By Hyunjoo Jin

San Francisco (Reuters) – Tesla Inc (NASDAQ:) Inc’s in-house design of components gave it the flexibility to make modifications to existing parts as well as deal with issues in supply chains that could have a significant impact on other automakers, experts and sources said.

Tesla’s deliveries rose by 87% to record levels in 2021. That pushed Tesla’s shares higher than 13% on Monday.

These are just a few of the many ways Tesla has overcome supply chain problems.

HOW TESLA COPED MIT THE GLOBAL CHIP SHORTAGE

Tesla informed some customers that they would be able to take delivery of the vehicle with certain missing components, including Bluetooth chips or USB ports. Tesla removed features like radar sensors and front-seat lumbar support, making the car easier to construct. Reuters reached out to Tesla for comment but they did not reply.

Tesla increased the price of its vehicles to cover higher prices, as well as “expedite cost” for parts. American buyers must wait seven month to purchase a Model Y, whose costs increased 18% in the last year.

Elon Musk, Tesla’s chief executive officer said that Tesla could also substitute for chips in shortages. Volkswagen (DE), CEO Herbert Diess stated that Tesla’s ability in two to three weeks to create software for the new chips was remarkable.

HOW TESLA DIFFERENT TO OTHER AUTOMAKERS.

Tesla has more technology and software development than any of its competitors, which rely on the efforts of auto suppliers. Musk described the company as “absurdly horizontally integrated” in comparison to other automobile companies.

Tesla insider: “We create circuit boards ourselves. This allows us to modify them quickly to accommodate powerchips.”

Tesla’s complex software is designed by internal engineers. Musk describes it as an “computer on wheels”.

Tesla designs and manufactures the chips that power its driver assistance systems. Tesla also operates its own service, sales and charging networks.

We are designing and building more cars than OEMs (original equipment makers), who will mostly go to traditional suppliers and, as I like it, catalog engineering. Musk explained that this isn’t very adventurous.

Ambrose Conroy is the CEO of Seraph Consulting. He stated that they control everything in the vehicle to a degree that no other manufacturer wants. This is more in line with Henry Ford’s original integration of the Model T.

HOW TESLA SECURES CHIP ORDERS

As the Pandemic and Lockdown Measures hit, demand for chips grew in 2020, automakers saw their orders cut by many. However, Tesla did not reduce its production forecasts with suppliers as it predicted rapid growth. This helped the company weather the crisis, Zach Kirkhorn, Tesla chief financial officer has stated.

According to a Tesla supplier executive, “They have just been more smart about it than other businesses in terms of making certain there’s buffer stock.”

Tesla was able to make faster progress because of its direct relationships with suppliers, Kevin Anderson, principal consultant at Write-Tek said.