tesla by eric

Tesla is a new approach to a lot of things. It is a new way of approaching the every-day automobile, it is a new method of manufacturing, and most of all, it is an almost entirely new way of running a company. It, like SpaceX and the Boring Company, is run by Elon Musk, who is a character like no other. You’ve probably heard of Elon, but what you may not know is that he made his money not from Tesla, but from PayPal, which he co-founded. Since then he has started companies with the objective not of making money, but instead, futurizing the world. The Boring Company has the objective of making underground travel viable with far more efficient tunnel boring machines; and SpaceX was founded with the objective of making space travel more accessible (so much to the extent that Elon Musk refuses to let SpaceX go public until they land a mission on Mars to avoid pushback from stockholders). Those aren't the topic of this blog, but rather Elon’s larger company: Tesla.

As stated on their website, Tesla’s objective is, “to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.” And to start off this objective, they have released their “Master Plan

  1. Phase one of their plan is complete today, with the objective being to create “a low volume car that would be necessarily expensive,” the Roadster. The Roadster is an interesting piece of the Tesla lineup for a couple of reasons. For one, they don’t share the supercharging network, they lack many of the tech gizmos of later additions, and a lot of the car even comes from other car manufacturers. This leaves it often forgotten and excluded from Tesla’s modern lineup.

  2. Phase two was to “Use that money to develop a medium volume car at a lower price,” which led to the creation of Model S--the family sedan, and Model X--the midsize SUV.

  3. Phase three is to “Use that money to create an affordable, high volume car,” which is Model 3 (originally planned to be called “Model E”), which rounds off the vehicular part of their Phase one master plan. I say “vehicular” because they also have plans regarding solar networks, but we’ll get back to that.

The three phase master plan was just the original plan to get the company established, and now that they are, Tesla wants to address “all forms of terrestrial transportation,” by adding different classes of vehicles to their lineup. Model Y is rumored to be a more compact SUV, and they also have plans for an unnamed pickup truck, as well as refreshes of the Roadster and other consumer vehicles. They also released the Tesla semi truck and have plans to release a bus, some form of van or shuttle, and many other classes of vehicles.

Stepping back from the automotive market though, Tesla has been pushing back against fossil fuels in other ways too. They sell solar panels to mount onto the roof of your house, and perhaps more significantly, a battery pack to store the energy from said solar panels. They allow you to capture and store solar energy throughout the day, charge your vehicle at night with that power, and then sell it back into the grid when it needs it most (and therefore pays the highest), which helps significantly to offset the higher electricity consumption of owning an electric vehicle. This technology isn’t used exclusively in homes, though. When hurricane Maria hit Puerto Rico in 2017, Tesla acted quickly, installing a massive solar array as well as a record-breaking battery array to restore power to a large part of two islands. Elon promised completion in 100 days or the entire array would be free. Tesla completed it within the allotted 100 days, and since then plans have been made for more of these arrays to be constructed. These are two of countless examples of how Tesla can change the world even outside of the automotive industry. But speaking of the automotive industry, let’s talk some more about Tesla’s objective.

In a sense, Tesla has already achieved its goal of “accelerating the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.” They have released many vehicles which have sold in thousands. But the effects of Tesla go beyond just the company itself. Tesla has proven that the market for high end electric vehicles is prevalent and many of the big auto manufacturers have begun contributing to the market themselves. Tesla’s influence has spread, and they have already proven the viability of an electric future. The Tesla Supercharger network across North America, Europe and parts of Asia opens new doors of practicality when it comes to daily driving and even road trips. So they have done a lot of great things, but like any of Elon’s ventures, Tesla doesn’t function like a normal company. Their objective isn’t to make money, and that probably explains why they haven’t. They haven’t patented their battery technology, and they have been losing money on almost every vehicle that has come out of their factory since the company was founded, putting them massively in debt. This has been conflicting to stockholders. At the current rate, Tesla will go bankrupt. It’s as simple as that. But if Elon wanted to make it profitable, Tesla certainly has the brand image and, to some extent, the necessary infrastructure to do so.

Tesla isn’t a manufacturing company. Their roots are as a tech company, and they can’t manufacture efficiently enough to compete with GM and Ford, not to mention imports. This has led them to come up with a different manufacturing model than a lot of companies. Many companies that sell products in the US have factories in China or other countries with lower labor costs to save money. Tesla contrasts this by having their headquarters and manufacturing plants right next to each other. This results in higher labor costs, but it also makes it far easier to revise designs and put them into effect and troubleshoot. This model works well for Tesla for a few reasons, one of which is that they automate almost the entire manufacturing process. This means they have a smaller number of people working on the assembly but it also means that the machinery needs to be readily accessible if they should have problems. This model of manufacturing also saves immensely on shipping costs, and keeps jobs in the US which is important politically.

The other thing that is noteworthy about their manufacturing is that they make everything themselves if possible. Currently, Tesla makes all significant parts of their vehicles in-house. The one exception to this is their batteries, which were up until recently supplied by Panasonic. Tesla recently went into a joint venture with Panasonic during the construction of their “Gigafactory” in Nevada, where they will produce the batteries necessary for the Model 3. This presents several advantages. The first is that can make changes at any time and have complete and utter control over that decision. The second is that by making their own, they avoid the element of cost added from another company’s profit margin. This is a common way of cutting back manufacturing costs in the business world, but Tesla is surpassing others. For example, Apple is famous for having proprietary everything, and this is because they make almost everything themselves (see my article on “Why I prefer Android”), but on the iPhone X, they had to rely on Samsung to supply their displays, and this is a large factor to why is costs as much as it does. Tesla is able to bypass this, meaning the only profit margin they have to account for is their own (and they haven’t even really been doing that).

Tesla is a weird company. It innovates and doesn’t patent its technology. It shows the car industry that it’s not afraid to break the mold, and redefines what’s possible. It changes the world, and doesn’t make money. It just doesn’t care about what other people think should be possible. It shows the possibility of a future without oil, and does it with an incredible amount of style. Elon has made up his mind to change the world, and nothing is going to stand in his way.