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Interesting how both SpaceX and Tesla's operational efficiency is much higher compared to industry.
by tzm 4y ago
Interesting how both SpaceX and Tesla's operational efficiency is much higher compared to industry.
- elil17 4y agoTesla is not more efficient than other carmakers. Tesla has 110,000 employees and makes 366,000 cars/year. Honda has 220,000 employees and makes 5.3 million cars per year. That's 3.3 cars/employee vs. 24.1 cars/employee. Even if 2 out of every 3 Tesla employees do nothing related to making cars (e.g. they are working on that bipedal robot thing), Tesla still uses 2x more labor/car than Honda. Tesla also has 176 failures/year/PP100 for 3 year old cars, making them the 4th least reliable car company, despite the fact that they are mechanically much simpler than gas cars. Can't argue with SpaceX, though - an engine a day is an insane pace.
- pbreit 4y agoNot really apples-to-apples considering how much of the finished car Tesla manufacturers. Other car companies make very few of their parts. Tesla makes almost every part.
- elil17 4y agoTesla does not make almost every part. I have talked to multiple Tesla part suppliers and can assure you that Tesla purchases both individual parts and entire subsystems the same way every other automaker does. Tesla has inhoused a couple of components that are typically done by specialized companies, such as their seats.
- panick21_ 4y agoTesla is defiantly the most vertically integrated car companies. But that different then saying they don't have lots of suppliers.
- hllooo 4y agoI see your point but your numbers are way off. Tesla has already made ~900,000 cars this year and will probably make 1.3 million before the year ends.
- bryanlarsen 4y agoHow many people are employed by Honda dealerships and service centres? All those people count against Tesla's headcount and not against Honda's.
- macintux 4y agoDealerships are (always?) owned by other companies. Honda doesn’t employ that staff.
- avmich 4y agoHonda doesn't employ parts makers too, but all of them are needed to produce car and deliver it to the end user. Tesla does all of that, right? So it makes sense to consider outsourced personnel as part of the chain.
- itsoktocry 4y agoWe can add in the dealer's profits then too, right?
- bryanlarsen 4y agoWhere does it go in the ratio of cars delivered per employee, which is the number under discussion?
- bryanlarsen 4y agoTesla made ~366,000 cars/year in 2019 with 50,000 employees. They currently make ~366,000 cars/quarter.
- deleted 4y ago[deleted]
- legitster 4y agoYeah, it's kind of apples to apples. Talk to an actual industrial engineer and they can tell you how laughably bad some of Tesla's manufacturing practices. You're never going to catch up to Toyota or Honda in pure speed or quality. But Tesla has figured out a ton of clever ways to cut corners (mostly by having a customer base that accepts a very tiny static lineup of car models) and have gone all out on economies of scale.
- signatoremo 4y agoNot sure which engineers you spoke with but Toyota recently decided to reboot their EV strategies to respond to progress made by Tesla - [0] > "What's driving Mr Terashi's effort is the EV's faster-than-anticipated takeoff and rapid-fire adoptions of cutting-edge innovations by Tesla and others," one of the people said. [0] - https://www.reuters.com/business/autos-transportation/exclusive-toyota-scrambles-ev-reboot-with-eye-tesla-2022-10-24/ https://www.reuters.com/business/autos-transportation/exclus...
- legitster 4y agoSure, Toyota is lightyears behind on battery tech. But it sounds like this is more about Toyota misestimating the market than actual differences in manufacturing technology.
- panick21_ 4y agoSorry this is actually nonsense. Seriously, just nonsense. Go and actually watch the disassembly and analysis done by Munro engineers. They do detailed analysis and costing. And Tesla is routinely doing things nobody else is doing that is highly effective. Their use of aluminum casting is industry leading. Their electronics are industry leading by a wide margin. They are great at working with large glass panels. Their battery packs are industry leading. Their heating-cooling loop is fantastic. I could go on. Just go and look a Tesla looks under the frunk and then look at how a VW ID.4 looks. That doesn't mean they are the best at everything. Their suspensions are not as good. Their fit and finish is not as good. Again, there is more one could mention. To just flat say that Tesla it worse at manufacturing the their competition is simply not true. If it were true they could never achieve anywhere close the margin they got. And this margin is achieved with pure EV, something most companies barley make profit on. Tesla is also amazing at iteration. They are iterating faster then Toyota. In 2017 Model 3 had a lot of issues, if you look at Model 3 in 2021 the internals are very different. > But Tesla has figured out a ton of clever ways to cut corners (mostly by having a customer base that accepts a very tiny static lineup of car models) A the old 'all their costumers are idiots' defense that can't be backed up by anything substantial. > and have gone all out on economies of scale. They are pretty small car company still in terms of volume. And centralizing and vertically integrating production is a valid and effective industrial practice. They had better margin then the competition while having 1/2 or less production on a architecture so just saying 'economics of scale' is just nonsense.
- systemvoltage 4y agoTesla hasn't had decades of time to perfect their operations like Toyota and Ford. Just 5 years ago, they had 10k cars per quarter. You need to look at rate of change of improvement. Or, we can check back on Tesla 40 years from now.
- itsoktocry 4y ago>You need to look at rate of change of improvement. Are you comparing the rate of change of improvement of Tesla to Toyota during their first 5 years?
- elil17 4y agoI'm not saying Tesla isn't doing any good work. I'm just saying that it's untrue to say that they're somehow unequivocally better at manufacturing then other car companies. They simply are not - they're improving rapidly but they are far from the industry leader.
- tzm 4y agoYes, Tesla is orders of magnitude more efficient than industry. They also maintain the highest profit margins in the industry (14.95% vs 4.32%). For comparison, if Toyota was as efficient as Tesla they would've posted 2022 Q3 profits of ~$24 billion, not $3.1B. Tesla achieved $3.9B from only 344k cars. Operational efficiency is their leverage. Cars sold (2022 Q3) Toyota: 2.6M (+5% y/y) Tesla: 344K (+42% y/y) Operating profit excl. FX impact Toyota: $3.1B (-38% y/y) Tesla: $3.9B (+97% y/y)
- itsoktocry 4y ago>They also maintain the highest profit margins in the industry (14.95% vs 4.32%). They have a different business model than OEMs, this is not apples-to-apples. OEMs act as wholesalers. Besides the fact that you're talking about the efficiency of a company that literally produces 10x the number of cars. Let's see what happens to Tesla if they ever reach that scale. >Toyota: 2.6M (+5% y/y) Tesla: 344K (+42% y/y) Base rate fallacy. Why not use absolute numbers of cars, rather than percentage increase? It would tell a different story, wouldn't it?
- vardump 4y ago> Besides the fact that you're talking about the efficiency of a company that literally produces 10x the number of cars. Let's see what happens to Tesla if they ever reach that scale. 10x higher production should in itself bring a lot in terms of economies of scale. Generally, the more you make of something, the cheaper one unit is to make. So Tesla's position is certainly more impressive in this comparison.
- panick21_ 4y agoIts not longer 10x the cars. Toyota is targeting only 9.1 million. Tesla is targeting close to 1.5 million. That's more like 6-7 times as much. And next year it will likely be even less.
- SEJeff 4y agoWith the recent increases at the Shanghai and Austin Gigafactories, Tesla is able to sustain a rate that would extrapolate to two million vehicles manufactured per year.
- SEJeff 4y agoI think your data is suspect here. Tesla[6] made 343,000 vehicles in the third quarter of 2022, so thinking they are only able to make 366,000 per year is incorrect. Year to date, from their quarterly reports, Tesla has manufactured 908,573 vehicles so far in 2022. With the recent updates at the Shanghai Gigafactory and the spin up of the Austin Tx Gigafactory, they're on track to be able to make (if it ran at this speed a full year) two million vehicles per year. One of the ultimate "business metric" for auto manufacturers is the gross margin aka "how much profit does the company make as a percentage of the cost of the vehicle" Before Tesla, Toyota[1] generally held the crown as the highest with just under 18% over the past five years. Ford[2] averages around 14%. Tesla[3], is industry leading with an average of 20.61%. GM[4] has always sort of been a laggard with the average at 11.26%. The German manufacturers, known for their efficiency, also do very well with VW[5] at 18.75% (this includes Porsche, which significantly tips the scales upwards for Volkswagen) and Mercedes[6] at 19.66%. So Tesla makes approximately 6% more profit per vehicle sold at the low end (GM) and almost exactly 1% more than Mercedes on the higher end. Mercedes has ~173,000 employees and (per your own comment) Tesla has ~110,000 employees. So doing "less with more" is a pretty nice way to say they're more efficient, is it not? [1] https://ycharts.com/companies/TM/gross_profit_margin https://ycharts.com/companies/TM/gross_profit_margin [2] https://ycharts.com/companies/F/gross_profit_margin https://ycharts.com/companies/F/gross_profit_margin [3] https://ycharts.com/companies/TSLA/gross_profit_margin https://ycharts.com/companies/TSLA/gross_profit_margin [4] https://ycharts.com/companies/GM/gross_profit_margin https://ycharts.com/companies/GM/gross_profit_margin [5] https://ycharts.com/companies/VWAPY/gross_profit_margin https://ycharts.com/companies/VWAPY/gross_profit_margin [6] https://www.cnbc.com/2022/10/02/tesla-tsla-q3-2022-vehicle-delivery-and-production-numbers.html https://www.cnbc.com/2022/10/02/tesla-tsla-q3-2022-vehicle-d...
- AustinDev 4y agoWhat do they both have in common?!
- sixothree 4y agoIdol worship much?
- ever1 4y agoIs it due to bringing software dev methodologies into very traditional industries ?
- laputan_machine 4y agoI thought our software dev methodologies come from the automotive industry: https://en.wikipedia.org/wiki/Kaizen https://en.wikipedia.org/wiki/Kaizen https://en.wikipedia.org/wiki/Kanban https://en.wikipedia.org/wiki/Kanban
- adolph 4y agoThose are one concept of and one method to achieve Deming's ideas. [0] 0. https://www.uthsc.edu/its/business-productivity-solutions/lean-uthsc/deming.php https://www.uthsc.edu/its/business-productivity-solutions/le... Recommended podcast episodes about Deming: https://smallbatches.fm/search?query=deming https://smallbatches.fm/search?query=deming
- laputan_machine 4y agoVery cool, thanks for this
- adolph 4y agoGlad to share--Small Batches podcast is excellent in general (I'm totally unaffiliated) and I found the Deming introduction contextualized in ways I could understand better than straight business texts. I'm going to do some relistening right now.
- FredPret 4y agoI'm in a technical kind business consulting where I work with owners, management, and some employees. One thing I've noticed that the owners' or CEO's personality tends to permeate throughout the organization, for better or worse.
- conscion 4y agoMusk's goal is that "the factory is the product" [0]. He's always focused on production efficiencies. This was brought up in the Tesla bot presentation also where they're trying to reduce the number of unique parts. [0]: https://thedriven.io/2021/01/12/the-factory-is-the-product-musks-take-on-teslas-record-2020-deliveries/ https://thedriven.io/2021/01/12/the-factory-is-the-product-m...
- bryanlarsen 4y agoIn a way it's a good thing Musk companies are such crappy places to work and are a massive resume boost. People are joining SpaceX & Tesla, learning some good lessons and then leaving and taking those lessons to other companies. If they stayed at SpaceX/Tesla their entire career those lessons would not spread as well.
- jffhn 4y agoReminds me of this: << Recognize the team is the product. In software, the product life cycle is shortening. “In traditional accounting,” says Bjork, “the business asset is the product. But more and more, in practice, the asset is a team that is capable of delivering products. The team has a longer lifetime of generating value than the product itself. That’s a big shift in focus.” >> (The_Age_of_Agile.online.pdf)