Tesla's Pricing Strategy - A Modern-day Take on Henry Ford's Assembly Line Legacy?

By Kevin Armstrong
Ford introduced the assembly line in 1913
Ford introduced the assembly line in 1913
Ford (edited by NATA)

In 1913, Henry Ford introduced the assembly line in Highland Park, Michigan, revolutionizing the automotive industry and drastically reducing the price of the Model T. This groundbreaking innovation led to the collapse of hundreds of rival car companies, unable to compete with Ford's cost-effective production methods. Fast forward to 2023, and we witness a similar dynamic unfolding in the electric vehicle (EV) market, with Tesla leading the charge.

Tesla's continuous advancements in technology and manufacturing and strategic price reductions have raised questions about whether history is repeating itself. Are Tesla's actions, reminiscent of Henry Ford's assembly line legacy, catalyzing Darwinian forces in the EV market and forcing competitors out of the game?

Adam Jonas from Morgan Stanley raised this question during Tesla's Q1 2023 earnings call. Elon Musk, Tesla's CEO, clarified that the company's pricing actions are not aimed at deliberately undermining competitors. "We really don't think about competitors that much," he stated. Instead, Tesla focuses on improving its products, making them more accessible, and enhancing customer service.

Tesla's Unique Strategic Advantage

Musk acknowledged that Tesla does have a unique strategic advantage. The company is developing cars with potential autonomy, which may be worth significantly more in the future. This factor allows Tesla to sell its cars at zero profit while benefiting from the net present value of future cash flows associated with the asset. Tesla also enjoys ongoing revenue streams from service, charging, insurance, and other areas, which competitors may not have.

Tesla's Supportive Approach to the EV Market

Elon Musk emphasized that Tesla's actions are not malicious or intended to destroy competitors. The company has made its patents available for free and opened up its supercharger network to other manufacturers. Tesla's approach is to support the growth of the entire EV market, not to monopolize it.

As the electric vehicle market continues to expand, it is essential to recognize Tesla's role in driving innovation and adoption. While the company's pricing strategy and technological advancements may draw comparisons to Henry Ford's assembly line, Tesla's commitment to supporting the growth of the entire EV market sets it apart.

Despite similarities to historical precedents, Tesla's current approach fosters a collaborative environment and encourages competition. This strategy ultimately benefits the global transition to sustainable transportation and pushes the entire industry toward a greener future.

Tesla Begins Testing FSD in China

By Karan Singh
Not a Tesla App

Tesla was recently granted permission to test FSD on Chinese streets – specifically in Shanghai. Just recently, Elon Musk visited China and discussed the potential for FSD to come to China.

Gearing Up for FSD China

This is just the first step for Tesla to begin its customer deployments of FSD – Tesla conducts similar ADAS testing in North America, where special testing vehicles and testing employees run the latest FSD (Supervised) versions against a gamut of real-world, real-life tests.

Tesla has recently been working on translating FSD release notes into multiple languages, alongside building a data center in Shanghai and establishing an FSD Operations and Labelling team at the same center. These are the first, key steps to bringing FSD to a new market that has unique and different traffic rules when compared North America.

China doesn’t have the regulatory hurdles or challenges that Tesla faces in Europe to bring FSD and has been working with Chinese corporations as well as the government, which has now provided its official approval for FSD testing in-country.

We might even see FSD deployed to early testing customers in China by the end of 2025.

ADAS Competitors

There are quite a few competitors in the Chinese market already- with challengers like Xpeng and Xiaomi working on building their own homegrown systems, mostly driven by a mixture of cameras, radars, ultrasonic sensors, and LIDAR. However, many of these systems face similar challenges to other non-Chinese competitors and don’t have the mileage under their belts to tackle Tesla’s dominating lead in data and data processing.

European Union

Tesla is poising itself for an FSD rollout internationally, with increased testing also taking place in the UK, France, and Spain – some of the key locations with unique infrastructure in the European Union. However, some EU-specific regulations restrict how FSD can perform – each and every action must be manually approved by the driver. Until that regulation is changed to adapt to systems like FSD, it won’t be making its way there just yet.

Tesla Cybertruck to Receive Charging Improvements in Upcoming Update

By Karan Singh
Not a Tesla App

Former Tesla VP of Powertrain and Energy Drew Baglino previously mentioned that Cybertruck would be receiving charging improvements soon.

Wes Morrill, Tesla’s Cybertruck lead engineer, recently reposted Baglino’s comments on the charge speed update on June 16th and mentioned that it would be coming soon via OTA.

Charging Improvements

The 4680 cell has seen some difficulties in its charge curve, similar to Tesla’s other vehicles that have been deployed with the 4680. Tesla has alluded to difficulties in the manufacturing curve previously, and also with engineering improvements to the new cell standard, and eventually stopped manufacturing the Model Y with the 4680 cells.

However, this is the first time that Tesla has begun to deploy major improvements to the 4680 cell. It appears the improvements will allow up to 154 miles to be recovered in 15 minutes, which is approximately a 30% improvement to current charge rates.

We’re hoping that these improvements to the 4680 will also translate to older Model Y vehicles that have 4680 cells, which will be key to the owners of these vehicles. 4680 production is currently mainly focused on Powerwall, Megapack, and Cybertruck – with Semi not using 4680 yet.

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