The 7 “Secrets” To Tesla’s Success

hi John McElroy here talk at all things Automotive today I want to talk about why Tesla is so successful I call this the seven secrets to Tesla's success but those of you who have been following Tesla closely know that there's not really any secrets here some of you already know what I'm about to tell you but a lot of people especially those in the Auto industry have no clue how differently Tesla is doing things differently from Legacy automakers and while some of you probably heard about some of the things I want to cover today you probably have not had it laid out in a logical step-by-step progression so let me share with you the things that I've learned today Legacy automakers are scrambling to try and replicate Tesla success but I believe only three of them probably Ford Toyota and Renault truly understand what they're up against the rest of them seem to believe all they have to do is double down on the old way of doing things to catch up I don't think that's going to work Ford Toyota and Renault are the only ones who have carved out stand-alone EV business units and are treating them as startup companies I think that's the right way to go but it doesn't guarantee that they're going to be able to pull it off you see Tesla is playing by a completely different set of rules the way it designs Engineers manufacturers and sells its cars is very different than anyone else has done before in fact the way Tesla runs its business is different from any other company that I'm aware of not just the automotive ones here's what I've learned about how Tesla does things I don't claim that this is a full or comprehensive list of how it does things differently but there's enough here to show the Legacy automakers just how far behind they are the first secret starts with first principles Elon Musk has talked about this for years that's the idea of going back to basic physics to figure out what you're trying to do it is Tesla's most important guiding principle instead of benchmarking other automakers or tearing down competitors vehicles to analyze them or coming up with some kind of work around Tesla uses basic physics to figure out how to overcome any engineering problem this is exactly how SpaceX figured out how to land Rockets vertically when everyone else said it was impossible the second secret is developing a software-defined vehicle or what's called an sdv that's where every single function in a car is defined in software from managing the battery pack to raising and lowering the windows to whatever Legacy automakers are also getting into stvs but so far they've only done bits and pieces of it Tesla's been doing sdvs for over a decade and the legacies are not going to get there until around 2025. once a vehicle is defined in software then it's possible to update it without adding any hardware all you need to do is beam new software over the air and into the car Tesla has even improved suspension Dynamics and braking and even the sound system with over-the-air updates Legacy automakers can do some OTAs but it mainly involves updating navigation maps or putting new icons on the infotainment Center the Third Secret is using a zonal centralized Computing system in the vehicle that's where all electronic controls are laid out by different zones in a car the left side and the right side the front and the back Legacy automakers group their computers by domains domains that include powertrain or brakes or steering or chassis they don't do it by Zone but by using zones Tesla can use far less wiring which Cuts weight and cost and Tesla uses centralized Computing to control it all literally a couple of powerful microprocessors to handle almost all of the Computing Legacy automakers have chips in just about every component in a car including the lights and the seats and the window lifts and the door locks you name it this is why the legacies were crippled when the chip shortage hit and why Tesla was largely unaffected Tesla just doesn't use as many chips most Legacy automakers will have sdvs and zonal centralized Computing around 2025. that means in 2025 they'll catch up to where Tesla was in 2010 and that's got to make you wonder how far ahead Tesla is going to be in 2025 the fourth secret involves using digital twins to develop cars and how they're manufactured a digital twin is exactly what it sounds like it's a twin of a product or a process that exists in the digital world that means you can operate every single function in a car in the digital world to make sure everything works properly before you commit to Hardware even more you can create a digital twin of a factory and run it in the digital world to work out any problems before you commit to putting putting up bricks and mortar one reason why Tesla can build new assembly plants so quickly is that it's been building digital cars in digital factories well before the real world job one rolls down the line digital twins also explain why Tesla does design changes on the Fly either on the cars themselves or in its manufacturing operations it can test out everything quickly with its digital twins make sure it's going to work and then put it into production Legacy automakers typically take years to make design changes the fifth secret involves putting all the engineers on a program in one room reporting to one person Legacy automakers of course are organized in silos design is located separately from engineering which is separate from manufacturing which is separate from purchasing and so on down the line even most Legacy engineering departments are organized in silos which adds layers of management and bureaucracy and slows down communication and decision making Tesla's sixth secret to success is not really much of a secret because everyone knows about it that's how Tesla Sells Cars it's direct sales to customers eliminates the Acres of inventory that you see on the lots of every Legacy dealership Ford estimates that gives Tesla a two thousand dollar per unit cost Advantage simply from eliminating most of that inventory some people believe that the savings come from eliminating the Dealer's profit but the real savings come from getting rid of all that inventory and the seventh secret is that Tesla has a software operating system for the whole company not just an OS for its cars but an OS for the company that replaces a myriad of other purchased software systems it handles Tesla sales Financial Services accounts payable Human Resources including hiring document generation and a host of other functions all the software for this OS was written in-house which is how Tesla does things in-house look there's far more details that go into each of these secrets but in the interest of brevity this should give you a clear picture that Tesla runs far differently than any other Legacy the automaker the reason why I think Ford Toyota and Renault are the only automakers who recognize what they're up against is because they're the only ones that have carved out separate EV business units that are going to function like startups that's what I believe it's going to take to compete with Tesla a startup mentality because the old way of doing things just isn't going to work

Channel: Autoline Network

Views: 14,910

Keywords: cars, vehicles, vehicle, free global automotive news, car news USA, ev, battery, autonomous car, top auto news, self driving car, car, Tesla, Elon Musk, BEV, electric car, software defined vehicle, digital twin, Ford, Toyota, Renault, First Principles, OTA Update, over-the-air update, centralized computing, zonal computing, legacy automaker

Id: 7Etc_IVWG1A

Length: 8min 5sec (485 seconds)

Published: Sat Aug 05 2023