Elon Musk: A Model for Ecological and Industrial Transition?

Industry
December 8, 2022

An idealist, and a passionate visionary, Elon Musk has captivated many people and made the world talk about him in recent years. Like a "genius," Musk is passionate about innovation. For him, the impossible cannot exist, and there is undoubtedly an innovative solution for any problem. As evidenced by his transport companies (Hyperloop), for space (SpaceX), but also to treat autism and schizophrenia (Neuralink). Let's now look at the impact Elon, and his activities have on the environment, the climate, and industry. What can the man who wants to "help humanity emit less CO2 and make better use of the sun's energy" do?

Tesla: Accelerating the Global Energy Transition

Reducing the ecological impact of transport is one of the significant challenges of this century. Indeed, it accounts for 16% of global greenhouse gas emissions. Reducing this impact is a global challenge. But even more so in Western countries, where transport accounts for 29% of emissions. Elon Musk saw this as a business opportunity, so he invested in Tesla in 2004. Although he was not the founder of Tesla, Elon made the brand what it is today: a company everyone is talking about. A manufacturer of innovative consumer cars with a mission to "accelerate the world's transition to a sustainable energy future."

Adapting the Industrial Model

Pioneer in electric vehicle production

To begin with, Tesla marketed a relatively expensive niche product with its Roadster. This captured the early adopters and demonstrated the viability of electric vehicles.

Then, in a second phase, Tesla could turn to affordable vehicles. With the adoption of a pre-order system to finance the car's construction and R&D.

A second well-known principle was used for Tesla's production. As a pioneer in producing electric vehicles, Musk was determined to control the software in-house from the outset. So he used the production method of another pioneer, Henri Ford: vertical integration, which recommends centralizing production under one roof.

This makes it possible to limit the use of subcontractors as much as possible and, therefore, to remain independent by favoring production on the same site to reduce costs.

The first Tesla Roadster
Above, the first Tesla Roadster

Masterplan

As mentioned in Musk's initial Master Plan, Tesla's first challenge in entering the market was to demonstrate the performance of electric vehicles. (Creating a Roadster that could compete with Porsches etc.)

Then in a second phase to ensure a more affordable price.

"Build sports car
Use that money to build an affordable car
Use that money to build an even more affordable car
While doing above, also provide zero emission electric power generation options"
- Elon Musk, Masterplan

Tesla's third major challenge was moving away from "green car" models and providing users with a satisfying driving experience.

Tesla responded to these challenges by adopting a "First Principles Thinking" method. The principle of this method is to get to the root of the problem to find viable solutions.

The thinking turned to how to build a battery to reduce the price of batteries. How do you get the components at a competitive price?

So the company decided to turn to the lithium battery because of its falling price and the performance obtained with such batteries.

Acceleration of production

Tesla had achieved its goals with the launch of the Model 3. Another major challenge was increasing its production capacity at an astonishing rate to meet its pre-order commitments.

To meet its goals, the company chose to automate its factory to a high degree. Industrialization problems and excessive automation resulted in what Elon Musk called "manufacturing hell." It took two years to achieve a proper performance, a point on which Tesla was objectively not among the best-performing manufacturers.

The first unit of Tesla Gigafactory in Nevada, USA
Tesla Gigafactory 1

Giga Factory

While the battery represents 40% of the value of an electric vehicle, it is a question of reducing costs thanks to gigantic volumes to meet its objectives and make the electric car affordable for the most significant number. Always driven by this vision, Tesla is investing billions of dollars in creating its Giga Factory.

In 2016, Elon Musk launched the first Giga Factory construction in the United States to double its production and reduce costs by 35%. A model that is also modeled in Europe (Berlin) and Asia (Shanghai) to best meet the demands of the various markets.

Semiconductor Crisis

It is also worth noting that Tesla has coped remarkably well with the semiconductor crisis. Indeed, the company could take advantage of its in-house software engineering expertise and redesign the software needed to integrate alternative chips that were not in short supply.

Dillygence: A Vector of Innovation in the Industry?

Whatever you think about the person, Elon Musk has achieved several resounding success in business by relying on megatrends. Musk and Tesla's innovation has driven the electric vehicle market by proving their performance and reliability to the public. He has been able to respond to market needs with a global vision. And he has reinvented Tesla's brand image, which today appears more like a transportation and energy company.

Dillygence can help transform your company based on our innovative solutions, expertise, etc. Elon musk has no link with Dillygence, but this does not prevent us from having this sense of innovation.

Dillygence is a player in this industrial revolution of the automobile. We are committed to facilitating this transition of the sector towards the production of new electric vehicles and the construction of new factories dedicated to producing electric vehicle batteries. The stakes are enormous, and manufacturers have understood this, as Ford has done with its $11 billion investment in electric vehicles.

Dillygence is proud to be part of this revolution and to support companies such as ACC in designing new factories, but also in improving the existing ones and increasing industrial performances, as at Stellantis.

At Dillygence, we help companies, both large corporations, and SMEs, to improve their operations with innovative solutions. We offer a wide range of actions and identify the most profitable ones. Connected in real-time to your plant, our DispoX solution allows you to diagnose the production system to help develop improvement action plans and give operators levers for steering. Contact us to find out how we can help you.