The ongoing semiconductor chip shortage has been hard on automakers who are increasingly interested in manufacturing electric vehicles. Tesla has considered securing its own supply of chips for its vehicles by paying in advance or acquiring its own chip manufacturing plant. Now Elon Musk says that the chip shortage is impacting its ability to produce the Powerwall batteries that are a cornerstone for the solar power wing of its company.
He says that, under normal circumstances, Tesla could sell as many as 80,000 Powerwalls this quarter but can only produce 30,000 to 35,000 of them by the end of September 2021. He made his comments during testimony in an ongoing court case in which he defended Tesla’s 2016 acquisition of SolarCity. The investors who brought the lawsuit say that Elon Musk bailed out his cousins, who previously owned stakes in SolarCity, and was not as transparent about the deal as he should have been.
Musk says that the acquisition is part of his wider strategy for Tesla, which he says will not be purely a car manufacturer. Tesla had already been working on the Powerwall and similar “industrial-sized” solar power batteries like the Powerpack before the acquisition. At the Powerwall’s debut in 2015, Musk said that the battery could make it easier for owners of homes with solar panels to live off the grid or avoid interruptions if the local power grid goes down. It could also answer criticisms that electric vehicles run on fossil fuels by making it possible for vehicles to be charges with renewable energy sources like solar.
During Elon Musk’s testimony earlier this week, he said that he had always planned for the Powerwall to be integrated with solar power products like the solar roof, which would have been difficult if Tesla and SolarCity were separate companies. Although Tesla had initially made the Powerwall an optional add-on for the solar roof, it now sells both products as an integrated package. He reportedly frustrated the plaintiffs’ attorneys by refusing to give simple yes-or-no answers to their questions about the timing of the SolarCity acquisition:
“We were beginning development of the Tesla Powerwall battery. And in order to have a compelling product, you really needed to have a tightly integrated solar and battery solution.”
Not that the operations that used to be part of SolarCity have been without their challenges. Elon Musk recently admitted in an investor call that he miscalculated with pricing for the solar roofs in the wake of complaints and lawsuits from consumers who say that Tesla drastically increased the prices of their roofs after they had already signed contracts.
Tesla also had to temporarily put the former SolarCity on the back burner and move its engineers over to working on the Model 3 when difficulties with manufacturing it nearly led to the company’s bankruptcy. This move might have provided ammunition for the investors’ lawsuits since it did seem to imply that developing solar power products was not the priority that Musk made it out to be.
The trial for the investors’ lawsuit is expected to last up to two weeks. Other defendants in similar lawsuits settled before the case went to trial.