Elon Musk’s Approach to Logistics at Tesla

Posted on March 13, 2023 by Peter McGuthrie

Elon Musk has become well-known for his leadership at Tesla, SpaceX and his other business ventures, but how he’s managed to make his car company profitable in such a short span of time is particularly impressive. With legacy automaker histories spanning over a century, Musk’s focus on logistics at Tesla has given the company a wave of advantages, and he recently pointed to this detail during a Q&A.

Above: A Tesla from outside the driver's window (Image: Casey Murphy / EVANNEX).

During the Q&A session at the end of Tesla’s Investor Day, Musk pointed to logistics as an important factor in the company’s development of its next-generation platform, as can be seen in this video of the segment from CNET. Just as Tesla went through with the debut of its Model SX and Model 3Y platforms, the company will need to face off against logistical issues to bring a more affordable vehicle to market.

"Battles are won with tactics. Wars are won with logistics," Musk said at during the Q&A. “The logistics challenges here are enormous.”

Tesla is no stranger to what Musk has previously referred to as “logistics hell,” with the development of the Model 3 falling short of production targets due to several comingling issues. Musk previously said logistical issues with Model 3 pre-production caused tons of stress and pain from about mid-2017 to mid-2019.

Above: Elon Musk Answers All Your Questions at Investor Day 2023 (Video: CNET on YouTube).

Upcoming challenges for the company’s next-generation platform are not unlike past troubles with production, as Musk points out. Stabilizing logistical details, especially with regard to the still-growing industry of battery cell production, will be key to delivering on an affordable, mass-market vehicle in the coming years, according to Musk.

“The rate of progress is the rate at which we are able to scale 10,000 logistics problems,” Musk added. “Most significant of those is the cell production. We actually deliberately try to overdo cell production or cell supply to have that exceed what is needed in vehicles, because if it goes below what is needed for vehicles, the factories stall.”

To be sure, organizing a wide web of component and mineral suppliers, having them manufacture the necessary parts, then planning timelines and delivery of parts, and then using these parts to produce cars at volume are no easy logistical problems to solve. Tesla’s past experience may make it more financially viable for the company though, even as many startup electric vehicle manufacturers struggle to stay afloat amidst billions in losses.

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Source: YouTube (via CNET)