Tesla CEO Elon Musk, who has spent more than a decade trying to disrupt the traditional auto industry, is sounding more and more like the man most closely associated with it: Henry Ford.
Why it matters: In his quest to build affordable electric cars for the masses, Musk is starting to embrace many of the ideas pioneered by Ford’s founder — things like vertical supply chains and an obsession with manufacturing efficiency. A century ago that approach helped to popularize the American automobile by lowering the cost of the Model T.
What’s happening: Musk is making batteries, computer chips and many vehicle components in-house — and securing supplies of raw materials.
- He’s either bucking the prevailing industry trend that favors outsourcing to lower-cost global supply chains — or coming full circle.
Like Henry Ford in the early 20th century, Musk was ridiculed at first. But even Tesla skeptics are surprised by the leaps the electric vehicle company has made in its manufacturing capability and efficiency.
- Two years ago, after taking apart a Tesla Model 3, “I couldn’t believe how bad the body was [put together],” says Sandy Munro, a former Ford Motor engineer whose consulting firm, Munro & Associates, specializes in reverse-engineering and competitive analysis for the auto industry.
- “Everything else blew me away,” he tells Axios, referring to Tesla’s electric power train.
- Now, after poring over every inch of a disassembled Model Y, its newest product, Munro says Tesla’s improvement is remarkable.
“They’re going to go from worst to first in a short time.”
— manufacturing expert Sandy Munro
Details: Tesla still has work to do on paint quality and fitting body panels together, but several engineering innovations stood out, says Munro, whose findings are summarized in this video.
- Tesla’s new proprietary computer chip. Designed in-house to one day enable full self-driving capability, the new chip is manufactured in Texas by Samsung.
- The “mega-casting” of the car’s body. The entire rear of car is shaped from a single aluminum casting, rather than hundreds of pieces of steel welded together. That translates into better quality, less weight and easier assembly.
- Tesla’s unique materials. By inventing its own aluminum alloy, Tesla eliminated multiple steps in the body manufacturing process.
What to watch: With Tesla adding factory capacity on three continents (including Austin, Texas, next year) and competitors entering the EV space, too, demand for batteries is increasing, and raw materials could become an issue.
- Last month, on a call with investors and analysts, Musk dangled the possibility of a “giant contract for a long period of time” to nickel miners that can boost production.
- Others are speculating that Tesla will invest in its own lithium mine.
- “All of a sudden, you can make a battery 30% cheaper because you control the materials,” notes Munro.
Flashback: Henry Ford’s mission was to build a simple, reliable and affordable car that average Americans could afford. Efficient manufacturing was the key.
- Aside from inventing the moving assembly line in 1913, his biggest idea was an “ore to assembly” manufacturing complex that became Ford River Rouge.
- “He bought all the different elements so that the raw materials would go into one side of the Rouge and 28 hours later come out as a finished automobile,” said Ford Motor corporate historian Ted Ryan.
One other similarity: Like Henry Ford in the 1930s, Elon Musk has a history of anti-union behavior.
The bottom line: A century apart, these two automotive pioneers shared many of the same ideas.