Tesla's vertical integration and efficiency show why they're the leader in EVs

By Gabe Rodriguez Morrison
Tesla's vertical integration and its competitors
Tesla's vertical integration and its competitors
Not a Tesla App

Supply chain issues brought on by the pandemic have been particularly challenging for the automotive sector. A global chip shortage among an onslaught of supply chain obstacles have adversely affected the entire industry. Tesla's vertically integrated strategy proved to be very advantageous when facing these supply chain challenges.

Tesla's insistence on vertical integration used to be one of the main reasons the company struggled to become profitable and reach volume production. Now, it has allowed the company to scale rapidly while the broader automotive industry is down amidst a supply chain disaster.

The conventional automotive business model has traditionally concentrated on design and final assembly while largely outsourcing to suppliers. This strategy left them extremely vulnerable to supply chain turmoil.

In the past, automakers outsourced as much as possible and mainly focused on supply chain management. In the short term, this strategy reduced production costs but in the long term, legacy automakers lost the ability to adapt, innovate and advance technology.

Automotive manufacturing has typically relied on third party suppliers which has led to supply chain contingency and reliance on external companies. This business model has been successful for a long time due to the maturity of the internal combustion engine and a lack of need for innovation.

Tesla recognized the stagnant supply chain of the automotive industry and revolutionized it by adopting a vertically integrated strategy.

Tesla is a chain of startups

- Elon Musk

In recent years, Tesla has defied the conventional business model, reducing supply chain needs and reliance on other companies.

Tesla has vertically integrated many production steps, from battery production to electric powertrain production and self-driving software. According to Tesla CEO Elon Musk, Tesla is a "chain of startups."

This strategy allowed Tesla to avoid shortages of batteries, which have hindered legacy automakers from reaching volume production of electric cars. Before legacy automakers began investing in electric vehicle manufacturing, Tesla partnered with Panasonic to build its first gigafactory to produce batteries. Now, the gigafactory ensures a reliable supply of batteries.

Lucid Motors, a newer EV automaker, has also adopted a more vertically integrated business model. CEO Peter Rawlinson says that gives them a huge advantage in the modern EV technology race.

In an interview, Rawlinson stated, “The electric powertrain cannot be bought off the shelf at a world-class standard, it is not a commodity. This is a technology race and the market doesn’t see it yet."

Tesla's in-house software development is perhaps their biggest advantage over its competitors. As a Silicon Valley born company, Tesla has never outsourced their software. They have instead developed a proprietary self-driving software that is improved by collecting data from Tesla's network of over one million beta testers.

Ford CEO Jim Farley emphasized the company's need to move away from the “catalog engineering” business model at a conference earlier this year, saying "The most important thing is we vertically integrate."

Tesla is potentially going a step further to vertically integrate their supply chain. In light of the skyrocketing prices of lithium, Tesla may plan to get into the lithium mining and refining business. Tesla is considering mining some of its own raw materials for the same reasons that they developed their own batteries, produced their own electric motors and built their own computer chip and software for autonomous driving.

Tesla's pace of innovation and lead in the industry has become clear as the traditional business model of outsourcing components and software to cut production costs is quickly becoming outdated.

Cybertruck to be waterproof and serve as a boat briefly, may also appear in Cyberpunk 2077

By Kevin Armstrong
Cybertruck may appear in Cyberpunk 2077 game
Cybertruck may appear in Cyberpunk 2077 game
Cyberpunk

Cybertruck deliveries will start next year, but if you can't wait that long, you may want to head for Night City. Cyberpunk 2077 has teased that the highly anticipated vehicle in the real world may appear in the popular video game. But, if that's not enough, Elon Musk announced another exciting and unique feature for the futuristic-looking truck - it will be waterproof.

Let's start with the floating Cybertruck, which should not be a shock to anyone following the Tesla CEO. He bought the Lotus Esprit that James Bond used to jump off a pier and transform into a submarine in The Spy Who Loved Me. He purchased the movie prop for just under $1 million in 2013 and told USA Today, "I was disappointed to learn that it can't actually transform. What I'm going to do is upgrade it with a Tesla electric powertrain and try to make it transform for real."

In 2016 he tweeted that the Model S "floats well enough to be a boat," but he did not recommend trying it. Now he has claimed the Cybertruck could be used as a boat — briefly. Musk tweeted: Cybertruck will be waterproof enough to serve briefly as a boat, so it can cross rivers, lakes & even seas that aren't too choppy.

Cybertruck may appear in Cyberpunk 2077 game
Cybertruck may appear in Cyberpunk 2077 game
Cyberpunk

In a later tweet, he gave some idea of the distance he has in mind: Needs be able to get from Starbase to South Padre Island, which requires crossing the channel.

Twitter user @Erdayastronaut shed some light on why Musk would be singling out that area and distance. The tweet reads: "One of SpaceX's biggest problems is attracting talent to work at Starbase, which is extremely remote. South Padre is an awesome place to live, but it's almost an hour drive to Starbase despite being only 5 miles from Starbase because of the shipping channel." A quick check of Google Maps demonstrates what the user is describing.

South Padre is only five minutes from Starbase if you cross the channel
South Padre is only five minutes from Starbase if you cross the channel
Google

Musk's tweet also caught the attention of the Washington State Department of Natural Resources. Officials there seem to be a little concerned about the wording. The official account tweeted: Our derelict vessel crews are begging you to understand that anything that "serves briefly as a boat" should not be used as a boat.

CD Projekt RED also noticed Musk's tweet, and the makers of Cyberpunk used the opportunity to show two concepts of the Cybertruck as it would appear in Night City. Musk and Cyberpunk have had an ongoing relationship for a few years. Most recently, he demonstrated the power of the onboard computer's gaming system by playing Cyberpunk in a Tesla. However, CD Projekt RED did not mention if the Cybertruck in Cyberpunk would float.

Cyberpunk 2077 will be playable in the new Model S

Tesla hints at 'Reverse Summon' being available this year

Future Feature
By Kevin Armstrong
Tesla now mentions 'Park Seek' or what we know as reverse summon on its website'
Tesla now mentions 'Park Seek' or what we know as reverse summon on its website
Tesla

Tesla's team of Autopilot engineers is validating significant advancements to Full Self Driving Beta, including parking lot improvements. While Smart Summon and Reverse Summon were not specifically mentioned during the 3.5-hour AI Day 2022 event, parking lots were discussed, and Elon Musk gave a timeline of when enhancements are expected.

Reverse Summon or 'Park Seek' as Tesla appears to be calling it, is the opposite of Smart Summon. Whereas Smart Summon drives to you from a parking spot, users who activate Reverse Summon would have their Tesla drop them off at a location, perhaps closest to the entrance of a mall, and then find a parking spot. This feature was described by Musk on July 1, 2020, when he gave it a two to a four-month timeline.

Ashok Elluswamy, Tesla’s director of the Autopilot program, started the FSD portion of AI Day, saying, “FSD beta software is quite capable of driving the car. It should be able to navigate from parking lot to parking lot, city street driving, stopping for traffic lights and stops signs, negotiating with objects at intersections, making turns and so on.”

Several team members described how FSD has advanced and soon will be an integrated stack, meaning one code base that includes everything the program needs to navigate the car in a parking lot or on a busy highway. Musk is currently using this new stack, “it works quite well for me, but we need to validate it in all kinds of weather, like heavy rain, snow, dust and make sure it is working better than the production stack across a wide range of environments.”

Paril Jain, the Manager of Autopilot Motion Planning, expanded on what else will be included in the integrated stack, “we do expect to also include the parking lot stack as a part of the FSD stack before the end of this year. So, that will basically bring us to you sitting in the car in the parking lot and drive till the end of the parking lot, at a parking spot, before the end of this year.”

It has been previously reported that Reverse Summon would have three different modes to find parking spots that the owner prefers. The methods would include closest to the entrance, nearby a cart return, and the end of the parking lot for those who like to avoid tight spots that cause door dings. Musk said that the integrated stack is on track for release before the end of the year and maybe as early as November.

Tesla has also updated it's website to reflect this news, although no timeframe is given. The Autopilot section of Tesla's site now has a section titled "To your Destination." The description reads "When you arrive at your destination, simply step out at the entrance and your car will enter park seek mode, automatically search for a spot and park itself. A tap on your phone summons it back to you."

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View the release notes for the upcoming version 2022.36.

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Take a look at features that Elon Musk has said will be coming soon.

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