Tesla Advances Its EVs by Rethinking Conventional Automotive Provide Chain Practices

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Because it was based in 2003, Tesla has change into the premier electrical car (EV) producer globally. Tesla automobiles provide drivers entry to a novel mix of consolation, fashion, know-how, and efficiency.

Some have been essential of Tesla’s provide chain resulting from issues about low sustainability scores. Regardless of these issues, EVs similar to these produced by Tesla generate far fewer contaminants than combustion engine automobiles. Consequently, electrical automobiles have gained a robust foothold in each the personal transportation and provide chain logistics sectors.

Whereas there are numerous attributes that differentiate Tesla from different EV producers, one of the notable is its provide chain. Tesla and its polarizing CEO, Elon Musk, knew that producing among the most superior automobiles in the marketplace would require them to rethink conventional automotive provide chain practices.

Shedding Some Gentle on Tesla’s Secretive Sourcing Strategies

For years, Tesla has been extraordinarily secretive about the place it sources its manufacturing supplies from. This secretiveness has been fueled by issues that different EV producers could try to purchase up important supplies or achieve insights into Tesla’s processes.

Regardless of Tesla’s finest efforts, the identities of some of its most necessary suppliers have been uncovered. These suppliers embody:

  • Rohm and Haas Firm
  • Modine Manufacturing Co.
  • Glencore
  • Ganfeng Lithium Co.
  • BHP

The suppliers listed above present supplies similar to nickel, cobalt, lithium, and different specialised sources. There’s loads of hypothesis relating to the place Tesla acquires different very important supplies, however this data has not been confirmed. A number of worthy mentions of potential Tesla suppliers embody Garmin Ltd., Panasonic, and Vystar Corp.

It’s unclear if Tesla’s choice to protect particulars relating to the place it sources its supplies contributed to the EV producer’s meteoric rise. Nonetheless, this strategic alternative doubtless helped Tesla climate pandemic-related provide chain challenges much better than its counterparts.

How Tesla Is Pursuing Better Provide Chain Autonomy

Musk has repeatedly expressed curiosity in internalizing the manufacturing of key Tesla parts, together with batteries and semiconductor chips. The truth is, Tesla truly started doing so in 2020. Tesla’s chips are distinctive in that they aren’t made purely of silicon. As a substitute, they incorporate silicon carbide, a comparatively new materials.

Tesla has lengthy produced its personal charging gear as effectively. This gear contains each in-home charging instruments and its supercharger stations. All Tesla electrical motors are additionally manufactured in-house.

As effectively, the corporate has began to fabricate its personal batteries, as promised by Musk. Nonetheless, it has solely manufactured sufficient of its “4680 cell” batteries to energy roughly 1,200 Mannequin Ys, in line with Reuters. This lack of quantity is indicative of the inherent challenges related to producing high-performance batteries at scale.

Particularly, Tesla is trying to make use of a producing course of referred to as dry electrode coating. Since this dry electrode coating is so new, Tesla should design and create its personal manufacturing unit gear to carry out this progressive course of.

If Tesla can overcome this hurdle and start effectively mass producing its 4680 cell batteries, the EV producer can drive down the price of its automobiles. Growing accessibility to electrical automobiles will enhance adoption charges and encourage extra drivers to make the change from gas-powered vehicles to sustainable alternate options.

The 4680 cell battery will purportedly enhance the vary of Tesla’s EVs by a major quantity as effectively. It already has some competitors, although, from different battery producers similar to Our Subsequent Power (ONE). A Tesla Mannequin S that was geared up with ONE’s Gemini battery reportedly obtained a staggering 752-mile vary throughout a street check.

Weathering the Storm: Navigating Semiconductor Shortages and Different Manufacturing Hurdles

Tesla’s journey to the highest has certainly not been a storybook affair. The auto producer has needed to overcome greater than its justifiable share of challenges for the reason that first Roadster rolled off the road in 2008. Admittedly, a few of these hurdles had been self-inflicted, whereas others had been created or exacerbated by unprecedented occasions like the worldwide pandemic.

A few of the obstacles that Tesla has encountered and efficiently navigated embody the next:

Semiconductor Chip Shortages

By far, the most important problem that Tesla has encountered in recent times is a widespread semiconductor chip scarcity. As a extremely superior platform, Tesla EVs require much more semiconductor chips than your entry-level gas-powered car. Regardless of this truth, Tesla navigated the semiconductor chip scarcity higher than most auto producers.

Tesla achieved this feat in a number of methods. First, the corporate elected to ship some automobiles with out USB ports, Bluetooth performance, and different comfort options. Moreover, Tesla manufactured some automobiles with out facilities like lumbar assist or radar sensors.

As famous earlier, Tesla additionally manufactures some semiconductor chips in-house. Musk’s automobile firm has the flexibility to rewrite its car software program as effectively, which allowed it to substitute different choices for its common chips. This excessive diploma of flexibility allowed Tesla to attenuate disruptions to car manufacturing whereas another producers needed to shut down operations altogether.

Restrictive Mandates

Tesla’s large 5.3 million sq. foot manufacturing facility is positioned in Fremont, California. California has lengthy been the house of world-class creativity and innovation. Nonetheless, a lot of this innovation was stifled throughout the pandemic because of the state’s extraordinarily stringent lockdown rules.

Finally, these restrictions prompted Musk to relocate Tesla’s headquarters from California to Austin, Texas. Building can be underway on the Austin Gigafactory plant. These strikes will permit Tesla to start manufacturing and handle all operations from its Texas areas.

Overpromising and Underdelivering

Within the mid-2010s, Musk made a number of lofty guarantees relating to Tesla’s capability to scale up manufacturing of its entry-level Mannequin 3. Particularly, Musk hoped to be producing 500,000 Mannequin 3s per 12 months by 2020. By 2018, it appeared that the automaker would fall effectively wanting these predictions.

Nonetheless, Tesla revisited its manufacturing and provide chain practices with a purpose to enhance the amount of automobiles it was producing. Though Tesla nonetheless didn’t meet its manufacturing targets, the adjustments that the corporate carried out helped make the Mannequin 3 one of many best-selling vehicles globally.

What Differentiates Tesla’s Provide Chain from Its Rivals?

Tesla’s provide chain stands out from these of different auto producers resulting from a number of elements, together with the next:

Restricted SKUs

Tesla focuses solely on producing 4 fashions of electrical automobiles — the Mannequin 3, Mannequin S, Mannequin X, and Mannequin Y. Most different main producers produce ten or extra completely different car fashions on the market within the U.S., together with hybrid fashions and gas-fueled automobiles. Additionally they provide different merchandise internationally.

By limiting its lineup to only 4 automobiles, Tesla can extra effectively handle supplies sourcing and provide chain processes.

Superior Agility

Tesla’s manufacturing facility is considerably extra agile than a lot of its opponents. The corporate additionally produces a number of of its personal parts, which simplifies its provide chain. Consequently, Tesla is ready to reply to sudden provide chain challenges extra successfully.

In-house Software program Administration

Throughout the pandemic, Tesla’s extremely skilled software program administration workforce was capable of rewrite current software program in order that it might be suitable with substitution semiconductor chips. This recoding lowered the impression of the semiconductor scarcity and allowed the corporate to keep up comparatively excessive car manufacturing ranges.

The Worth of an Agile Provide Chain

Is Tesla’s provide chain good? Completely not. Nonetheless, it is among the most sturdy, agile, and resilient provide chains within the automotive manufacturing house. As different producers try to guard enterprise continuity by bettering their very own provide chains, they can achieve precious insights by reviewing how Tesla sources supplies. 

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Picture Credit score: BoJack / Shutterstock.com

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