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Monday, February 26, 2024

The Musk Method: Learn from your partners and then go solo

Since taking over the company, Musk’s goal has been to learn enough to bring key technologies under Tesla’s control.

Elon Musk is hailed as an innovator and disruptor who went from knowing little about car building to running the world’s most valuable carmaker in 16 years.

However, his track record shows that he is more of a quick learner who forged alliances with companies that had the technology Tesla lacked, hired some of its most talented people, and then went beyond the limits that held back. most risk averse partners.

Now, Musk and his team are preparing to outline the next steps in Tesla’s journey to become a more self-sufficient company and less dependent on suppliers at its “Battery Day” event on September 22.

Musk has been sending signals for months that major advances in technology will be announced as part of Tesla’s efforts to produce low-cost, long-lasting batteries that could put its electric cars on a more equal footing with cheaper gasoline vehicles. .

New battery cell designs, chemistry and manufacturing processes are just some of the advances that would allow Tesla to reduce its reliance on its traditional battery partner, the Japanese group Panasonic, according to several people familiar with the situation.

“Elon doesn’t want any part of his business to depend on someone else,” said a former Tesla executive who requested anonymity. “And for better or for worse — sometimes for better, sometimes for worse — he thinks he can do it better, faster and cheaper.”

Tesla has battery manufacturing partnerships with Panasonic, South Korea’s LG Chem, and China’s Contemporary Amperex Technology Co Ltd (CATL), and it is foreseeable that these partnerships will continue.

But at the same time, Tesla is taking steps to control the production of cells – the building block of battery packs in electric vehicles – in highly automated factories, including one it is building near Berlin, Germany, and another in Fremont. , California, where the American company is hiring dozens of battery cell engineering and manufacturing experts.

“There has been no change in our relationship with Tesla,” Panasonic said in a statement provided by a company spokeswoman.

“Our relationship, both past and present, has been strong. Panasonic is not a supplier to Tesla; we are partners. There is no doubt that our association will continue to innovate and contribute to the improvement of society ”.

Tesla did not immediately respond to a request for comment.

Do it all

Since taking over the young company in 2004, Musk’s goal has been to learn enough – through alliances, acquisitions, and talent hiring – to bring key technologies under Tesla’s control, people familiar with the business said. company strategy.

These sources said the idea was to build a solid vertically integrated company, or a digital version of Ford Motor Co’s production system from the late 1920s.

“Elon thought he could improve everything the suppliers did – everything,” said former Tesla supply chain executive Tom Wessner, who is now head of Imprint Advisors, an industry consultancy. “I wanted to do it all.”

Batteries, which currently account for a large part of the cost of an electric car, are central to the Musk method. While some voices have argued for years against Tesla’s development of its own battery cells, Musk continues to pursue that goal.

“You tell him no and that will be when he will insist on doing it,” said a third former Tesla veteran.

The changes to battery design and chemistry and production processes that Tesla hopes to reveal next week are aimed at remaking numbers that have so far made electric cars more expensive than CO2-emitting combustion engine vehicles. .

Reuters reported in May that Tesla plans to reveal low-cost batteries designed to last a million miles. Tesla is also working to secure the direct supply of key battery materials, such as nickel, while developing cell chemicals that would no longer need expensive cobalt, as well as highly automated manufacturing processes to speed up production.

‘Straight to Mars’

Panasonic partners with Tesla in Nevada’s $ 5 billion “gigafactory,” while CATL and LG Chem supply cells to Tesla’s Shanghai factory, where modules and battery packs are assembled for its Model 3 sedan.

Panasonic recently said it wants to expand its production lines in Nevada, which supply the cells that then go to battery modules assembled by Tesla at the same complex.

However, this partnership for the giant Nevada factory almost fell through, according to two former Tesla executives. Musk ordered a team to study battery manufacturing in 2011, according to a former executive, but eventually partnered with Panasonic in 2013.

Now, Tesla is testing a pilot battery cell manufacturing line in Fremont and building its own massive automated cell manufacturing facility in Gruenheide, Germany.

The twists and turns in the relationship with Panasonic resemble other Tesla alliances.

During his development alliance with Germany’s Daimler, which was an early investor in Tesla, Musk became interested in sensors that would help keep cars within lanes of traffic.

Until then, the Tesla Model S, which Mercedes-Benz engineers helped refine, lacked cameras or sophisticated driver-assistance sensors and software like those used in the Mercedes S-Class.

“He learned about it and took it a step further. We asked our engineers to point to the moon. And he went straight to Mars, “said a Daimler engineer.

On the other hand, from the association with the Japanese Toyota, another of the first investors, he learned about quality management.

Eventually, executives from Daimler and Toyota joined Tesla in key positions, along with tech talents such as Google (Alphabet group), Apple, Amazon and Microsoft; or from rival automakers like Ford, BMW and Audi.

It may interest you: Elon Musk’s strange visit to Berlin

The Musk touch

Some relationships, however, did not end well.

Tesla crossed paths with Israeli sensor maker Mobileye in 2014, in part to learn how to design a self-driving system that evolved into Tesla’s autopilot system.

“Mobileye was the driving force behind the original Autopilot,” said a former Mobileye executive, who declined to be named.

Mobileye, now owned by Intel, also recognized the risks of sharing technology with a startup as fast as Tesla, which was on the brink of bankruptcy in late 2008 and now has a market capitalization of $ 420 billion.

But Tesla and Mobileye had a sour and public divorce after a driver was killed in 2016 when a Model S he was driving on autopilot crashed.

At the time, Amnon Shashua, currently president and CEO of Mobileye, said that Tesla’s Autopilot had not been designed to cover all possible crash situations, as it was a driver assistance system, not a driverless system.

US tech company Nvidia succeeded Mobileye as a provider for Autopilot, but it also ended up being sidelined.

“Nvidia and Tesla share a common strategy of developing vehicles defined by software and powered by high-performance artificial intelligence computers. Elon is very focused on vertical integration and wanted to make his own chips, ”said Nvidia senior director of automotive Danny Shapiro.

Both Shapiro and the former Mobileye executive said there was no question that Tesla was using its technologies inappropriately.

In addition to the partnerships, Musk undertook a series of acquisitions four years ago, buying a handful of little-known companies – Grohmann, Perbix, Riviera, Compass, Hibar Systems – to rapidly advance Tesla’s expertise in automation. Maxwell and SilLion further increased Tesla’s capacity in battery technology.

“He learned a lot from those people,” said Mark Ellis, a senior consultant at Munro & Associates, who has studied Tesla extensively. “He took advantage of a lot of his information and then he put his touch to improve it.”

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