Tesla's Secret Weapon: Vertical Integration
Tesla's Secret Weapon: Vertical Integration
As a knowledgable businessman, Elon Musk has worked incredibly hard to vertically integrate Tesla’s business structure, but although it may have been costly at first, the strategic move will allow for higher profit margins and faster innovation. In this video, I talk about Tesla’s underlying weapon and how it will allow Tesla to easily outcompete its competitors.
If you enjoyed this video, please hit the like button and subscribe so that I know you want to see more videos like this. Also, please consider supporting me on Patreon at https://patreon.com/casgains
I appreciate your support!
—————————–
Music used in its respective order:
https://www.youtube.com/watch?v=-SjOkb3kVgI
https://www.youtube.com/watch?v=kqh0r8lEo5M
I hope the cybertruck factory goes in anywhere but Texas. Texas has tried to block Tesla at every turn. Build it anywhere else but in a state that blocks the company.
Bro your video is one of the most amazing one! but the script reader should has more energy/confident in the voice. How can I make a video like this?
Price finally will drop fast
For saving Tesla money I think it is a great thing. The only problem I’ve seen with Tesla is if you have a problem with them. From what I’ve heard they are expensive to fix and it takes a long time to get the parts. If Tesla or your insurance pays to have it fixed (and you have another car) they are not a problem. They are more like the Apple of the car industry, great for the people that love them, but I’m more Android. The future yes but not for most people yet.
Apple will make their own EV, tesla is fucked
And then Elon goes on Twitter with ridiculous statements and cost all his investors a fortune……đđđ
Dude work on your voice it is too monotonei and your pronunciation is off.
Casgains :Can you do a bear case analysis on Hyliion? This one is hyped as well with no profitability, revenues till 2021, yet its market cap is projected to be 10 billion
Where are autonomous taxi services?
This may be what Scotland needs.
There are old train lines that have, since their original need has been surpassed, shut.
Because of nationalised networking, smaller stations closed,
but these links between still existing communities could be reopened,
and why not under the auspice of an autonomous taxi service?
Kind regards
LM
Components that Tesla brings in-house are also redesigned / optimised / improved *constantly*. Legacy auto just make exactly the same old thing in slightly different shapes to suit fashion; no real innovation. Toyota broke the mould with the Prius but it stopped there… we all expected / wanted bigger batteries & smaller petrol engines… but it never happened; ball dropped.
TESLA IS FUCKING AMAZING
Don’t Stop There. Make the tires, the glass, everything.
Cyber trucks to give larger cargos of trafficked children for all the elites adrenochrome needs ! We see you and we donât even need a triangle with a magic eye just common sense decency and a knowledge of criminality and corruption!
I plan to buy more than a hundred tesla model 3s this year and when the Y is available at least that many again
âWe will integrate you; resistance is futile.â
History seems so simple until you really begin to study it. There are a number of benefits obviously to vertical integration. But it’s not that Ford doesn’t know about it (you think Henry didn’t know who Andrew was???lol)
The reason why Ford isn’t vertically integrated is also in the history books. Unionization.
A vertically integrated company will have a mostly common labor force. This makes the company prone to interruptions due to strikes. Once this happens, the union becomes the "boss", a short sighted boss. All "extra" profits are diverted from R&D to payroll.
By buying from a wide group of suppliers, Ford can maintain a smaller, unionized workforce, and still have subsystems produced for their product line.
Vertical integration is also a human thing. Once the Tesla workforce has worked out that Elon detests any delays then they might call on industrial action for higher wages and better work conditions. Humans want to make sure that their employment is in line with their visions for their own lives. To have more under their own individual control is an ever present human trait, not only for Elon but for each and every employee.
Tesla cars will have solar roof glass in a near future. Melon Husk is a genius!
But Tesla still using a big heavy parts from german companies..such as electronic, steering system, suspension. Doors technology of X model. And others.
There is companies who are pioneering in certain areas. And Tesla will never reach to that level. Why would they. To invest even.
That ford electic F150 still looks the same, lol.
PS who wants self driving ?
Secret weapon low gas prices oh no no more battery cars.
Nothing new here, but if you’re new to subject this is for you.
Tesla vertical integration may not be as proned to Union strikes as their factory will be almost fully automated and possibly non-unionized. Their fewer employees will be mainly highly specialized engineers & technicians who do not need union protection.
Henry Ford was one of the first business leaders to fully vertically integrate production. Today Ford has hundreds of suppliers. There’s a very good reason for that.
vertical integration doesn’t always work in your favor. It increases capital investment and risk and can cause liabilities when you can’t sell or have too much competition. vertical integration also ensures that you follow your own standards and make it impossible to use your components elsewhere. Building an entire supply chain can seriously backfire and hold back speed of innovation. Its not a new concept. Its an old concept and it died once the number of components became too many to handle. Electric cars allow larger integration with reduced number of components but its still a risk and capital intensive. Electric cars are not exactly very low in components. They still have plenty of components that make up a car from A/C’s to bearings and couplings and control systems.
Concise, Excellent, mahalo!
aloha,đ´đ´
Manufacturers spent the whole of the 70s, 80s and 90s "concentrating on their core businesses" and selling off anything that looked like vertical or horizontal integration. This despite the immense success of of, for example, the Korean chebols (my spelling) – huge vertically and horizontally integrated companies like Samsung or LG. The truth is that the only good management is good management, that management fashions come and go, and there’s more than one way to do things.
vertical integration is not the holy grail. It makes most sense in new markets because their are no suppliers to source from. In the EV business it makes sense in the ICE business it was the right thing to control the core technology (the ICE) and have multiple supplier for the rest. The problem of course is when this core technology gets obsolete.
But there are so many vertically integrated business which have a problem with it now. Siemens, Thyssen Krupp, …
In their early days (as the market was a new one) it made sense to vertically integrate, nowadays it would be better if they source some stuff from the market (because it is developed now).
Tesla is designing the circles, the others are trying fit the square into the circle by cutting corners/redesigning.
You donât really know your Automotive history. Henry Fordâs Dream was total vertical integration but it never worked because it requires too much capital and no auto maker is large enough to achieve economy of scale. For example to make their own automotive glass, Ford created a glass company but to
reach economy of scale they had to also make architectural glass too and then they needed another company to do that. This is as true of batteries , spark plugs , etc. etc. Henry Ford even tried to create his own steel! Apple has 100 billion in the bank because they want to stay focused on their core business even though the vertical integration âsoundsâ like the right thing to do. They could have easily bought Corning but they didnât. We will see if chip making will work for them soon.
You are ill informed on one point. Elon Musk started Tesla for the purpose of reducing CO2 caused by burning fuel. All Tesla patents are open source, and available to anyone wanting to build electric vehicles, free of charge.
improvement đ
Thanks
creating ones own components is backward integration not vertical.
Ford and gm used vertical integration years ago!
How much do you want to make a bit that in all he is doing none of it is his. He just being used as an tool. Here is why. I’m not saying it although others are, all of his vehicles have been proven garbage. Then his rockets garbage. Who knows about his solar. Then so called satellites that are only on an rail system. Now an so called high tec weapon. So what movie is this? Tony Stark. He made none of it. Just an puppet and you all fell for it. He even said it himself, he has no education. My question is then, can he even read to do very huge math equations. Most likely not. Anyone want to buy some swamp land? Area 51 is saling. Better hurry up. He is just a puppet.
Good video kiddo Elon rules…
I thought Tesla didn’t have any of their technology patented. Musk said they made everything public years ago.
Omg keep away from China they gonna steal ..
good luck Elon musk..
Let’s consider making an emergency move out of California. We could move in months and be in a more friendly business state. We must stay on mission. We then could actually produce EV’s that will help save the planet and perhaps develop a great protocol for controlling the current illness in the workplace. It could save lives in driving safety and in manufacturing health safety. We could move up to 80% of internal equipment and get up and running in stages in possibly less time it would take the California governments to allow EV production. California may be a lost cause. Even a Sheriff and Mayor want to kill the prize factory of our times. In the Tesla plant humans would be healthier than in any of the government facilities. Easier to move than be ordered into our own homes for lockdown. California does not deserve the planet saving Tesla Plant.
But Tesla model s do have many companies supplying windshield to seats
Vertical integration isn’t always the best thing. You often lose economy of scale. For example the air conditioner if sold by another company could be sold to many other car manufacturers and thus reduce the price to all. On the flip side of Tesla made only battery packs and/or drive units they could sell them to many if not all the major manufacturers. They would also have saved a buttload of money on upfront capital.
As well, because of that huge dump of capital into one or two products, the selection of products is relatively sparse.
There’s also the quality issues. Tesla’s, while technically high quality, aren’t always crafted well. While established manufacturers have the staff and experience to build quality cars.
They also have the distinction of being unique. If say Tesla folds because of the current economic crisis then there will be loads of Tesla owners without support. There won’t be other companies that managed to survive that have old stockpiles of parts.
I get that Tesla is paying a lot of first mover costs and are taking the lead in a lot of technological arenas because of that. But to suggest that all car companies should do the same is ludicrous. Ultimately when they catch up to Tesla and the majority of consumers buy electric cars that are good enough they’ll have a harder time keeping the vertical integration model. Tesla may be the Apple of the car world but with products that are 50-100 times more than an iPhone not near as many people will be able to make the decision to buy Tesla over a cheaper and functional if inferior electric vehicle.
Unfortunately vertical integration does necessarily not equate to more profits and therefore business success, as it is a double edge sword. In the 80’s US auto industry was more vertically integrated that the Japanese companies, that by focusing in a few chore skills (design, quality and just in time manufacturing) where much more efficient and were beating the hell out of US companies. US companies then adopted the Japanese manufacturing techniques and prospered again starting in the late 80’s and thereafter. In Tesla’s case vertical integration has become a key to its success, but not because vertical integration per se is better. Two key reasons are as follows: (A) lithium batteries for large scale applications like cars is anew technology and availability is limited. Tesla is driving innovation in this area and developing proprietary technology while rapidly expanding manufacturing capability that is not available to others. This translates that Tesla’s cars have a higher range than competitors’s vehicles making them instant winners. A similar argument applies to self driving technology. (B) Tesla as it started from scratch scratch and had visionary Elon at its helm, targeted transforming the whole auto industry supply chain by taking out key inefficiencies with more automation, less inventory, less transportation of parts from place to place, no dealer network, etc., while simultaneously starting a new product category, a dual goal that was crazily ambitious indeed . This could only be achieved through vertical integration. So in fact vertical integration was a tough burden that almost made it fail during 2018 and 2019, but of which it ultimately come out victorious. And lets bear in mind that vertically integrating the manufacturing of an electric car is feasible whereas doing this with an internal combustion engine is next to impossible. So I challenge you to research this subject further and make a more detailed analysis explaing how and why Tesla is succeeding with this business model.
Welcome to elon musk,good luck for every thing you do
Dont Buy From China!!!
Henry Ford did vertical integration 100+ years ago….fake news
I hate useless middlemen with a passion. If we can do it ourselves, why bring in half-assed slower clowns? This is why tesla dominates. Utilize outside help when needed, then part ways when you can replace them.
I wish that he would design an air purifier. Since air pollution is a problem, I feel this would be cheaper fir people that wanted to own something from Tesla.