Comment by nunez | Hacker News Reader

Comment by nunez | Hacker News Reader

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There are other things to consider too:

- Tesla is achieving vertical integration to a degree no other mainstream auto OEM has achieved. The only other example of vertical integration to the extreme that I can think of is Koeneigsegg, and they are _very_ niche. This only helps Tesla make cheaper cars faster while collecting more margin per car.

- Tesla's FSD marketing is highly contentious, but they are the only auto manufacturer that is building (designing) their own SoCs explicitly for this. I wouldn't be surprised if they are outspending other auto OEMs on autonomous driving R&D by several degrees of magnitude.

- Tesla still has a major, major lead in EV battery tech which will only be cemented if they can get 4680 into revenue production. They also own the largest and (arguably) most reliable charging network in the world, which is growing at a faster rate than Electrify America, the second biggest competitor.

I think that Tesla is overpriced long term in a world where 91% of American cars are EVs and 48% of them are self-driving, but I think they are correctly priced for _right now_

> Tesla is achieving vertical integration to a degree no other mainstream auto OEM has achieved

This is crucial. It’s also why Tesla vs automakers reminds me of Apple iPhone vs existing cell phones. Sure making an electric car is “not that hard,” but because the carmakers didn’t take Tesla seriously for 10+ years, they now have a lot of catching up to do.

... isn't iPhone production outsourced? That's the opposite of vertical integration

Outsourced using in-house designs, and, in Tesla's case, in-house assembly lines and factories.

Even the SPEAKERS inside of the Model 3 and Y are designed by Tesla (and manufactured by a vendor).

That's the big difference. It's also the reason why legacy manufacturers will struggle to effectively respond to Tesla. It takes a LOT of money and egos to upend generations of culture (and accept hundreds of millions in losses in the process)

> Even the SPEAKERS inside of the Model 3 and Y are designed by Tesla

In this particular case, is this really a good thing? Porsche's high end option for example is getting the speakers, amplifiers, tuned filters etc. from Burmester. Since Burmester specializes on this kind of thing, and the sound system (not the head unit and interface) are pretty much entirely distinct from the rest of the car, except that it has to be tuned to the environment it will exist in, that intuitively feels better conducive to focus areas and quality all around.

Naïvely, I would think that having audio engineers in-house from companies like Harmon and Burmester that specialize in car audio but specifically to Tesla's product line would produce better, cheaper results than paying those companies to white-label audio systems.

Tesla hired former Bang & Olufsen audio engineers to design their in-house audio systems.

Source: https://twitter.com/PaulMaric/status/1160777733825150976

While I’ve no doubt the speakers in your Porsche example sound great, the German car industry LOVES to upsell a customer to a speaker with a designer label on it - every single brand in the VW group does it, BMW, Mercedes…

I think the German manufacturers just understand their customers vanity, sadly, where being seen to have the brand matters. The label is practically more important than the sound beyond a certain point.

In this case, the Burmester system sounds really great. I'm saying that as someone who has no such thing, so I'm less biased to like it. The example came to my mind because when I heard it, I was amazed that this was in a sports car.

But you may have a point anyway: The Bose system in the same car (a vastly more popular option because it is much, much cheaper) sounds worse than the cheap sound system in my old Ford.

Every auto manufacturer does this. Include a "Bose", "Harmon Kardon", or "B&O" sound system as part of a multi-thousand dollar premium package. Speakers are still the same paper cones as the trash-tier sound system; only difference is in some amp tuning, a sub, and a few tweeters. No surprise: the resale value of these systems is pennies by comparison.

For my particular example, I can at least say that the Burmester tweeters seem significantly better over the Bose, being solid (and heavy) ribbon tweeters, and not light cone tweeters.

https://www.suncoastparts.com/product/SKUBERTWEET.html https://www.suncoastparts.com/product/SKU680TWEET.html

No chance with that comparison. Per unit economics are different, marginal utility is different. Total cost of ownership is different. Pandemic has wreaked havoc for automakers and... for WFH Tesla owners made the 1k monthly car payment look unnecessary while most iPhone users upgraded phones.

> Tesla is achieving vertical integration to a degree no other mainstream auto OEM has achieved.

Tesla has made a lot of claims - volumetric efficiency, worrying about air resistance, when Musk toured the Toyota factory there was talk of them moving at granny pace. After the worlds most dramatic production ramp they still have yet to reach the capacity at Freemont of their predecessors (GM/Toyota).

Vertical integration represents the biggest issues with Tesla, a lack of focus. During the ramp of their mass production car, they went and bought Musk's cousin's company for a product that didn't even actually get released until basically this year. I don't see how that is a competitive advantage.

> Tesla is achieving vertical integration to a degree no other mainstream auto OEM has achieved.

That's because other OEM have worked hard NOT to be vertically integrated. There are benefits to splitting the value chain and letting each supplier concentrate on what they are best at, and get economies of scale from selling to multiple clients.

It seems to me that Tesla lack of focus is actually one of their biggest problem. You can't the best at making cars, batteries, solar panels, etc. all at the same time.

If you're looking for a vertically integrated electric car maker with an impressive position in batteries and semiconductors, I suggest you look into BYD.

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