German chipmaker Infineon to supply Tesla Model 3

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German chipmaker Infineon said Tuesday it will supply parts to Tesla’s new Model 3.

The manufacturer, who already supplies for the Model S, was originally passed up for the gig by Tesla. STMicroelectronics, a French-Italian company, was granted status as the initial chip supplier to Tesla’s $35,000 EV, which began delivery on Friday. Infineon confirmed the deal in a press conference after reporting its third-quarter profits above analyst’s predictions.

“We do not comment on the individual models,” said Reinhard Ploss, Infineon’s chief executive. “But we will also be present in Model 3.”

According to Reuters, Infineon’s chip technology is included in eight out of 10 of the world’s best-selling electric vehicles, including the Model S.

Infineon’s presence in the Model 3 will continue to boost its share of the EV semiconductor market, which has been steadily increasing. In April 2017, the company had control of 10.7%, and is still on the rise. As Tesla ramps up production of its mass-market Model 3 and beyond, the Infineon deal could allow the company to snatch up even more of the market.

However, Ploss said, for now, Infineon will continue to place most of its focus on Asian markets, where the majority of demand for its products originate.

“Our success is very much dependent on Asia,” Ploss said.

The German semiconductor giant will have will face an increasingly demanding production schedule as Tesla aims to meet the over 350,000 Model 3 reservations already made as quickly as possible. Infineon’s chips are part of the one-third of the Model 3’s 10,000 parts that are imported from overseas to Tesla’s factories. Tesla CEO Elon Musk hopes that the company will be able to manufacture up to 10,000 cars per month by the end of 2018, though he also acknowledges ramping up to that scale is a major challenge.

“Frankly we’re going to be in production hell,” he said during the Model 3 delivery event.

And Infineon will be right there with them.

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