Elon Musk: Chip shortage crisis was a lot like the toilet paper fiasco
After missing-in-action on the last earnings call, Elon Musk was back to give his take on Tesla's Q4 call yesterday. As always, he added quite a bit of color (and humor) to his analysis. Tesla's "techno-king" had a lot to be proud of — especially in light of another crazy year for Team Earth.
Above: A look at Tesla Quality Control inside of Giga Berlin (Source: Tesla)
The auto industry, as many are aware, was plagued by a significant chip shortage. According to Musk, "last year was chip hell,” it was nothing short of “chip drama central.” Even so, Tesla was "able to grow almost 90% while at least almost every other manufacturer contracted last year.”
So will the chip shortage finally abate? Musk seems to think so and made a pretty amusing analogy. He explained, "I think there's some degree of the toilet paper problem as well, where, you know, there was a toilet paper shortage during COVID, and like, obviously, it wasn't really, certainly, a tremendous enhanced need for ass wiping."
He continues, "It's just people panicked... and got every paper you could possibly wipe your ass with basically… So [it was] an odd choice for people to panic about... if [the] end of the world is coming, having toilet paper is the least of your problems.”
So much like the toilet paper fiasco in the consumer goods sector, in the auto industry, "I think we saw just a lot of companies over-order chips… [but] we are seeing alleviation.” In addition, "It's not a long-term thing [anyhow] because there's going to be — there's a great amount of chip fabs being built, which is great."
Above: Loup Ventures' Gene Munster comments on Tesla's recent earnings call and his forecast for the future (YouTube: CNBC Television)
Tesla’s CFO Zach Kirkhorn sees a bright future ahead. He noted, "As we look forward, we expect 2022 to be another significant and exciting year for the company. We continue to drive for vehicle volume growth at or above 50%, as Elon mentioned, and our plans show that this is actually achievable with just our Fremont and Shanghai factories.” Meanwhile, Giga Austin and Giga Berlin will surely accelerate growth this year.
On another front, once full self-driving is achieved, according to Musk, "if you run the numbers on robotaxis, it's kind of nutty — it's nutty good from a financial standpoint.” He continues, "the cars in the fleet essentially becoming self-driving by a software update, [which] I think, might end up being the biggest increase in asset value of any asset class in history.”
Musk adds that transitioning from a “dumb” car to a robotaxi changes it from having, “a utility of perhaps 12 hours a week per passenger car to maybe around 50 or 60 hours a week [which is] a five times increase in the utility of the asset. [Yet] the cost didn't change."
Musk also has high hopes for Tesla’s robot — internally nicknamed, tongue-in-cheek, Optimus Subprime. He believes it can outpace the company's car business. According to Elon, "The foundation of the economy is labor. Capital equipment is distilled labor. So what happens if you don't actually have a labor shortage? I'm not sure what an economy even means at that point. That's what Optimus is about, so [it's] very important.”
In the end, there's plenty to be excited about in regard to Tesla's road ahead. According to the electric car company's Q4 shareholder letter, "While 2021 was a defining year for our company, we believe we are just at the very early stages of our journey. Thank you for being part of it.”