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(23-02-2018, 02:47 PM)HitandRun Wrote: [ -> ]For Tesla's fan boys, they can believe what they like....  Big Grin

But serious investors who like some insight, they may wish to refer to this link:

Tesla's Main Suppliers

Or

Tesla's Model X Supplier


In the automotive industry, there is no need to build everything from scratch. The key automotive suppliers are always keen to help one out, for a price of course. That's why even this small Singaporean company, can come up with its own car.

Singapore Electric Car


Niche auto manufacturers like Porsches, Ferraris, McClarens etc. rely heavily on their suppliers. Ditto for the big boys like Volkswagen and Toyota.

Thanks for the links. But it doesn't prove or disprove the 80% vertical integration number though.

It is well understood that the Auto Industry has largely gone out-sourced in the recent years. It is also well-known that Tesla is trying to challenge the status quo and the presumption that out-sourcing is the best way to go. And only time will tell who is right.

But at the end of day, what matters most, is whether or not they could mass produce their batteries and cars in a way that have better margins than the rest (both price point and cost matters). In which case, Tesla still has a clear lead (average selling price per car, and battery price per kwh).

If "serious investors" have strong conviction that Tesla is going down, they are welcomed to short the stock. The beauty of the market is, at the end of the day, it is a weighing machine, and not a voting machine.  Smile

(vested in Tesla)
@Wildreamz : If you are not vested, you should check out Nvidia which makes the chips that power Tesla Car's AI and software system. Over past 2 years share price jump from $10+ till $250+. Strong growth in core gaming processors segment, AI processors and crytocurrency mining processors. That's revenue and PROFIT growth.

AFAIK The main frame/body/chassis of the Tesla S is made at their own factory in Fremont California. Obviously the metal has to be processed from ores at a smelter and pressed into sheets before supply to the factory. Pretty sure Tesla doesn't own their own steel/aluminium furnace/smelter.

Internals whilst assembled in house, will not be fabricated in house. Example : If you follow our local Memtech, Tesla is a customer. Memtech has seen a surge in share price in recent years partly due to this. According to analyst report they supply functional plastic components related to Tesla's core batteries and a few other parts. So Tesla/panasonic Gigafactory may make their own batteries but components will be sourced from third party like Memtech, and whoever supplies Panasonics' battery business.

(regarding the battery, I am actually keen to see if Tesla can pull of "hot swap" plug and play spare battery pack since their battery is using the usual small battery cells. That would solve the charging time/limited range problem)
@BlueKelah Thanks for the suggestion. Nvidia has been on my watch list for about a year, but I'm seeing a trend that companies are designing their own chips (Google with their TPU, and Apple with their A and W series Chips). Even Tesla announced that they are ditching Nvidia to design their own chips late last year (that's after they ditched Mobileye). I'm just not sure how long Nvidia can maintain their dominance.

I agree that the level of vertical integration is a complex issue. I don't think Tesla takes ores and output cars, lol. That said, whether the 80% number is true (or what it actually means), I think it is fair to say Tesla have a high degree of vertical integration, more so than most car manufacturers? 

Regarding profitability, I believe "net profitability" is not an absolute necessity for a fast growing company. But in the most recent quarter, Elon mentioned:
Quote:So 2018 is likely to be a very big year for us. At some point in 2018, we expect to begin generating positive quarterly operating income on a sustained basis, operating 5,000 per week of Model 3 production, and I am cautiously optimistic that we will be GAAP profitable. It's not certain, but I'm cautiously optimistic that we will actually be GAAP profitable with no asterisk.
https://seekingalpha.com/article/4144365...transcript
Would Tesla ever be profitable? I think we shall have our answers very soon.
This are some intersting articles about Hyundai. Basically Hyundai is able to TAKE ORES and OUTPUT cars. lol... Perhaps thats why they are fast rising as a global car manufacturing powerhouse.

https://www.forbes.com/forbes/2011/0314/...ea8395476d
[The Korean carmaker is bucking decades of automotive history by tapping its Hyundai Steel unit to produce virgin steel for cars rather than buying it from suppliers. Hyundai has already invested $5.5 billion to open two new blast furnaces in Dangjin, about 75 miles south of Seoul, capable of producing 8 million tons of automotive steel annually. And it's not done yet: A third is in the planning stages that would add capacity for another 4 million tons.]

https://www.drive.com.au/motor-news/how-...229-gtjllf
[We joined the workforce for two days, starting in a stamping plant where 40-tonne dies press sheets of steel into pieces that become a car's core structure. The blanking press applies around 5400 tonnes of pressure to steel sections that become one of 17 body panels including a car's bonnet, roof, doors, or floorpan. ]

As you can see Tesla is not the only major car manufacturer with high vertical integration. In fact, all big car manufacturers can have this ability, just a matter of whether they want to or not. Ford also had integrated steel mill with its plant in the 1920s but divested that later as it probably became more cost effective and less management headache to just concentrate on the car design and engine production.

Company like Apple and Google have too much $$ to burn. It very capital intensive to do semicon wafer manufacturing on a big scale and I do not envision them making much headway into the semicon chip market, unlike Nvidia / Intel /TSMC / Samsung which are already established. At best they can probably produce specialized chips like the TPU for their own use.

Actually I do think Tesla car division can be making some profit, they are gaining a lot of market share in the high end luxury segment. However the two headwinds will be any sudden rise in interest rates which is happening as we speak and not to forget SolarCity after the takeover seems to be shrinking in market share and piling up the losses for Tesla.

Now market sentiment is good, Tesla can benefit by easy cash raising and just diluting all the opmi. But should market crash, Tesla could have serious cash flow problems given their total debt with solar city included is really staggering amount liao.
hi all, please take note that there should be no stereotyping here (ie. using the word "fan boys")

Moderator
(24-02-2018, 12:28 PM)weijian Wrote: [ -> ]hi all, please take note that there should be no stereotyping here (ie. using the word "fan boys")

Moderator

ok ok edited to just opmi. Big Grin
Just a minor point to add to the discussion of chips: TSMC/Intel/Samsung operate foundries. Nvidia, Qualcomm, Mobileye etc. are fabless chip makers; ie. they just do the designing of the chips. While Apple and Google design their own chips, they both uses TSMC foundries for fabrication (outsourcing). I believe Tesla do not operate foundries in their Gigafactory, but who knows?

To be honest, I am not sure if Tesla input ores and output cars, which is why I refrain from discussing the details, and only quote 3rd parties with more access to the inner workings of the Gigafactory. I think it is fair for people with relevant industry knowledge to question the claim. Personally I take the analysts' word.

A few interesting points:
1. The Gigafactory is specifically located near lithium sources (mines):
Tesla Could Be Near All the Lithium It Needs for Its Car Batteries
https://www.inverse.com/article/35618-te...pervolcano

Quotes from Elon:
2. "It makes sense for rail cars of raw materials to come in one side, and then for finished vehicles to exit the other side."

3. "One way to think of manufacturing efficiency is how long a journey did that molecule take from when it was mined. So if it was mined in one part of the world, and eventually does several trips around the world before it ends up in a finished product, that's fundamentally expensive."
(24-02-2018, 10:17 AM)BlueKelah Wrote: [ -> ]This are some intersting articles about Hyundai. Basically Hyundai is able to TAKE ORES and OUTPUT cars. lol... Perhaps thats why they are fast rising as a global car manufacturing powerhouse.

https://www.forbes.com/forbes/2011/0314/...ea8395476d
[The Korean carmaker is bucking decades of automotive history by tapping its Hyundai Steel unit to produce virgin steel for cars rather than buying it from suppliers. Hyundai has already invested $5.5 billion to open two new blast furnaces in Dangjin, about 75 miles south of Seoul, capable of producing 8 million tons of automotive steel annually. And it's not done yet: A third is in the planning stages that would add capacity for another 4 million tons.]

The comparison to Hyundai may not be exactly apple to apple. A highly vertical integrated model would "pass from left hand to right hand" but the Hyundai example is probably more of "brother's hand pass to sister's hand", to extend the analogy abit.

Business models and methods don't remain static. The earlier part of the 20th century, compared to the later half, had much restrictions wrt communication, transportation and supplier management. I guess a more vertically integrated model has pros than cons in the earlier part of the 20th century. Overall fixed and head costs would be higher but those costs might have been bearable against all other problems like feedback on defects, managing suppliers' consistency of products or communicating and managing transportation bottlenecks. Maybe that's why Mr Henry Ford went with a "highly vertically integrated model" in his time.

Faster forward after WW2, Deming and ISO became mainstream and standardization was promoted. Automobiles also became more complicated as more functions (leisure, safety, maneuver) were added. As such the equation may have shifted and that's where we are seeing where all the automakers are today - they mainly only take care of design, assembly and marketing, while they maintain smaller overhead costs (supplier management) and prevent the need for RnD in those parts (eg. a car maker might partner with Michelin for new generation tyres but don't incur large expenses in order to own the IP anymore)
Tesla Model 3 tops Jan-Feb 2018 EV sales in US, according to new report
https://www.teslarati.com/tesla-model-3-...les-chart/
By Simon AlvarezPosted on March 5, 2018
[Image: LwbrrLv.png]

Initial numbers look promising.
Model X crashed and tesla stock tumbling, will Tesla be able to ramp up model 3 production and actually break-even?
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