one of the big questions for any company trying to enter a well-established Market is what is their unfair Advantage what is the thing that sets them apart that others don't have that can help them stand out for Tesla this has been huge because they were entering a market with well-established Legacy brands that have Decades of brand recognition behind them they were also trying to make battery electric vehicles at scale something nobody else had done before many companies like GM had entirely given up on it in the past as well even though they were arguably on to something good in any case in the last two decades while many weren't taking Tesla seriously they were building up a stack of unfair advantages that automakers now have to compete with today we're going to get into 10 of those so let's get into it and a special thanks to Masterworks for sponsoring a portion of this video [Music] at this point most know Tesla as an automaker but they are so much more you'll see that detailed in some of these unfair advantages but the first relates directly to vehicle manufacturing at the core when making a product the only real way to scale up keep selling the product and keep improving it is to make a profit each time you sell it this is a fairly basic concept but sometimes it seems many don't quite understand it when looking at how companies function one of the biggest hurdles for electric cars has been just that manufacturing these cars for less than people are willing to pay for them at the beginning of a new exciting technology early adopters are willing to pay extra to buy in but that only lasts so long in order for True scaling to happen with EVS Tesla knew they had to get costs down this came with their original plan to make the Roadster use the profit to fund the model S use that to fund the model 3 and so on over the course of each vehicle launch and scaling process Tesla has been refining and questioning every aspect of manufacturing most companies didn't really find this necessary as they've been successfully making in cars for years but the battery electric part makes things quite a bit more difficult batteries are expensive so in order to make these cars affordable costs need to be cut across the board whenever possible we can't just wait until battery costs come down even though they are expected to do so today Tesla is employing some technologies that are seen as revolutionary and they are detailed well in Walter isaacson's new biography about Elon Musk one such Innovation ships in model wise today a single piece rear casting for this Tesla took around 70 pieces of metal from the model 3 rear underbody and made them into two pieces in the model Y and eventually one this is in production and customers have noted this in their own cars here we can see that piece on the model 3 with many weld spots compared with the incredibly simple model y piece this Innovation may seem simple but it comes via some of the largest casting machines ever used in manufacturing they are made for Tesla by idra and originally were something that nobody but idra would make for Tesla according to the biography this all started when Elon Musk looked at a toy model less before a Tesla meeting quote the entire underbody of the car had been diecast as one piece of metal why can't we do that he asked the machines didn't exist to do it so they quote called the six major casting companies five of whom dismissed the concept edra went for it and now Tesla uses their machines for a single rear and single front underbody on the model y quote the machines inject bursts of molten aluminum into a cold casting mold which can spit out in just 80 Seconds an entire chassis that used to contain more than a hundred parts that had to be welded riveted and bonded together today this is a technology many automakers are planning to use because of the many advantages it brings but of course while Tesla has improved things it still has not made a single piece like a hot wheels for Tesla's Next Generation vehicle platform though they plan to reduce cost by Reinventing the entire manufacturing process from the ground up they say one aspect of this new approach improves operator density by 44 percent and space-time efficiency by 30 percent one Innovation for Tesla's next car was all also recently reported by Reuters saying quote in a bid to extend its lead Tesla is closing in on an innovation that would allow it to Die Cast nearly all the complex underbody of an EV in one piece rather than about 400 Parts in a conventional car this technology speeds up the design process that was three to four years to just 18 to 24 months and quote a single large frame combining the front and rear sections with the Middle underbody where the battery is housed could be used in Tesla's small EV which it aims to launch with a price tag of twenty five thousand dollars by the middle of the decade there's a lot more to this but Tesla approaches manufacturing as a part of the design it's not design a car then figure out how to make it it's something that happens simultaneously because manufacturing is the most important piece ultimately it could be a huge unfair Advantage for Tesla going forward as other automakers try to catch up on cost the second unfair Advantage for Tesla comes with software since the model S they've taken a software approach to their vehicle designs and this allows them to constantly improve customer cars with over-the-air software updates this means that a 2018 model 3 will largely feel similar to a 2022 model 3 from a software perspective of course there are always improvements but as a user this is a very exciting proposition when buying an expensive vehicle it consistently gets better as Tesla improves things and learns from customer data regarding that data Tesla is collecting Anonymous data on how customers are using their vehicles at this point they have produced 5 million Vehicles so they are seeing in real time how and where customers are charging home versus superchargers how far they are driving on a charge what controls they are most using on screen which seat controls they use how often they use the front trunk and many other things this is a level of data that no other automaker has collected and it gives Tesla real data for what customers actually want or need instead of customer surveys polls or other means they have the data right there so that they can go against the grain confidently and make decisions many questions that turn out to be correct usually this comes with improvements but one example of a feature Tesla removed is moving passenger lumbar support on the model 3 and Y Elon Musk said quote logs showed almost no usage so Tesla cut that part from their cars and sure enough sales have not been affected that is just an example of the logs that they're looking at and it's a huge piece of their software approach and why it's an unfair Advantage but we can also see it in features one recent feature is the cloud profile your driver profile settings logins and all are saved to the cloud if you opt in at first I didn't really understand the usefulness of this but then I went to Tesla Service they gave me a loaner car and when I got into the car it had my profile my streaming services logged in all of my settings and everything else right there automatically it just leads to a very seamless experience that keeps getting better we'll expand on software a little more in a bit but first number three is vertical integration again the name of the game with Tesla is cost cutting how can they make battery electric vehicles more affordable to manufacture at the end of the day that's the only way to make them available at scale many automakers take the approach of assembly in-house us and using many suppliers this oftentimes requires less r d and less risk since you can Source Motors from one company that specializes there and Source other parts from Specialists there Tesla on the other hand has decided to bring as much as possible in-house they make their own Motors they design their own software they have their own ever-growing supercharger Network they design their own glass they design their own sound systems they design their own self-driving technology they sell cars direct to customers instead of through dealers they have their own service centers and they design their own firmware last year Financial experts were saying a lot about what could happen but as we near 2024 it's looking a bit different than anticipated it looks like we might not get that economic soft Landing many were hoping for inflation may not have peaked yet mortgage rates are at their highest since 2000 are expected to go higher and the government is quote nowhere close to cutting interest rates this time billionaire investors like Warren Buffett and Michael burry appear to be dumping their stocks or betting against the stock market it's a tough situation and raises the question have you reassessed your long-term strategy of course there's no need to abandon everything to prepare for volatility and research shows the potential of diversifying with alternative Assets in fact a five percent asset allocation to contemporary art has historically driven higher returns than a traditional 60 40 portfolio I haven't started my art investing Journey yet but some of you have already begun investing there with today's sponsor Masterworks they've handled the legwork to give you unprecedented access to the Art Market and the results speak for themselves 16 exits thus far each of them delivering a positive return to investors over 800 000 people have signed up so far including dozens of my subscribers and you can skip the wait list and get started today just click the link in the description below there are countless other examples and what it means is that when something needs to change they simply go next door and get it changed when they are developing a new car these departments all work together and adjust as needed back and forth a great example of how this integration paid off for Tesla came with the chip shortages in 2020 automakers were stuck when semiconductor shortages happened because they were reliant on specific suppliers who wrote firmware for them for Tesla they were able to Pivot nearly instantly changing and expanding suppliers and writing new firmware in-house to keep production going without hiccups in a recent interview Ford's CEO detailed the ways they are learning from Tesla in this department quote we farmed out all the modules that controlled the vehicles to our suppliers because we can bid them against each other we have about 150 modules with semiconductors all through the car the problem is that the software is written by 150 different companies and they don't talk to each other so even though it says Ford on the front I actually have to go to Bosch to get permission to change their seat Control software he added that even if they knew how to change it it's their IP so Fort is having to learn how to make their own software from the ground up here Tesla has been working on this for years and their unfair advantage in vertical integration may only grow from here they are even getting into lithium refining itself to add some Supply to their raw material needs like likely they'll learn how to do that more efficiently and will be taking on competitors in the future one other aspect is control over pricing Tesla sells direct to customers so they are never dealing with dealer markups number four is back to the manufacturing side of things and that is profit margins in 2022 Tesla's profit margins peaked around 15.45 per car or around nine thousand five hundred eighty dollars per car this blows everyone else out of the water and Tesla is doing it with purely electric vehicles most other companies are still losing money on each vehicle they sell that's electric rivien recently announced they had reduced vehicle build cost by thirty five thousand dollars each but they still lose money on each car that they make Lucid as a whole has been losing around five hundred thousand dollars per vehicle sold when all is added up GM was originally losing about nine thousand dollars per Chevy bolt sold and says that with their new EV platform they plan to be profitable by 2025. Ford says they plan their EVS to be profitable by 2026 and will lose three billion dollars there this year this could also get worse for the the last two companies with union strikes their main competition when trying to make competitive EVS is Tesla and since Tesla has such great margins they can drop prices without too much harm this immediately gives them a competitive unfair Advantage even though it does show up in their margins Tesla has the unfair advantage of a huge lead in manufacturing EVS at scale that everyone else is trying to catch up on number five is one you've likely heard of Tesla's supercharger Network Tesla just hit 50 000 charger stalls worldwide and their reliability is 99.98 percent amongst those Chargers this blows everyone else out of the water especially in North America and that lead will only grow Tesla's install cost for fast Chargers is around one-fifth of their competitors and they are now partnering with almost every major automaker in North America for their Network this should lead to more revenue from supercharging and further growth of Tesla's reliable Network that could soon see even faster charging stalls not only are they going to be the main charging Network for all EVS but they are going to keep the advantage for their own EVS by only opening 12 000 Chargers to other EVS as far as we know that would mean that the rest are kept exclusive to their own customers next up for number six is Battery Technology when considering electric vehicles it can be easy to think that every brand can get the same batteries to a certain degree this is the case as Tesla uses batteries from LG chem Panasonic catl and more however they have a distinct advantage and that they have been working with Panasonic a gig in Nevada since 2016. they have been directly involved in the manufacturing of battery cells and packs for their vehicles instead of Simply receiving shipments of them on top of that they plan to expand this Factory and are expanding to their own battery cells their 4680 batteries are made entirely in-house and have already been shipping on many model y's soon these are expected to be the main battery cell powering the Cyber truck and Tesla will have complete control over that entire production process giving them many cost and Tech advantages this all takes scaling and we likely won't see Tesla only using their own battery cells for many years but these small things that take a long time add up significantly over time number seven is a business Tesla has been regularly expanding Insurance one of the main costs associated with owning a vehicle is insurance and since Teslas are often expensive vehicles that are pricey to repair companies charge a lot to insure them that's where Tesla insurance comes in and it uses a new technology to determine pricing quote many providers base your premium on information that has little to do with your driving we base your premium on how you drive we use existing technology in our vehicles to track your real-time driving behavior no additional Hardware required Tesla insurance is easy to purchase manage analyze and file claims with through the Tesla app and it's available in 12 U.S states currently California is the only state that doesn't use the real-time premium approach through this Tesla is able to offer competitive insurance rates and also see the true cost of repairing their cars on the back end itself in turn they can reconsider design and Manufacturing if certain repairs are common and expensive long term they will be expanding Tesla Insurance internationally and it's just another piece of their product that they will be able to have control over themselves all while learning and collecting data to optimize in the future next up number eight is autopilot and full self-driving I'll start this section by saying Elon musk's predictions on this front are pretty hilarious here's a great video scrolling through his predictions dating back to 2014 about how Tesla will achieve full autonomy within a couple years the predictions here are wild so I'm not going to sit here and say that next year all Teslas will be Robo taxis that can make you thirty thousand dollars per year however Elon is making these predictions based on the real progress he is seeing at Tesla Tesla owners can all see this for themselves as well the basic included autopilot does a very good job with normal Lane keeping in adaptive cruise control and this is already more advanced than most systems because it can drive anywhere that are clearly marked Lanes Tesla doesn't need to pre-map roads like most do it has its flaws like Phantom breaking but it comes standard on every Tesla and Tesla is collecting data that every time this system messes up gets in an accident or anything else then Tesla has their full self-driving package this is an overpriced option in my opinion and under delivers on its name but the FSD beta demonstrates how Tesla vehicles are interacting with the world in real time and learning from it over 4 000 customers have this beta and their data is feeding a growing neural network that is constantly learning as owners take over when it messes up if you use it yourself it's a mix of emotion because on the one hand it will do something incredibly dumb and scary or it will drive like a student driver but on the other hand it is an AI student driver and one of the only ones out there Tesla is creating and improving this system with vision only meaning it's much cheaper to manufacture than something like waymo or Cruise self-driving cars Tesla still has a long road ahead here but this is improving and could lead to a huge advantage in the self-driving space in the future long term as well they may license it to other automakers number nine directly relates to FSD and that's General AI Tesla is developing real world AI through their FSD system and this will only improve exponentially with the introduction of things like their Dojo supercomputer specifically designed for AI training at the same time they are also working on the Tesla bot and will surely find many AI uses as their expertise in neural networks grow in this space last up number 10 is global expansion and localization many automakers exist in other markets but we often do see a split sometimes brands have different brands under their umbrella or sell different vehicles for different markets Tesla on the other hand is expanded globally with the exact same cars that they make in the US they make the model 3 and Y internationally now and so far those are the only cars they make at multiple factories right now the model 3 is made at Fremont in Shanghai the model Y is made in Fremont Texas Berlin and Shanghai this is contributed to it being the best selling car in the world and Tesla's limited number of vehicle models means that they can optimize fully instead of spreading themselves across different platforms vehicle types via vehicle shapes or other factors they can just copy and paste exactly what they do for a vehicle in a new market they learn from each new Factory improve things and then make those adjustments at their original factory making the same car for the most part this is the case but localization also plays a huge role in Tesla's cost approach here the more they can Source locally the more they can save on Transportation costs this has been exemplified at Giga Shanghai where Tesla quote has more than 95 percent localized supply chain this drives down cost all while they're already producing the same optimized vehicles in that market so far this has worked so the question for the future will be does Tesla need more vehicle models to satisfy demand or will a simple approach like this keep working since it helps keep costs down for customers we'll have to see there's always a lot going on at Tesla both hidden and public but one unfair advantage that is worth a mention like it or not is Elon Musk Elon Musk has many qualities good and bad but his Relentless approach to driving down cost and employing the algorithm as detailed in his his new biography is ultimately what has led to Tesla's success and driven the entire Auto industry to compete the five steps of this algorithm are question every requirement delete any part or process you can simplify and optimize accelerate cycle time and lastly automate the order is important there Elon Musk has been vital to Tesla's success but now that Tesla is doing very well and is set up with these 10 unfair advantages among others we'll see how long he stays completely on board that said which of these advantages do you think will prove most vital for Tesla's success going forward leave a comment below to let me know your thoughts in the meantime if you want to see the latest Tesla news including cyber truck production updates you can check out that video linked up here or in the description below thanks so much for watching and I'll see you on the next one
