Tesla: More than a product innovation

“[The Tesla Model 3] was the best-selling vehicle in the UK. Most months, it’s the best-selling vehicle in California. Not just electric, but overall. If we’re going to succeed, we can’t ignore this competition anymore.”

  1. Establish relationships with many suppliers.
  2. Pick out (mostly) existing parts, like axles and crankshafts.
  3. Fine tune assembly.
  4. Brand yourself (“built Ford tough”).
  5. Distribute via franchises.
  • Early on, Tesla lacked the bargaining power and scale to build a complex supply chain enjoyed by the incumbents.
  • Tesla realized a key benefit of electric vehicles: they require far fewer parts than internal combustion vehicles.
  • Tesla can continually differentiate its product so that it looks very different from anything else on the market. Existing automakers and traditional suppliers cannot recreate Tesla parts because they can’t buy or build Tesla machines.
  • Tesla can better optimize manufacturing to suit the whims of its business. There are simply fewer friction points, like supplier agreements and negotiations to manage.
  • Once Tesla has a built a successful factory with its own machines and processes, it can treat the factory as a product in and of itself (“The factory is the product”). This should be much more scalable than, for example, Toyota’s operations, which in the US alone has a dozen or more manufacturing hubs scattered across the country.
Toyota’s US Manufacturing Locations
Toyota’s 2023 bZ4X
Subaru’s 2023 Solterra

Product manager with a background in mid-late stage startups.

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Marcus Flores

Marcus Flores

Product manager with a background in mid-late stage startups.

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