Tesla Advances Its EVs by Rethinking Traditional Automotive Supply Chain Practices: Supply Chain Management Assignment, APU, Malaysia
|University||Asia Pacific University (APU)|
|Subject||Supply Chain Management|
ANSWER ALL QUESTIONS BELOW
Read the case study below and answer the following questions:
Tesla Advances Its EVs by Rethinking Traditional Automotive Supply Chain Practices.
Historically, the automobile industry has pioneered an impressive number of supply chain innovations. Ford’s assembly line and Toyota’s lean manufacturing technique for instance, were extremely valuable for the development of supply chains in other industries. Given the backlash against fossil fuel-guzzling cars, it seemed like the golden age of automobile-inspired innovation was over.
Enter Tesla. There are quite a few companies also in the electric vehicle (EV) business, including formidable automobile giants such as Toyota and Ford. Tesla however, stands out as the only EV maker that has truly captured the public’s imagination.
Since it was founded in 2003, Tesla has become the premier electric vehicle (EV) manufacturer globally. The company’s philosophy has centralised on optimising the consumer experience and bringing to market a product that customers really want. Tesla vehicles offer drivers access to a unique blend of comfort, style, technology, and performance. None of this, however, is possible without an incredibly sophisticated supply chain system that simultaneously reflects Tesla’s values.
While there are many attributes that differentiate Tesla from other EV manufacturers, one of the most notable is its supply chain. Tesla and its polarizing CEO, Elon Musk, knew that producing some of the most advanced vehicles on the market would require the company to rethink traditional automotive supply chain practices.
The underlying Tesla’s business model is an idea that has been critical to their success – willingness (almost to the extreme) to take complete ownership of the supply chain, from the technological vision of the company to the end consumer experience.
Tesla designs, manufactures, sells, and services thought their own sales and service network. It’s not an exaggeration to say that Telsa has played an important role in the transformation of the automobile business, particularly in customer-facing practices.
Consumers in the US for instance, can go online to purchase their Tesla and choose amongst a wide array of customisation options. In their Beijing showrooms, Tesla has gone so far as to allow payment through WeChat, China’s most popular mobile messaging app. Customers that have paid though this service will also automatically “follow” the company’s updates, allowing customers to feel more engaged with the company as they wait for the delivery of their vehicle.
Despite Tesla’s phenomenal growth in the pas few years, the company is still one of the smallest auto manufacturers in the world. This means that unlike many of its competitors, Tesla cannot independently enjoy the same economies of scale. Due to the nature of their product, Tesla also has to deal with suppliers that don’t usually work with car manufacturers at all – such as battery suppliers.
Peter Carlsson, Tesla’s VP of Supply Chain, says that Tesla is trying to develop vehicles faster than their competitors. “We really want to be able to develop vehicles in a 2-and-a-half-year time frame.” Tesla also manufactures some semiconductor chips in-house. Its R&D team is capable to rewrite its vehicle software as well, which allowed it to substitute alternative options for its regular chips. This high degree of flexibility allowed Tesla to minimize disruptions to vehicle production while some other manufacturers had to shut down operations altogether.
In short, Tesla recognised the complex supply chain in the automotive industry and revolutionised the industry by using vertical integration. It takes complete ownership of the supply chain by carefully picking and choosing between conventional manufacturing practices and custom designing others that are unique to its own product. In addition to pursing its vertical backward integration strategy, Tesla is also ensuring good chemistry with its suppliers.
Also, Tesla has been vocal in their rejection of the traditional franchise-dealer sales model. Preferring instead of selling directly to their consumers, the company argues that the laws prohibiting these transactions are outdated – and the consumer is bearing the brunt of the additional cost. A report published by Goldman Sachs, an investment bank, estimates that the savings for consumers in the direct-to-consumer model is around $2,225 for a $26,000 vehicle, or around 8.6%.
Cutting out the dealership rung of the supply chain has been a challenge- several states in America have filed petitions to shut Tesla down. Despite these restrictions, the company continues to grow even in disputed areas – operating a workaround where customers can view the vehicles in showrooms but must complete orders online of on the phone and have cars shipped in from elsewhere.
Based on the information given in the article above, examine Tesla’s vertical integration strategies and its benefits. Provide examples to support.
Determine the supply chain challenges facing the automotive industry and propose appropriate remedies.
Get Solution of this Assessment. Hire Experts to solve this assignment for you Before Deadline.
Get Help By Expert
Recent Solved Questions
- Discuss a cheque as one of the negotiable instruments, its relevancy in the modern banking industry: Business Law Essay, TU, Malaysia
- TCP1201: Your updated version of the COVID-19 vaccination system now consists of 4 separate JavaFX programs: Objected-Oriented Programming and Data Structures Assignment, MMU, Malaysia
- How does Flextronics’ operations strategy help the company satisfy its customers and What specific operations competencies must Flextronics: Operations Management Case Study, RVU, Malaysia
- BM6023: The financial characteristics of companies vary for many reasons The two most prominent drivers are industry economics and firm strategy: Managerial Accounting & Finance Case Study, HWU, Malaysia
- STA60704: The ith claim amount is denoted by. Claim amounts can be 100, 200, or 400: Probability Theory Assignment, TU, Malaysia
- XBMB3104: you are appointed to give a briefing on the tiers of recommended precautions to prevent the spread of infections in healthcare settings: MICROBIOLOGY Assignment, OUM, Malaysia
- In recent years, the UK has witnessed bank failures mis-selling of financial products, and various scandals: Contemporary Issues in Banking, Assignment, KU, Malaysia
- RMGT-2313: You plan to open an Indian restaurant specializing in serving Northern Indian food somewhere in Kuala Lumpur: Production and Operations Management Assignment, UniKL, Malaysia
- Thinking skills and problem solving – University Of Malaysia- You are a single parent with three young children. Your spouse has just passed away recently due to a motor-road accident
- Ability to obtain and analyze the Thevenin equivalent circuit: Electronic Assignment, MMU, Malaysia