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Tesla aims to create an affordable electric vehicle by controlling its supply chain through vertical integration, focusing on owning raw materials like lithium, nickel, and cobalt. The company plans to produce 20 million vehicles annually by 2030 while facing challenges such as raw material dependency, production bottlenecks, and geopolitical risks. Tesla's unique in-house model contrasts with traditional automakers, allowing for greater control but also presenting risks and complexities in supply chain management.

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Prataya Das
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5 views11 pages

Tesla upload copy

Tesla aims to create an affordable electric vehicle by controlling its supply chain through vertical integration, focusing on owning raw materials like lithium, nickel, and cobalt. The company plans to produce 20 million vehicles annually by 2030 while facing challenges such as raw material dependency, production bottlenecks, and geopolitical risks. Tesla's unique in-house model contrasts with traditional automakers, allowing for greater control but also presenting risks and complexities in supply chain management.

Uploaded by

Prataya Das
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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TESLA: Building an

Electric Vehicle global


supply chain
Prataya Das 47 , Rahul Kumar shaw 49 , Raman Mishra 52
Basic understanding of the case study

AIM - Tesla makes an affordable car uses the profit to make a more affordable
car and then uses the profit to launch a mass market practical low cost car .
HOW -Tesla aims to increase affordability ( reduce production costs and rolling
the benefits down the line to the customers)by owning the source i.e. lithium for
batteries , nickel and cobalt for body panel construction .
WHY- Tesla argues that owning the whole end to end gives them great control
over supply chain eliminating partner dependency .
GOAL- Construct Inhouse R&D, design, assembly and manufacturing within a
few centrally located giga-plants.
VISION - 20 million EV’s on road by 2030.

End to end control of supply Make sustainable margins on


Reduce costs of production by
chain eliminating external risk now cheaper cars and reinvest
owning the raw materials.
to a great extent. to further optimise costs .

Simplified process flow to address the vison –


IN HOUSE PRODUCTION
CHALLENGES AND RISKS

• Why is the inhouse model not preferred by legacy makers ?


• Does inhouse model actually reduce Costs ?
• How to mitigate supply chain disruptions ?
ONLINE ONLY OR COMBINED APPROACH

• Does online only model miss to encash on people not familiar with online
bookings?
• What are the customer benefits for the online model ?
• What alternatives are there in case of a breakdown of the online platform ?
WARP issues

• Readily available ERP systems not suitable after modification ?


• Can Inhouse ERP communicate with suppliers?
• Cross compatibility issues ?
Financial data VS organisation aims.
• Why does Tesla have a higher DIO compared to industry standard (35 days ) ?
• Why is Tesla having inventory issues when the Online order model is based on
pre booking concept ?
• How much of cash inflow is actually part of pre booking revenue ?
Avg. DPO (Supplier Payments Avg. DIO (Inventory Avg. DSO (Receivables
Company
Efficiency) Efficiency) Collection Efficiency)
Tesla 94.40 (🔝 Best) 80.42 (🔻 Worst) 19.77 (🔝 Best)
Ford 55.05 41.50 28.03
GM 25.84 (🔻 Worst) 24.64 (🔝 Best) 19.33 (🔝 Best)
Toyota 65.50 48.46 28.26
ANAYSIS OF THE SITUATION IN TESLA’S
SUPPLY CHAIN
 Tesla's Growth & Supply Chain Complexity

• Tesla has grown rapidly, aiming to scale up to 20 million vehicles per year by 2030.
• The company has established a global supply chain with gigafactories in multiple
locations.
• Dependence on critical raw materials like lithium, nickel, and cobalt creates
sourcing challenges.
 .Vertical Integration Strategy

• Unlike traditional automakers, Tesla is highly vertically integrated.


• Controls battery production, software development, and direct-to-
consumer sales.
• Built its own Warp enterprise system for end-to-end supply chain visibility.
 Challenges & Bottlenecks
• Raw Material Dependency: Heavy reliance on external suppliers for key battery
materials.
• Production Bottlenecks: Difficulty scaling production to meet demand.
• Geopolitical Risks: Dependence on China for refining key battery materials.
• Competitive Pressure: Increasing competition from legacy automakers and
Chinese EV manufacturers.
THANK YOU

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