Printed on October 23rd, 2020 |
by Matt Pressman
October 23rd, 2020 by Matt Pressman
Tesla simply achieved its fifth consecutive worthwhile quarter. How did Tesla beat Wall Road’s third quarter earnings estimates? How are they doing this whereas the broader auto trade is down amidst a worldwide pandemic?
Some clues surfaced within the firm’s third quarter Shareholder Letter. Tesla talked about an “in-sourcing” technique with a purpose to obtain speedy progress. CEO Elon Musk elaborated on the investor name. “Tesla is absurdly vertically built-in in comparison with different auto firms, or mainly nearly any firm. We now have a large quantity of inner manufacturing know-how that we constructed ourselves. … It’s like, okay, what are the issues we wish to make? Design a machine that may make that factor, then we make the machine.”
“This makes it fairly tough to repeat Tesla — as a result of you may’t do catalog engineering. You’ll be able to’t simply [say] I’ll decide up the provider catalog, I’ll get a type of.” With regards to what Tesla does, “there isn’t any catalog. Take a look at it. So, we made the machine, that made the machine that made the machine,” says Musk.
He provides, “We’re simply making a loopy quantity of equipment internally … if we’re making an attempt to make progress and no one’s acquired the machines that we’d like, we’ve acquired to make it. So we do.”
Musk notes, “We’re designing and constructing a lot extra of the automotive than different OEMs who will largely go to the normal provide base and, like I name it, catalog engineering. So, it’s not very adventurous and it mainly finally ends up like older merchandise find yourself — trying the identical as a result of they’re going to the identical suppliers.”
Musk notes that legacy automotive firms in the end inherit legacy parts. “You inherit the legacy limitations and value construction. And so you might want to make new elements, new elements … then there’s no machine to make these elements. So you need to make the machine that makes the half.” Musk says Tesla could be “an order of magnitude” extra vertically built-in than different automotive firms.
Vertical integration extends past manufacturing as nicely. “Different automotive firms, OEMs, they don’t personal their gross sales and repair. So we have now to create our service community. We now have to create our gross sales and supply community. We now have to do that in, I don’t know, 40 nations [in] a number of languages … whereas the opposite automotive firms don’t personal their gross sales and repair and distribution. So that they form of assemble elements from [their supply chain] after which hand them to a supplier base,” says Musk. He claims Tesla has solely about “10% in frequent” with different automotive firms.
Musk explains, “there’s most likely in extra of a dozen startups successfully in Tesla. … Designing and making our personal energy electronics. Manufacturing our personal motors, chargers. The Supercharger community is a startup. The factor I feel that folks simply don’t actually perceive about Tesla is that it’s an entire chain of startups.”
A latest (small however particular) instance could be Tesla’s new Semi truck Megachargers. As an alternative of normal Superchargers, Tesla President Jerome Guillen says, “we’re searching for one thing way more highly effective. We now have to invent it as a result of it doesn’t exist.”
Initially revealed on EVANNEX.
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