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.
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Tesla’s Giga Texas factory usually gives us the first site of Tesla’s upcoming products. We first saw the Cybertruck and Model Y castings here. With Giga Texas being one of Tesla’s largest factories, it’s logical that most products would originate here.
Tesla has also stated that it intends to manufacture the Cybercab, Semi, the next-generation vehicle, and Optimus at Giga Texas over the coming years. The affordable vehicle and Cybercab were originally intended to be manufactured at Giga Mexico, but the plans for that facility were waylaid by changes in economic policy.
Robotaxi Castings
These new castings were spotted by Joe Tegtmeyer, who regularly does drone flights of Giga Texas. Joe pointed out that these castings don’t look like the usual Model Y or Cybertruck castings usually seen outside Giga Texas.
With an eagle eye, @minusYCore on X also spotted some interesting text on the frames holding the castings up. In particular, the castings say “RTTX050” and “W68-RSF AS-CAST”. These could be interpreted as ‘Robotaxi Texas’ and ‘Rear SubFrame,’ as Tesla marks Cybertruck castings as “CTTX.” The as-cast portion indicates that these particular castings haven’t been trimmed yet, according to the X user.
The castings laid out.
@JoeTegtmeyer
The size and shape of these castings—combined with rumors that Tesla’s more affordable vehicle has been delayed—suggest that these castings are intended for the Cybercab.
These castings are much flatter and appear to be a different size than the castings found throughout Giga Texas, indicating that they are intended for an entirely different product.
It’s possible that these are the first castings used by Tesla to test their unboxed assembly process, which the Cybercab is expected to rely on. If you take a closer look at the video below, you’ll note that these new castings look very similar to the ones in the unboxed assembly video.
Interestingly, Tesla did say that they don’t intend to have the Cybercab available for customers before late 2026 or early 2027, but we’ll likely hear updated timelines as Tesla’s Q1 2025 Earnings Call tomorrow.
A more vertical look at the castings.
@JoeTegtmeyer
New Giga Presses
To top it all off, new parts for a Giga Press - the machine Tesla uses to make these castings - were also sighted in Texas. These machines are few and far between, and each one is highly specialized for the particular vehicle it produces. Seeing new parts coming in usually indicates that a new assembly line is under construction, or that changes are being made to an existing line to either expand it or update it.
There’s a lot happening and we will hopefully know more tomorrow evening.
Tesla’s first large-scale partner for the Tesla Semi - PepsiCo - is building out another Semi Megacharger site per a recent filing found by MarcoRP. Building out these Semi charging sites is expensive due to their much higher power output when compared to Superchargers.
Name Change
Interestingly enough, Tesla appears to have shifted its terminology recently, now often referring to the Semi’s high-power charging solution as Tesla Semi Chargers instead of the previously common "Megachargers." Regardless of the name, these chargers are crucial for the Semi. They’re designed to deliver 1.2 megawatts of charging power capable of adding hundreds of miles of range in roughly 30 minutes.
Frito-Lay Site
The new site detailed in the recent filing will be located at a Frito-Lay production plant on Hageman Road in Bakersfield, California. Permits were filed just a couple of days ago for the installation of eight Tesla Semi Charger stalls along with their associated electrical equipment.
This facility adds to PepsiCo's existing network of chargers, supporting the Tesla Semis operating out of their Sacramento facility, and highlights Bakersfield as the next expansion of the Semi’s operational area. Notably, this new Frito-Lay charging site is strategically located just five miles (approx. 8 km) away from a massive future public charging complex Tesla is planning on Kelton Way.
Kelton Way Charging Complex
Tesla’s planned charging complex in Bakersfield, which is just down the road, will feature 72 Supercharger stalls, as well as 18 Semi charger stalls. According to pre-permits filed last month, this site will be fairly large and accessible to both the public and Tesla’s partners.
A rendering of the Kelton Way site - with the Semi Chargers on the outside, and the Covered Supercharger site in the center.
@MarcoRPi1 on X
Tesla plans to develop a vacant plot right off the interstate into a large charging hub, which is now the second major public Semi Charger site we’ve heard about. For now, these sites will remain rare, but we expect that Tesla and its partners will be happy to expand them out further as required.
Carson Semi Charger Site
These Bakersfield developments – both the private Frito-Lay site and the large public Kelton Way hub will help lay out the necssary infrastructure for the Tesla Semi, much like the early days of Tesla’s Superchargers. Since Semi cannot be charged at a Supercharger site (the MCS plug is notably different than NACS), these sites are a must-have.
Tesla's first publicly accessible Semi Charger site planned near the Port of Long Beach in Carson, California, was one of the first signs of these types of Semi Charger facilities being established - and like Kelton Way, it also includes amenities for truck drivers. Tesla is also considering what long, medium, and short-haul truckers need for their stays at these sites.
As Tesla works to ramp up production of the Semi itself, the parallel expansion of dedicated, high-power charging infrastructure by both Tesla and its key partners are essential to making electric heavy-duty trucking a reality.
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