Vertical Integration: Tesla's Secret to Overcoming Challenges

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Last year proved to be extremely challenging for the auto sector. Supply chain issues, a global chip shortage, and a pernicious pandemic plagued the industry. However, an unorthodox strategy at Tesla proved invaluable when facing tough times in 2021

competitors. “Tesla, born in Silicon Valley, never outsourced their software — they write their own code,” says Morris Cohen, a professor emeritus at the Wharton School of the University of Pennsylvania who specializes in manufacturing and logistics.“Doing more on its own also helps explain why Tesla avoided shortages of batteries, which have limited companies like Ford and G.M. from selling lots of electric cars.

, to produce batteries with its partner, Panasonic. Now, that factory helps ensure a reliable supply,” according to“It was a big risk,” said Ryan Melsert, a former Tesla executive who was involved in construction of the Nevada plant. “But because they have made decisions early on to bring things in house, they have much more control over their own fate.”“Investors have embraced Tesla Inc. and its meteoric rise.

 

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“Think of the EV race as a marathon. Tesla is in the lead at mile number 21. Everybody else is at mile 2 or still tying their shoes.”

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