Elon Musk, CEO of Tesla, is known for his innovative approach to automobile manufacturing. One key aspect of this approach is vertical integration, a strategy that allows the company to control every step of its supply chain. This approach has many advantages, including cost savings, increased efficiency, and improved quality control.
Tesla’s vertical integration strategy includes owning its own stores, service centres, and charging stations. It also manufactures many of its own components, including batteries, which are a critical part of electric vehicles. This level of control allows Tesla to quickly respond to changes in demand and to adapt its production processes as necessary.
Despite the many advantages, vertical integration also has potential drawbacks. It requires a significant amount of capital and can make the company vulnerable to fluctuations in the market. Additionally, it can lead to complacency and a lack of innovation if not managed carefully.
Yet, Musk remains committed to this strategy. He believes that vertical integration is essential for Tesla’s success and has publicly stated that he plans to increase the level of vertical integration in the future. This commitment is reflected in the company’s recent decision to manufacture its own battery cells, a move that is expected to significantly reduce costs and increase the range of its vehicles.
In conclusion, Tesla’s vertical integration strategy is a key part of its success. It allows the company to control every aspect of its supply chain, resulting in cost savings, increased efficiency, and improved quality control. However, it also requires significant capital and can lead to complacency if not managed carefully. Despite these potential drawbacks, Musk remains committed to this approach and plans to increase the level of vertical integration in the future.
Go to source article: https://insideevs.com/news/450316/elon-musk-tesla-vertical-integration/