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Tesla Supply Chain Problems Spark Consumer Complaints in China

By Rich Smith - Mar 3, 2020 at 5:05PM

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HW 3.0, HW 2.5 -- is this really a big deal? To Chinese buyers, it is.

Coronavirus may be starting to infect Tesla's (TSLA 4.53%) supply chain in China. 

This afternoon, Beijing-based media company Pandaily reported that complaints are surfacing on Weibo chatboards -- and even being phoned in to the Chinese national consumer rights hotline "12315" -- regarding Tesla Model 3 sedans being delivered to consumers with downgraded parts under the hood.

Tesla Model 3

Image source: Tesla.

Specifically, consumers allege that Tesla has been delivering Model 3s, which were supposed to be equipped with "HW 3.0" vehicle controllers (the hardware used to facilitate full self-driving, or FSD, capability), with HW 2.5 controllers installed instead.

In 2019, Tesla made the switch to version 3.0 hardware, equipped with a self-designed FSD, as an upgrade to enable the full suite of self-driving capabilities permitted by Autopilot. In contrast, HW 2.5-equipped Teslas use a chip bought from NVIDIA. According to the company, its self-developed chip can process images provided by the cars' sensors as much as 21 times faster than the NVIDIA chip.

Tesla quickly acknowledged the switch in its own statement on Weibo, blaming supply chain issues caused by the coronavirus for its decision to substitute the older chip. "Our original intention is to do our best to meet the needs of consumers' safety and use," the company explained," but also "to ensure timely delivery." As a compromise, the company elected to include HW 3.0 controllers only in cars ordered with the full self-driving option paid for, and put HW 2.5 in the other cars when needed.

Tesla assured its Chinese customers that it plans to retrofit HW 2.5-equipped cars with HW 3.0 controllers "as production capacity and supply chains recover."

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