Tesla delivered 241,300 vehicles in the third quarter of 2021. That surprised many, exceeded Wall Street’s expectations, and caused the company’s share price to rise 5 percent. Tesla did this at a time when most auto company sales have plummeted due to supply chain issues. The mindset that Elon Musk and Tesla employees used to solve these problems is something that every business leader, and especially every entrepreneur, can learn from.
It’s hard to overestimate how big Tesla’s third quarter was. Tesla sold 102,000 more cars than in the same quarter of 2020 – an increase of more than 73 percent. The company set a record for quarterly production. Compare that to other automakers: General Motors’ sales fell 33 percent and Ford’s 27 percent in these three months compared to the same quarter last year.
Why are automakers’ sales falling at a time when demand for cars is so high it is literally driving inflation? If you’ve been following the news at all, you may already know the answer: the ongoing shortage of computer chips caused by a combination of pandemic shutdowns and canceled orders due to an expected drop in demand. This shortcoming affects everyone, as both analysts and automakers are quick to explain. For example, GM CFO Paul Jacobson warned investors last month: “The global supply chain continues to deteriorate a little. The same automakers were optimistic about rising sales – as soon as the factories could supply them with more chips.
Tesla was of course also affected by the chip shortage, as Musk admitted during a conference call in July. “Chip supply is becoming fundamentally a factor in our production,” he said. “This is essentially out of our control. It seems like it’s getting better, but it’s hard to predict.”
That’s where the other automakers ended their statements – there’s a shortage of chips, it looks like it’s getting better, and we’ll be selling like gangsters once the time comes. The difference is that Musk went on to explain how Tesla managed to build cars anyway.
“An immense effort.”
“The achievement of the performance we achieved was only due to the immense efforts of the employees at Tesla,” he said. “We were able to replace alternative chips. And then write the firmware within a few weeks. It’s not just about swapping out a chip. You also have to rewrite the software. It was an incredibly intense effort to find new chips, write new firmware, integrate it into the vehicle, and test to keep production going. “
In other words, he and the Tesla staff continued doing what they always had. They adapted to a changing landscape and found ways to solve problems in the blink of an eye. Later in the conference call, Musk even considered whether Tesla could solve the problem of building its own semiconductor factory once and for all. “People want to say, ‘Why don’t you just build a chip fab?’” He said. “Well, okay, that would take us 12 to 18 months – even lightning fast.
I understand Tesla isn’t getting into the semiconductor business anytime soon, and I’m not suggesting that it should. I say that Musk is the rare leader who will consider any possible solution to a problem, even most CEOs would immediately turn it down because those solutions are outside of the company’s business model or cannot be done. When faced with something he doesn’t know how to do, Musk goes out and learns how to do it. In other words, Musk has what Stanford psychology professor Carol Dweck calls a growth mentality – the belief that he can develop and develop skills and abilities that he did not have before.
He and Tesla also demonstrated something that I believe every successful entrepreneur needs – an internal control point defined by psychologists as the belief that your successes and failures result primarily from your actions. People with external control believe that their successes and failures are largely determined by forces outside themselves. While both viewpoints have pros and cons, given an issue like chip shortage, people with an internal locus are more likely to do what the people at Tesla did and find a way to build cars with alternative chips. People with an off-site location are more likely to do what GM and Ford have done, and place their hopes on improving conditions in semiconductor factories. (Another example of Musk’s willingness to take action in the face of challenges is his recently announced decision to move Tesla headquarters from Palo Alto to Austin.)
There is a small but growing group of Inc.com readers who receive one text from me every day with a self-care or motivational micro-challenge or idea. Often they write back to me and we get into an ongoing conversation. (Interested in becoming a member? Learn more here.) Many are successful entrepreneurs and tell me that when faced with challenges, they tend to take action because they believe it is up to them to find a way to make things better .
The truth is that almost every situation you face in business or in life is a combination of internal and external factors, things that you can control and other things that you cannot. Focus on what you can do and believe that your actions make a difference – this can be a determining factor. Just ask Elon Musk. He has sold 241,300 cars to prove it.