Tesla is NOT running in place. All Tesla vehicles started out as EVs so all the frameworks, processes, and workflows used to design, engineer, test, and manufacture the vehicle include software as ‘native’ to those systems and essential to design, engineering, production, user experience, manufacturing, and service. Elon said during ‘Battery’ Day, that Tesla planned to move faster so if the OEMs are having a hard time keeping up now well good luck as the velocity increases.

Further, the software that’s being referred to in the article that VW is having all kinds of problems with is really just basic software that makes the vehicle run. No more than that. The software needs to be built tested, integrated tested, and on and on which doesn’t sound like what’s happening. Even if they did create a patch, they couldn’t send it OTA. These tasks are what we call ‘basic blocking and tackling’ that all auto companies should be able to do by now hopefully and if they can’t – Uh oh.

If the SW development basics are too complex, then there is NO WAY VW or any OEM for that matter will catch Tesla EVER, let alone in the next 5 years. Did I mention that Tesla said they’re going to move faster? This also means that the way EVERYTHING was done in the past at VW needs to be blown up and rethought through. I am shocked that this didn’t happen yet. It’s not mentioned in the article at least. Not just R&D, engineering, quality, and production but all the support functions including marketing, accounting, finance to sourcing, and supplier quality.

I believe Diess knows this but getting a behemoth like VW to cooperate is likely a bridge too far for him. And adding more car guys (did you see that picture, it’s quite literally ALL guys) is NEVER the right answer if you’re trying to build a software developing competency!

This article makes some of the people look incompetent, unfortunately. Leaving folks in leadership roles after they’ve failed on a major project is a recipe for future disaster. I was told that Ulrich left so maybe that was a blessing for VW? I don’t know all the details so maybe it’s a bit unfair of me to lay the failure at his feet but man, this wasn’t some small oversight.

Make no mistake, VW will still sell a gazillion cars and won’t likely lose their crown as one the largest vehicle manufacturer in China and the EU, but I CAN tell you this. If this is how they’re approaching the mountain of a challenge of ‘catching Tesla’ they’re better off just admitting that they won’t be making cars to compete directly with them anytime soon.

The manufacturing guys are probably juggling production schedules to pull ahead orders so they can build vehicles that don’t need the parts that currently aren’t available. There are probably war rooms in Detroit, Dearborn, Wolfsburg, Seoul, Beijing, and anywhere else these chips are short in order to monitor all the production at the supplier and track each shipment as it leaves Taiwan, down to the tracking number and bill of lading. Expedited freight is probably going to be a large number on the balance sheet over the next quarter or so but that’s what it’s going to take to keep these plants running, a period of the suppliers feeding chips to the OEMs ‘hand to mouth.’

While at Apple, part of my responsibilities were to ‘chase’ parts or in my case chips, but not just any chips, some of the most technologically advanced graphics chips from Nvidia, ATI (now part of AMD), and graphics cards, which were basically a board with an expensive graphics chip on it, from companies like Celestica and Solectron. These were high-end chips that always had lower yields, meaning that the wafer they came from would yield fewer viable chips than a lower-powered ASIC that wasn’t very advanced.

It was NEVER good to be one of the top three commodities that threatened production on a weekly basis but there I was, semi-regularly in the top three ‘gating items’ in the materials meetings. Apple back then was a much smaller player in computer sales similar to the automakers now so the operations teams were ALWAYS paranoid that suppliers were shipping parts, be it screens for laptops, memory, or graphics chips first to their larger customers and we were left scrambling for the leftover capacity.

It was likely true although they never did admit it. I vividly remember getting chewed out in a meeting one time when my boss asked me point-blank in front of a room full of colleagues ‘WHO is Nvidia shipping our chips too, Dell, HP??!’ My job was to keep contacting them and be just annoying enough that our suppliers would ship the parts in order to shut me up, at least until we ran out of parts again.

I have to admit, I got this kinda wrong. I thought that this was OEMs crying a bit of wolf in order to disguise shuttering plants because they were seeing some softness in demand but couldn’t be honest about it from a PR standpoint. Now, I think demand softness is still somewhat valid but there also seems to be a real squeeze on supply, at least in the short term.

I can picture it right now in those war rooms - The OEMs are talking to their suppliers ‘….they’re gonna what?? Take a week off in February for Chinese New Year (CNY)?? Tell them they can’t DO THAT!! WE need our parts!!’ On the other side, the foundries are likely planning OT AND working through CNY to try to build ahead and bank chips that they know are in demand. And the GM sourcing guys are wondering right now whether their chips are getting shipped to Ford…

LG plans to double their overall China capacity in 2021 to accommodate what believe will be a growing Tesla business, which is LG’s only customer for cylindrical cells and which LG will triple the capacity of cylindrical cell manufacturing to 60GWh as they try to compete with CATL for China customers.

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