>They could certainly get commodity seats from a traditional auto supplier, but they must have some line-of-sight to making them cheaper, or better or maybe just more customized than what a supplier would produce.
That's what they think. What do you think? Do you think it's possible for a single player to be the best builder in everything?
When it comes to manufacturing, the world is flattening out. You can produce things from components built and sourced all over the world. But Tesla is going in the other direction. One has to at least question their reasoning, and not assume "Elon knows best".
Personally I’m rooting for Tesla’s vertical integration approach. Tesla doesn’t need to be the best, just good enough to make a component of adequate quality for less than what the supplier would charge for it. I do think they’ve figured out some places where they can get to that level.
For commodities like semiconductors it would be insane to try and open your own fab: those players are so much more sophisticated than anyone else. For mechanical components I think they logic is a lot more complicated. In a phrase: it depends. I’ve been working in product development for a few years and have been to overseas factories to help set up assembly lines. Some suppliers are fantastic and we won’t beat the quality / price. Others just don’t seem to get it and we’ll spend months and many engineering hours basically teaching them how to build what we need. It’s those cases where I would personally prefer to be more vertically integrated.
That's what they think. What do you think? Do you think it's possible for a single player to be the best builder in everything?
When it comes to manufacturing, the world is flattening out. You can produce things from components built and sourced all over the world. But Tesla is going in the other direction. One has to at least question their reasoning, and not assume "Elon knows best".