In this part of Tesla case study, we are going to discuss-
- How Tesla plans to become the biggest company in the world?
- Why is Tesla going to be an unstoppable force?
Vision
Tesla has always been way ahead of others when it comes to future planning. 10 years ago, Tesla was way ahead when it banked on electric cars and even now when others are trying to follow in its footsteps by going electric, Tesla has found another goldmine that will propel it to $1 Trillion status – Autonomous driving.
10 years ago, car manufacturers were pondering on, “if electric cars will happen, not when“, today car companies are pondering on “if autonomous driving(autopilot) will happen, not when“. This is why they lost and this is why they’ll lose again.
If I had asked people what they wanted, they would have said faster horses.
Henry Ford
Most companies don’t have the right vision for the future. There just focus on what is obvious and in doing so they miss out on what is enormous. I believe that good companies work on products/services which are booming but great companies work on products/services which have the potential to boom in the future.
Mark my words: There will come a time when driving would be illegal because robots would simply drive better and more efficiently. So, whoever is the first to conquer this blue ocean(autopilot) will become the megalodon among goldfishes.
Now, you must be thinking that many companies are developing self-driving tech, so Tesla has some serious competition this time from the start.
No, many companies are developing self-driving technology but no one is even close to the progress that Tesla has made. Even saying close is an understatement!
And, this lead is only going to increase as Tesla has millions of test drivers, i.e. every Tesla car owner is a test driver!
Tesla’s autopilot technology would be so revolutionary that every ride-hailing service – Uber, Lyft, Ola, etc would be using Tesla cars with autopilot! Tesla could also charge other car companies for using its autopilot tech (lease the tech) if they want to!
Tesla SEMI is yet another portrayal of Tesla’s ability to predict the future. When everyone is busy building electric cars following Tesla’s footsteps, Tesla is busy building the next big thing, electric trucks.
I read this line somewhere: “You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.” This is precisely where Tesla excels. Tesla looks where no one else is looking. They don’t go for the obvious, they work on things that a normal person would consider crazy!
Electric truck industry is still in its infancy and Tesla is about to disrupt once again!
Look at Semi’s specs in comparison to an average diesel/gas truck-
What more would anyone want? (Semi is also the safest truck ever built)
If we temporarily ignore the fact that Tesla’s main aim is to entirely remove human drivers from the operation. Semi is beneficial for both truck drivers and companies. Until a full-fledged autopilot gets released, truck drivers would be able to earn more, drive around with more safety and contribute to the world’s betterment.
And just imagine, when we combine full-fledged auto-pilot with Semi, a whole new era of trucking would be born.
Trucks driving non-stop, taking no lunch/dinner breaks, no medical insurance, no paid leaves. It would be a no-brainer for any company.
Innovation
In layman’s terms, first principles thinking is basically the practice of actively questioning every assumption you think you ‘know’ about a given problem or scenario — and then creating new knowledge and solutions from scratch. Almost like a newborn baby. (Source)
Tesla is the poster child of the First principle’s thinking, an electric car company in the early 2000s questioning every assumption and belief of the auto industry!
Everything at Tesla is Innovation at its best, whether we talk about the design, the battery, the manufacturing process, or the factory.
Tesla has never been afraid to try out new things, take the signature Tesla interior, clean and tech-savvy with that extra-large infotainment screen, for example.
They could have just adopted the auto-industry’s usual interior setup! But, no, they tried something new.
Or take the cybertruck’s design or the fact that it’s bulletproof, for example.
Was there a need to give it such an unusual design or to make it bulletproof? NO.
But, why not? Trying out new things is crucial to the success of any organization. That’s what innovation is – a new idea, a new method, a new product!
Let’s talk about the factory, the GIGAFACTORY!
A revolutionary car needs a revolutionary factory. When complete, the Gigafactory Nevada will be the biggest building in the world by footprint and the second biggest by volume.
What’s unique about the gigafactory is that its blueprint closely resembles an advanced computer chip instead of a traditional plant! As Elon famously called it “the machine that builds the machine”. Tesla plans to build a dozen more of these gigafactories in the next decade!
Gigafactories are the most automated factories on the planet, watch this video to see the machine in action!
Though there are hundreds of crazy innovations that Tesla has done. I will just mention one more.
Recently, Tesla commissioned the largest casting machine that’s ever been made (Re-engineered and custom made for Tesla) to make structural parts for its cars, but in order to make it work, they needed an alloy that did not require coatings or heat treatment (which did not exist)!
So, what did Tesla do? They developed a new aluminum alloy on their own from scratch. You have to realize that there are entire companies which are working on designing new alloys for particular applications, that’s their whole thing, that’s their whole business model.
And Tesla is doing this on top of everything else they are doing! Innovation in material sciences, what more do you want from a car company?
Innovation with first principles is truly an entrepreneurial dream, this is – understanding the problem and developing an out-of-the-box solution, at its best.
Vertical Integration
Businesses are always looking for methods to reduce costs and control the quality of the products and services they provide. A company is able to create a competitive advantage by integrating different stages of its production process and supply chain into their business. This is called vertical integration. (Source)
This is the hardest process for any company to execute because vertical integration requires companies to figure out more stuff by themselves instead of relying on other companies. They have to hire different people, create different departments, invest more money into R&D, and compete with world-class companies that are already experts in that specific domain.
Tesla is the only 100% vertically integrated car company on Earth. It makes its own battery, motor/drive train, structural parts (No outsourcing). It manufactures its cars in its Gigafactories, owns all its retail stores (No franchising) and all of its service stations (No franchising). And it has its own supercharger network (Fuel Infrastructure). Holy f*ckin Moly!
In comparison, most of the car companies only control 2-3 parts (25%) of the vertical integration map.
Not just all this, Tesla is now even going one step further and it’s going to mine the raw materials used to make batteries and structural parts themselves.
So, basically, now they don’t have to rely on anyone else other than themselves. Everything is under their control. Lower costs, better profits, speedier production, and unlimited future potential. Tesla is going to become the most valuable company (bye, bye Apple) on Earth within the next decade!
Now, let me tell you the master plan, Tesla was never about cars, it was always about energy. (Tesla’s mission is to accelerate the world’s transition to sustainable energy).
Tesla’s car business is going to be worth $trillions but sustainable energy is where the real value lies.
The energy ecosystem consists of three things: energy generation, energy storage and energy consumption. Tesla is targeting all these elements with its product line.
Sustainable energy generation with solar roof and solar panels–
Sustainable energy storage with Powerwall and Powerpack–
And sustainable energy consumption with with its fleet of vehicles.
Tesla will own a whole ecosystem. How about that?
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