Say what you will about Tesla’s controversial CEO and its recent problems with Full Self Driving mode. The company is very different from other car companies because it shows a continued capability to push for new paradigms. This was on full display at Tesla’s recent investor day on March 2. The company unveiled a radically different approach to automobile manufacturing that could slash the cost of building a vehicle. It might even be the biggest change in automobile manufacturing since the dawn of the assembly line pioneered by Henry Ford for the Model T. Tesla is calling it the “Unboxed Method”.
The traditional way of making a vehicle involves several stages working down an assembly line, Those include stamping, building a body, painting, and final assembly. Each stage is performed sequentially. Along the way, all the sub-assemblies are also added sequentially. Factories were built to accommodate this sequential process. Any problems along the line block the entire line.
Unboxed parallelizes assembly, allowing workers to build multiple large sub-assemblies at the same time. This unlocks a number of other benefits. A car can be assembled in much less time, in a smaller factory, where more workers can still comfortably work at the same time. Tesla believes this new manufacturing process can cut total cost per vehicle by as much as 50%. This could lead to a massive drop in the price of electric cars. It’s important to note that a key part of this is the ability of Tesla to use thousands of tiny batteries as part of the assembly; it’s not possible with the more rigid confines imposed by an internal combustion engine and associated drivetrain.
The video is worth a watch and is illustrative of why it’s not enough to merely compete with legacy players. In any industry, the very best technology companies are already thinking about how they can put in place revolutionary changes. Tesla is among the more visible players, but thinking like this is only possible because Tesla asks its engineers to think like a technology company, not like a car company, and to look for step-change rather than percentage-change. This worldview requires a fundamentally different type of thinking which is hard to find outside of a select group of companies and its why people with backgrounds from those companies are so incredibly valuable.