In July 2024, Tesla, one of the automotive industry’s most forward-thinking companies, experienced a major disruption due to an IT outage caused by a defective software update from CrowdStrike. This outage temporarily shut down production lines in two of Tesla’s key manufacturing facilities—Texas and Nevada—and raised critical questions about the cybersecurity readiness of automotive supply chains.
For automotive parts manufacturing companies, this incident is not just a wake-up call for Tesla but for the entire industry. Here’s why it matters to you, and what lessons you can take away to protect your operations and supply chains.
What Happened?
Tesla’s production lines were halted due to a faulty software update rolled out by CrowdStrike, which affected Windows systems globally. The issue caused significant disruptions, from travel to finance, with the automotive supply chain being one of the industries caught in the crossfire. According to Business Insider, two production lines were shut down, and employees were sent home as Tesla scrambled to fix the problem .
While the production stoppage was short-lived, the incident underscores the vulnerability of interconnected manufacturing systems, especially those reliant on third-party software. This wasn’t just a Tesla problem—any company connected to a global supply chain is at risk of similar outages.
Impact on the Automotive Supply Chain
Automotive parts manufacturers rely on complex and tightly integrated supply chains, with just-in-time (JIT) inventory systems in place to reduce waste and optimize production schedules. Any disruption, whether from a cyberattack, a faulty software update, or logistical issues, can cause ripple effects across the entire industry.
Elon Musk referred to the incident as giving “a seizure to the automotive supply chain” . While some experts like Arun Kumar from AlixPartners suggested the damage was minor compared to other recent disruptions, the outage still highlights a critical weak point for companies dependent on digital infrastructure .
For parts manufacturers, this means that any disruption on the automaker’s side can have an immediate knock-on effect, slowing production, delaying shipments, and potentially causing financial losses.
Lessons for Automotive Parts Manufacturers
1. Cybersecurity is Business-Critical
In Rockwell Automation’s 2024 State of Smart Manufacturing Report, cybersecurity was identified as the top concern for industry leaders . Yet, many manufacturers are still not fully equipped to deal with cyber risks. The CrowdStrike outage highlights the importance of treating cybersecurity as a core operational issue, not just an IT problem.
For parts manufacturers, this means integrating cybersecurity into every aspect of the supply chain, from software updates to endpoint protection for machinery.
2. Evaluate and Manage Third-Party Risks
Tesla’s issues stemmed from third-party software—CrowdStrike’s faulty update—which means companies need to be diligent in vetting and monitoring their vendors. If your production depends on external systems, it’s essential to have contingency plans in place for when things go wrong.
Conduct regular audits of your third-party vendors, especially those handling critical operations like cybersecurity, logistics, or supply chain management.
3. Invest in Redundancy and Backup Systems
While JIT manufacturing has long been the standard, the Tesla outage demonstrates the importance of having backup systems in place. Automating production with connected systems can offer efficiency gains, but it also introduces vulnerabilities. Ensure your systems can revert to manual operations or alternative platforms in the event of an outage.
4. Internal Controls and Quality Assurance
Beyond vendor management, internal quality controls are essential to preventing similar incidents from spreading through your operations. Kumar emphasizes that many companies still lack strong internal mechanisms to mitigate such risks . For automotive parts manufacturers, this means implementing rigorous testing protocols for any system updates before they go live.
Preparing for the Future
As the automotive industry evolves, so do the risks associated with interconnected, software-driven manufacturing systems. For parts manufacturers, it’s vital to strike a balance between keeping up with technological innovation and ensuring robust internal controls are in place.
While the Tesla outage may seem like an isolated event, it’s a stark reminder of the growing cyber risks in the automotive sector. Protecting your supply chain, mitigating third-party risks, and investing in comprehensive cybersecurity measures will be key to avoiding similar disruptions in the future.
Final Thoughts
The Tesla outage is a lesson in vulnerability for the entire automotive supply chain. As automotive parts manufacturers, learning from this event is crucial to ensuring business continuity in the face of increasing cyber threats. The key takeaway is that cybersecurity must be integrated into every aspect of your operations to protect not just your business, but the entire supply chain that depends on it.
