of the ongoing shortage of semiconductor chips, according to a new report.

The Associated Press reported Wednesday that while the electric automaker would be able to produce 50% more vehicles than it did in 2021, the global chip shortage meant it would not be able to produce any new models in 2022, including the highly-anticipated Cybertruck. According to AP, Tesla CEO Elon Musk told shareholders during an earnings call on January 26 that the company’s factory output was limited in 2021 because of supply chain problems, including the shortage of semiconductors, which forced the company to modify both its vehicles and its manufacturing process in order to cope. If Tesla began building new models, fewer vehicles would be produced overall because most of the company’s resources and time would go to engineering processes and factory retooling in order to begin production, he added. Musk also said that Tesla isn’t currently working on an anticipated $25,000 small electric vehicle, though it will in the future. “We have enough on our plate right now, quite frankly,” he said.

Those shortages were expected to affect production into 2022. “The rate of growth will depend on our equipment capacity, operational efficiency and the capacity and stability of the supply chain,” Tesla said in a shareholder presentation announcing the company’s fourth-quarter 2021 earnings. “Our own factories have been running below capacity for several quarters as supply chain became the main limiting factor, which is likely to continue through 2022.” Tesla CFO Zachary Kirkhorn said during the call, via AP, that production pressures, including commodity price hikes and increased supply chain costs, would drive up Tesla’s overall expenses this year.

Tesla had previously been forced to cope with the shortage of semiconductors by removing electronic components in many of its cars produced for Europe, Asia, and Australia. CNBC reported in January that an electronic component used for Tesla’s advanced and hands-free steering capability had been removed from tens of thousands of cars. The part was deemed redundant by engineers, as it was primarily used as a backup, and scrapped, but CNBC noted that it was just one of a number of manufacturing problems Tesla had gone through because of the chip shortage. During the January 26 earnings call, Musk told shareholders that the company had gone through a “chip hell of many chips” in 2021. The shortage affected a large number of “basic chips,” including “the little chip that allows you to move your seat back and forth,” Musk said, via CNBC.

News was not all negative for Tesla. The automaker, which recently moved its headquarters from California to Austin, Texas, reported $5.5 billion in profits in fiscal year 2021, compared to $721 million in 2020. That profit margin, combined with accumulated income since it was founded in 2003, pushed the company into profitability, the AP reported. The company was able to cut costs while also putting out a record number of cars. Tesla put out a record 936,000 vehicles last year, nearly double its 2020 output. Car sales also hit a record high of 308,600 in Q4 2021.

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