As a knowledgable businessman, Elon Musk has worked incredibly hard to vertically integrate Tesla's business structure, but although it may have been costly at first, the strategic move will allow for higher profit margins and faster innovation. In this video, I talk about Tesla's underlying weapon and how it will allow Tesla to easily outcompete its competitors.
If you enjoyed this video, please hit the like button and subscribe so that I know you want to see more videos like this. Also, please consider supporting me on Patreon at https://patreon.com/casgains
I appreciate your support!
Music used in its respective order:
https://www.youtube.com/watch?v=5cmlgvekbYY
https://www.youtube.com/watch?v=RXLzvo6kvVQ
https://www.youtube.com/watch?v=RTGEoh-vPIc
https://www.youtube.com/watch?v=-SjOkb3kVgI
https://www.youtube.com/watch?v=kqh0r8lEo5M

Los Angeles November 2019, the skies are polluted, the world is addicted to oil, but we're here to offer a solution: the cyber truck like 100 years trucks to bed. Basically the same. We want to try something different, so I present you, the cyber truck with the rise of electric vehicles in general. The automobile industry is quickly evolving.

Many traditional car manufacturers have already unveiled their upcoming electric vehicles, including the Ford Mustang Mach II. The BMW I for the for electric f-150, the Volkswagen id3 and the GMC Hummer. However, there's one key aspect about electric vehicles that legacy automakers don't seem to be catching on to vertical integration. Vertical integration is a well-known business tactic that involves taking over the entire manufacturing process of a product.

From start to finish, the tactic has driven the largest companies in the world, including Netflix Target, and even the ones driving u.s. steel corporation, led by Andrew Carnegie. One of the richest people in history, the process of vertical integration, varies from industry to industry, for example. Target creates distributes and sells all of their products.

On the other hand, vertical integration for Netflix means creating their own movies and providing those movies on the Netflix platform. This strategy has allowed many corporations to out-compete their competitors and with Tesla it is no different for decades. The auto industry has refused to vertically integrate, rather than producing the cars in-house legacy, automakers purchased them from suppliers, for example, Ford obtains most of its parts from 100 different suppliers and General Motors obtains the majority of its parts from 70 different suppliers. However, with so many different car parts, this list of suppliers actually goes even farther than that, as Ford actually has 750 first-tier suppliers.

This is inefficient, complicated and costly. Elon Musk has recognized this and looks to revolutionize the automobile industry and make the legacy automakers follow his footsteps. Tesla's vertical integration has allowed the company to out-compete its competitors and continue to out-compete in the future. For example, instead of relying on the third-party electric vehicle chargers that began to ramp up Tesla built its own super charging Network, along with the super charging Network, Tesla has also vertically integrated the manufacturing process to the maximum extent, Haslip reduces the computer chips for its autonomous Network has driven the development of battery production and will soon develop.

Its own battery has moved its e production in-house, produces its own electric motors, manufactures its own in-car, HVAC and HEPA filter and has even been in serious discussion of getting into the lithium mining business. This allows not only for higher profit margins but, more importantly, faster innovation with Tesla's body investor day approaching, it's no secret that Tesla's body has had some incredible battery breakthroughs. These breakthroughs have all been patented and we'll secure, Tesla's competitive advantage. That is years ahead of the legacy automakers.
If Tesla had taken the route of relying on suppliers like Panasonic Tesla would be just like the legacy automakers when it comes to range acceleration in top speed. This innovation applies all across Tesla's business, with the most notable one being self-driving many legacy. Automakers are relying on suppliers to help their vehicles have an option for self-driving. The logic is that, once the technology is ready from technology, companies like Google and they can purchase the self-driving technology from these suppliers.

However, unlike the legacy, automakers Tesla has gone full in on self-driving, with arguably the biggest lead out there. Now, I'm sure Tesla won't be lending that technology to others unless it gets stolen. Nasa has also vertically integrated the energy portion of the sustainable energy sectors with Paris, solar panels and electric vehicles. This allows them to further innovate on their electric vehicles, as electric vehicles rely on energy storage and will soon have solar panels with the release of the cyber truck overall Tesla's vertical integration will ultimately allow them to dominate the automobile industry by allowing them to increase profit Margins and provide further innovation.

If you enjoyed this video, please hit the like button and subscribe so that I know you guys want to see more videos like this. Also, please consider supporting me on patreon in the description below. I appreciate your support.

By Stock Chat

where the coffee is hot and so is the chat

31 thoughts on “Tesla’s secret weapon: vertical integration”
  1. Avataaar/Circle Created with python_avatars Timothy Lim says:

    creating ones own components is backward integration not vertical.

  2. Avataaar/Circle Created with python_avatars Roberto C says:

    Tesla cars will have solar roof glass in a near future. Melon Husk is a genius!

  3. Avataaar/Circle Created with python_avatars padiyarvishal says:

    Casgains :Can you do a bear case analysis on Hyliion? This one is hyped as well with no profitability, revenues till 2021, yet its market cap is projected to be 10 billion

  4. Avataaar/Circle Created with python_avatars TheAdekrijger says:

    Dude work on your voice it is too monotonei and your pronunciation is off.

  5. Avataaar/Circle Created with python_avatars jafar ke says:

    But Tesla model s do have many companies supplying windshield to seats

  6. Avataaar/Circle Created with python_avatars ScanaDaze says:

    How much do you want to make a bit that in all he is doing none of it is his. He just being used as an tool. Here is why. I'm not saying it although others are, all of his vehicles have been proven garbage. Then his rockets garbage. Who knows about his solar. Then so called satellites that are only on an rail system. Now an so called high tec weapon. So what movie is this? Tony Stark. He made none of it. Just an puppet and you all fell for it. He even said it himself, he has no education. My question is then, can he even read to do very huge math equations. Most likely not. Anyone want to buy some swamp land? Area 51 is saling. Better hurry up. He is just a puppet.

  7. Avataaar/Circle Created with python_avatars Anonymous Wolf says:

    vertical integration is not the holy grail. It makes most sense in new markets because their are no suppliers to source from. In the EV business it makes sense in the ICE business it was the right thing to control the core technology (the ICE) and have multiple supplier for the rest. The problem of course is when this core technology gets obsolete.

    But there are so many vertically integrated business which have a problem with it now. Siemens, Thyssen Krupp, …
    In their early days (as the market was a new one) it made sense to vertically integrate, nowadays it would be better if they source some stuff from the market (because it is developed now).

  8. Avataaar/Circle Created with python_avatars Robert Mcwilliams says:

    Cyber trucks to give larger cargos of trafficked children for all the elites adrenochrome needs ! We see you and we don’t even need a triangle with a magic eye just common sense decency and a knowledge of criminality and corruption!

  9. Avataaar/Circle Created with python_avatars K B says:

    Tesla is designing the circles, the others are trying fit the square into the circle by cutting corners/redesigning.

  10. Avataaar/Circle Created with python_avatars Reza Sadr says:

    Bro your video is one of the most amazing one! but the script reader should has more energy/confident in the voice. How can I make a video like this?

  11. Avataaar/Circle Created with python_avatars Aerrow Nex says:

    vertical integration doesn't always work in your favor. It increases capital investment and risk and can cause liabilities when you can't sell or have too much competition. vertical integration also ensures that you follow your own standards and make it impossible to use your components elsewhere. Building an entire supply chain can seriously backfire and hold back speed of innovation. Its not a new concept. Its an old concept and it died once the number of components became too many to handle. Electric cars allow larger integration with reduced number of components but its still a risk and capital intensive. Electric cars are not exactly very low in components. They still have plenty of components that make up a car from A/C's to bearings and couplings and control systems.

  12. Avataaar/Circle Created with python_avatars Shaima Hylas 63 says:

    Unfortunately vertical integration does necessarily not equate to more profits and therefore business success, as it is a double edge sword. In the 80's US auto industry was more vertically integrated that the Japanese companies, that by focusing in a few chore skills (design, quality and just in time manufacturing) where much more efficient and were beating the hell out of US companies. US companies then adopted the Japanese manufacturing techniques and prospered again starting in the late 80's and thereafter. In Tesla's case vertical integration has become a key to its success, but not because vertical integration per se is better. Two key reasons are as follows: (A) lithium batteries for large scale applications like cars is anew technology and availability is limited. Tesla is driving innovation in this area and developing proprietary technology while rapidly expanding manufacturing capability that is not available to others. This translates that Tesla's cars have a higher range than competitors's vehicles making them instant winners. A similar argument applies to self driving technology. (B) Tesla as it started from scratch scratch and had visionary Elon at its helm, targeted transforming the whole auto industry supply chain by taking out key inefficiencies with more automation, less inventory, less transportation of parts from place to place, no dealer network, etc., while simultaneously starting a new product category, a dual goal that was crazily ambitious indeed . This could only be achieved through vertical integration. So in fact vertical integration was a tough burden that almost made it fail during 2018 and 2019, but of which it ultimately come out victorious. And lets bear in mind that vertically integrating the manufacturing of an electric car is feasible whereas doing this with an internal combustion engine is next to impossible. So I challenge you to research this subject further and make a more detailed analysis explaing how and why Tesla is succeeding with this business model.

  13. Avataaar/Circle Created with python_avatars j evans says:

    I wish that he would design an air purifier. Since air pollution is a problem, I feel this would be cheaper fir people that wanted to own something from Tesla.

  14. Avataaar/Circle Created with python_avatars Pat McDaniel says:

    I hope the cybertruck factory goes in anywhere but Texas. Texas has tried to block Tesla at every turn. Build it anywhere else but in a state that blocks the company.

  15. Avataaar/Circle Created with python_avatars Guy says:

    Tesla vertical integration may not be as proned to Union strikes as their factory will be almost fully automated and possibly non-unionized. Their fewer employees will be mainly highly specialized engineers & technicians who do not need union protection.

  16. Avataaar/Circle Created with python_avatars Rick Shaw says:

    Henry Ford was one of the first business leaders to fully vertically integrate production. Today Ford has hundreds of suppliers. There's a very good reason for that.

  17. Avataaar/Circle Created with python_avatars Dr mosfet says:

    Nothing new here, but if you're new to subject this is for you.

  18. Avataaar/Circle Created with python_avatars Lee Morris says:

    Where are autonomous taxi services?

    This may be what Scotland needs.

    There are old train lines that have, since their original need has been surpassed, shut.

    Because of nationalised networking, smaller stations closed,
    but these links between still existing communities could be reopened,
    and why not under the auspice of an autonomous taxi service?

    Kind regards
    LM

  19. Avataaar/Circle Created with python_avatars Meyotra You Tube Channel says:

    Vertical integration is also a human thing. Once the Tesla workforce has worked out that Elon detests any delays then they might call on industrial action for higher wages and better work conditions. Humans want to make sure that their employment is in line with their visions for their own lives. To have more under their own individual control is an ever present human trait, not only for Elon but for each and every employee.

  20. Avataaar/Circle Created with python_avatars Banjofrailing says:

    Let's consider making an emergency move out of California. We could move in months and be in a more friendly business state. We must stay on mission. We then could actually produce EV's that will help save the planet and perhaps develop a great protocol for controlling the current illness in the workplace. It could save lives in driving safety and in manufacturing health safety. We could move up to 80% of internal equipment and get up and running in stages in possibly less time it would take the California governments to allow EV production. California may be a lost cause. Even a Sheriff and Mayor want to kill the prize factory of our times. In the Tesla plant humans would be healthier than in any of the government facilities. Easier to move than be ordered into our own homes for lockdown. California does not deserve the planet saving Tesla Plant.

  21. Avataaar/Circle Created with python_avatars mark marcinik says:

    You don’t really know your Automotive history. Henry Ford’s Dream was total vertical integration but it never worked because it requires too much capital and no auto maker is large enough to achieve economy of scale. For example to make their own automotive glass, Ford created a glass company but to
    reach economy of scale they had to also make architectural glass too and then they needed another company to do that. This is as true of batteries , spark plugs , etc. etc. Henry Ford even tried to create his own steel! Apple has 100 billion in the bank because they want to stay focused on their core business even though the vertical integration “sounds” like the right thing to do. They could have easily bought Corning but they didn’t. We will see if chip making will work for them soon.

  22. Avataaar/Circle Created with python_avatars king of the swing. says:

    And then Elon goes on Twitter with ridiculous statements and cost all his investors a fortune……🙄🙄🙄

  23. Avataaar/Circle Created with python_avatars Rik Koning says:

    I thought Tesla didn't have any of their technology patented. Musk said they made everything public years ago.

  24. Avataaar/Circle Created with python_avatars hopefultoo says:

    Manufacturers spent the whole of the 70s, 80s and 90s "concentrating on their core businesses" and selling off anything that looked like vertical or horizontal integration. This despite the immense success of of, for example, the Korean chebols (my spelling) – huge vertically and horizontally integrated companies like Samsung or LG. The truth is that the only good management is good management, that management fashions come and go, and there's more than one way to do things.

  25. Avataaar/Circle Created with python_avatars James Dean says:

    Vertical integration isn't always the best thing. You often lose economy of scale. For example the air conditioner if sold by another company could be sold to many other car manufacturers and thus reduce the price to all. On the flip side of Tesla made only battery packs and/or drive units they could sell them to many if not all the major manufacturers. They would also have saved a buttload of money on upfront capital.
    As well, because of that huge dump of capital into one or two products, the selection of products is relatively sparse.
    There's also the quality issues. Tesla's, while technically high quality, aren't always crafted well. While established manufacturers have the staff and experience to build quality cars.
    They also have the distinction of being unique. If say Tesla folds because of the current economic crisis then there will be loads of Tesla owners without support. There won't be other companies that managed to survive that have old stockpiles of parts.
    I get that Tesla is paying a lot of first mover costs and are taking the lead in a lot of technological arenas because of that. But to suggest that all car companies should do the same is ludicrous. Ultimately when they catch up to Tesla and the majority of consumers buy electric cars that are good enough they'll have a harder time keeping the vertical integration model. Tesla may be the Apple of the car world but with products that are 50-100 times more than an iPhone not near as many people will be able to make the decision to buy Tesla over a cheaper and functional if inferior electric vehicle.

  26. Avataaar/Circle Created with python_avatars Christoph Backhaus says:

    I plan to buy more than a hundred tesla model 3s this year and when the Y is available at least that many again

  27. Avataaar/Circle Created with python_avatars Mark Messer says:

    You are ill informed on one point. Elon Musk started Tesla for the purpose of reducing CO2 caused by burning fuel. All Tesla patents are open source, and available to anyone wanting to build electric vehicles, free of charge.

  28. Avataaar/Circle Created with python_avatars Phil B says:

    For saving Tesla money I think it is a great thing. The only problem I've seen with Tesla is if you have a problem with them. From what I've heard they are expensive to fix and it takes a long time to get the parts. If Tesla or your insurance pays to have it fixed (and you have another car) they are not a problem. They are more like the Apple of the car industry, great for the people that love them, but I'm more Android. The future yes but not for most people yet.

  29. Avataaar/Circle Created with python_avatars mastour722 says:

    But Tesla still using a big heavy parts from german companies..such as electronic, steering system, suspension. Doors technology of X model. And others.
    There is companies who are pioneering in certain areas. And Tesla will never reach to that level. Why would they. To invest even.

  30. Avataaar/Circle Created with python_avatars Rick Kay says:

    I hate useless middlemen with a passion. If we can do it ourselves, why bring in half-assed slower clowns? This is why tesla dominates. Utilize outside help when needed, then part ways when you can replace them.

  31. Avataaar/Circle Created with python_avatars Clark Mills says:

    Components that Tesla brings in-house are also redesigned / optimised / improved *constantly*. Legacy auto just make exactly the same old thing in slightly different shapes to suit fashion; no real innovation. Toyota broke the mould with the Prius but it stopped there… we all expected / wanted bigger batteries & smaller petrol engines… but it never happened; ball dropped.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.