Tesla Motors: At the Intersection of Innovation and Integration
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This deck highlights the extraordinary, ever-evolving success story of Tesla Motors and distills it as a story of innovation and integration, as a way for us all to look at our professions and ask what we can learn from Tesla’s approach. I think Tesla’s story is an ideal one to examine for anyone who is in business today. Their highly integrated and innovative approach is essentially unique among auto manufacturers, who are shackled by a tradition-bound industry. So I’d like each of you to think of your business or practice’s approach to projects and look with us at a model from outside your industry so we can start to challenge ourselves and start to change our approach.
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Tesla Motors: At the Intersection of Innovation and Integration
- 1. TESLA MOTORS: AT THE INTERSECTION OF INNOVATION & INTEGRATION Greg Papay, FAIA teslamodels.wordpress.com $1,000 Model S Discount: http://ts.la/greg8061
- 2. tesla’s mission to accelerate the adoption of sustainable transport
- 3. why a relevant model? an industry ripe for change
- 4. founded: 2003 roadster prototype: 2006 roadster production: 2008 TSLA IPO + factory: 2010 model s introduction: 2012 motor trend ‘13 COY: 2012 CR ‘best ever’: 2013 dual motor model s: 2014 model x production: 2015 model 3 production: 2017 teslaman sighted tesla’s history:
- 5. tesla’s secret master plan:
- 54. TESLA MOTORS: AT THE INTERSECTION OF INNOVATION & INTEGRATION
Editor's Notes
- Slide 1: Title Welcome, thank you for delaying you’re your trek over to the One Direction backstage pre-party to talk a little more Tesla. BTW, I took our teenage daughter to a One Direction concert last September – trust me, you’re all in the right spot. I am Greg Papay, cattledog on the forums, an architect by day, and by night a Teslaholic. Today I’ll be highlighting the extraordinary, ever-evolving success story of Tesla Motors, and distilling it as a story of innovation and integration. I’m an architect, so I see Tesla through that lens, but I am offering the next 30 minutes as a way for us all to look at our professions and ask what we can learn from Tesla’s approach.
- Slide 2: Tesla’s Mission Tesla’s Mission: To accelerate the adoption of sustainable transport. Why does this matter to me? I learned of Tesla about 5 years ago, and immediately saw a resonance with what the car and company was striving for and what we strive for in our work at our architecture firm. About 4 years ago we ordered our first Tesla, we got it nearly 3 years ago, got our second one nearly 2 years ago, and sold off our last gas car 1 year ago. Somewhere in the last 5 years we ordered our Model X, and sort of expected to have it by now, however… As I learned more about Tesla the company, and certainly after driving the cars, I came to a realization they were doing something of exceptional vision and importance, and I’ll be honest here, it is in many ways more exciting to me than what we are doing in architecture. It made me wonder why. I wanted to really dive in and analyze that question. So I submitted this abstract for the American Institute of Architects national convention, and they accepted it! So I gave a version of this talk to nearly 500 architects two months ago in Atlanta. So why does this matter to you, our TMC Connect friends? I think Tesla’s story is an ideal one to examine for anyone who is in business today. Their highly integrated and innovative approach is essentially unique among auto manufacturers, who are shackled by a tradition-bound industry. As an architect, in a similarly complex and tradition-bound industry, I could learn something by looking at how they work and what they make. So we’d like each of you to think of your business or practice’s approach to projects and look with us at a model from outside your industry so we can start to challenge ourselves and start to change our approach. Perhaps most importantly, we’ll see why it’s important to be visionary.
- Slide 3: Tesla Motors – Why a Relevant Model The automotive industry has operated essentially the same way for the past century. It was and is an industry ripe for disruption. Does this sound vaguely familiar? Tesla doesn’t just make cool cars – it’s transforming nearly every aspect of the modern mobility experience – for the car, company and most importantly its customers. It’s a company that sold just 33,000 cars last year out of nearly 100 million worldwide. 33,000 out of 100,000,000. 3/100 of 1%. So with similar odds, any of us can have a similar impact. The question is - are we willing to think boldly and take similar risks?
- Slide 4: History First some History – Tesla is named after Nikola Tesla, the inventor of the AC induction motor in 1888, around which the car is designed. Tesla Motors was founded in 2003 by a group of engineers in Los Angeles and Silicon Valley who wanted to prove that electric cars could be better than gasoline-powered cars. They revealed their first car, the roadster, in 2006 and produced it in 2008. They IPO’d in 2010, the same year they acquired a 5M sf factory in Fremont, CA, purchased from Toyota and GM after they mothballed it years earlier. The Model S, Tesla’s first ground up design, began production in mid-2012. Later that year it was named Motor Trend’s Car of the Year, which would be followed shortly thereafter by being ranked as the best car ever tested by Consumer Reports. They introduced the world’s first dual motor, 4WD car last year and will reveal the Model X, their version of an SUV, in about 3 hours. (Click) All this led to the reported sighting of Teslaman, a mythical creature with, as you can read, many desirable attributes.
- Slide 5: Secret Master Plan Tesla began with a Secret Master Plan, which they published in a blog post in 2006. It essentially outlined a path from an expensive sports car (the Roadster), to a mid-priced sedan and SUV (Models S and X), to an affordable mass-consumer car. We’re about half way.
- Slide 6: Founder – Elon Musk To understand Tesla, you must understand Elon Musk. Buy Ashlee’s book, it’s an illuminating portrait. Musk grew up reading science fiction and dreaming of a world different that the one in which we all lived. This has influenced him through his 43 years. He went to university in Canada and the US, ending up on the west coast. He started a small internet company that he sold and parlayed into the company that would eventually become PayPal, which threw traditional payment systems on their heads. Challenging convention is a common theme for Elon Musk.
- Slide 7: History – SpaceX PayPal led to SpaceX. To breach another industry set in its ways, SpaceX needed a model that was profoundly different and dramatically cheaper. Space travel up to that point had been based on the principle that you would sacrifice a few hundred thousands of pounds of fuel and tens of millions of dollars of rocket structure to send a tiny payload into space. SpaceX flipped that notion. To do that, you had to stop throwing away 99% of each rocket launch. Tesla is the first space company that’s within inches making its first stage reusable, and space travel dramatically cheaper. Industry being re-imagined.
- Slide 8: Solar City Musk is also the Chairman of Solar City – Solar City was the first and largest company to offer ways to for consumers to integrate solar into their residences via a power purchase agreement. This has democratized the solar industry and hastened the adoption of renewable energy for hundreds of thousands, soon to be millions. Tesla’s new stationery storage battery product, PowerWall and PowerPack, will augment this.
- Slide 9: Hyperloop Finally, a couple years ago Musk proposed the Hyperloop, a pneumatic transportation pod system that would be significantly cheaper and radically faster than high-speed rail projects. Again, a fundamental rethinking of how we approach intercity travel.
- Slide 10: Tesla’s First Principles Which leads us back to Tesla and their mission. Accelerate the adoption of sustainable transport. Make a car and company unlike any other. How could they get there?
- Slide 11: Innovation + Integration Tesla’s survival, let alone its transformational approach to mobility, required ingenuity, entrepreneurship, and that trait that defines the American spirit, innovation. It also required team-building, collaboration, and an integrated approach to all aspects of their business. This is what makes Tesla’s story so compelling – it’s not an isolated stroke of genius, it’s the wholly integrated nature, where no one part of how they work and what they make is stronger when separated from the whole. However, it’s instructive to try to isolate the parts of their business and their cars so we can try to find principles that might apply to our professions, practices, and our personal approaches to problem solving. (Click Through) Tesla pulled off this achievement through innovation and integration of approach + process, performance + design, manufacturing, and sales + service.
- Slide 12: Innovation: Approach + Process When Tesla’s founders speak about the early years at Tesla, when they were looking to first principles for engineering and design, they say that innovation was the enabler. But innovation in what way? For the sake of being new – no. For the purpose of being better – yes.
- Slide 13: Reason from First Principles Of any worthwhile endeavor, Winston Churchill once remarked - The most important part is the part before the beginning. The most important part is the part before the beginning. What do you do before you start something? At Tesla they would say the search for something better, for innovations, is spawned by an authentic mode of problem-solving – Reasoning from First Principles. Don’t make assumptions - Reason from First Principles. Reasoning from First Principles is a physics way of looking at the world…what that really means is that you boil things down to the most fundamental truths…and then reason up from there…that takes a lot more mental energy… (Click) So the this is the first of 20 questions - Do we do this often enough in our search for solutions to our problems or issues, or even when thinking about our businesses and firms?
- Slide 14: Approach + Process - Vertically Integrated Team It’s hard to imagine Tesla starting at any other time, and in any other place, than the past decade and in California. Not impossible, but really hard. Tesla really required a technology discontinuity and expertise from outside the auto industry to come to full fruition. Automobile design, engineering and manufacturing needed a fresh approach and some fresh science. They found it in a place where ‘Design Thinking’ rules, rapid prototyping reigns, where many, failed trials trumps over-thinking and death by meeting. They have been innovative because, dramatically more than any current automaker, but very much like many successful technology companies, they have vertically integrated their design, engineering, fabrication and operations, placing most all in-house and often under one roof. Their founders and leaders repeatedly emphasize that Tesla and the Model S are revolutionary specifically because of that integration, an integrated design process. They had to be innovative and integrated. They had to be nimble to survive. There’s a reason there have been no new US car companies in over 90 years. Tesla had to create distinction, separation, meaningfulness. (Click) How many of us ask that of ourselves and our firm?
- Slide 15: Approach + Process - Top Leadership Involved in Design + Engineering They were able to do achieve this because of the hands-on leadership of their core founders – a team of engineers and designers that assembled around a shared mission. Elon Musk JB Straubel Franz Von Holzhuasen And back a few years, George Blankenship Each integral to the design process, each deeply enmeshed in it. (Click) Are we, as leaders of our practices, willing to stay in trenches to constantly make our firms and projects better? Unrelentingly?
- Slide 16: Approach + Process - Culture of Innovation All this supports, really compels and fuels Tesla’s culture of innovation. Tesla recently opened up all of its patents to competitors. Took copies of them all off the wall in their lobby and replaced them with this quote from a cult video game from the 1990s. Why? They explained it by saying that technology leadership is not defined by the number of patents on your wall, but – “by the ability of a company to attract and motivate the world’s most talented engineers.” (Click) Do we require innovation as part of our design process? How are we attracting top talent to our firms?
- Slide 17: Approach + Process - Mission Motivates Employees + Customers These core leaders set the tone for another critical aspect to Tesla’s success – their mission motivates their employees and customers. You can’t fake the enthusiasm captured in this photo. Or at this conference. Right? When we received our Model S at the end of 2012, I wrote the following blog post about people’s experiences when they had taken a test drive or ride in our car: …in a span of about 60 seconds: (approach the car, it’s beautiful, the handles extend, THE HANDLES EXTEND, get in, stunning, the touch screen stares back at them, the panoramic roof slides open, foot on break, speedometer flips over, you roll away silently, first straightaway - punch it reliving memories of first rollercoaster ride, fat-ass grins all over faces)… ...And then they think, NO WAY, as in NO WAY has this freaking out-of-nowhere company kicked sand in the face of 100 years of auto-making. NO WAY have they done it, NO WAY is it American, NO WAY is it 7,000 laptop batteries in the right kool-aid. NO WAY did I just laugh my head off driving in a loop around your neighborhood! (Trust me, there’s nothing compelling about that) …It’s our Apollo Program. People are proud of it. Of their courage to try it. Of the audacity to pull it off. People we don’t even know are proud of us for buying it. They feel like they’ve bought it by seeing it or riding in it. No one is lukewarm about it. Is this how Columbus felt?
- Slide 18: Approach + Process - Mission Motivates Employees + Customers That captured an initial rush of excitement that came with purchasing the car. But it goes deeper. I have first-hand experience of sense of mission when I received a private e-mail from a Tesla engineer who said that blog post compelled him to send a copy of it to everyone who didn’t understand why he would leave an upper-level engineering job in Detroit at a big three automaker to join a Silicon Valley start-up. Here’s part of what he wrote to me: I wanted to reach out to you to let you know a couple of things about the Tesla Forums, which I often see you (Cattledog) prowling about. I read the Tesla forums often and with great intensity. In particular, your brilliant and inspiring piece on Tesla and the Apollo program really hit home for me. The choice to come to Tesla Motors for me was deeply personal and a very high risk to the comfortable lifestyle of a typical automotive engineer like myself in Detroit. Like many automotive "Detroit expats" at Tesla, I hungered for something more than what the Detroit machine was putting out. I was never really able to put it in words for people who asked why I made the leap, and then I read your Apollo post from a few months back. As I read each line, the smile on my face grew wider and wider, and then tears actually formed in my eyes. I was really moved. I immediately sent out an email with a link to your post to my most trusted friends, family and Tesla colleagues with the simple title ‘This is why I work at Tesla’. The response I got was incredible. People finally got it. They got why this company, its products and its people are so different, they got why I made the change. I simply wanted to say thank you for putting in words how I felt (and still feel) about this most amazing place, and for being such an ardent and passionate supporter of what we are trying to do here. Working at Tesla (as you might imagine) is far harder than anything I have ever done in my life. When I was interviewing for this position, I read a portion of the job description which said: ‘You must have a passion for engineering electric vehicles. Without passion, you would find what we are doing too difficult. There are easier jobs.’ I can’t tell you how much truth is in that statement. All of this means that days can be very long and quite hard. Your words still reverberate in my mind and often provide the extra energy I need to get through a particularly difficult day. (Click) Do our clients feel this passionate about what we do for them? Do the people in our firms feel this way? Shouldn’t they?
- Slide 19: Approach + Process: Summary 1. Reason from first principles. 2. Champion a vertically integrated team 3. Entrench leadership in design and engineering 4. Create a culture of innovation 5. Articulate a mission that motivates
- Slide 20: Innovation + Integration: Performance + Design Now let’s talk about the car, Model S (I was hoping to speak about Model X, too, but I mostly know it as a sculpture of black masking tape at the moment), a complex, expensive interrelated set of systems trying to form a cohesive whole. Sound familiar to what you are trying to do in your profession? It does for me as an architect. The car’s performance, too, starts with, what else, innovation and integration. For Tesla, it started with the critical decision to go all-in on all-electric – a fundamentally new approach to power and the power train. Tesla’s commitment in the Model S to an electric powertrain, hyper efficient packaging and performance engineering make for incredible design opportunity. Franz von Holzhausen describes it as ‘Ready-to Wear’, comfortable, elegant - not ridiculous runway fashion. It’s the brand icon of a new car company, that’s not an easy job. It needed to win acceptance (at least partially) through design.
- Slide 21: Performance + Design – Lithium Ion, Thermally Managed Battery Module It all starts with the batteries. Let’s go back two decades. In 1995, auto battery technology had stagnated, with the prevailing technology being lead-acid batteries. These were defined by these highly enviable attributes: . short lifespan . heavy in relation to volume . short range . but commonplace Tesla looked at the landscape and decided they needed a fresh approach to auto batteries. But also that they couldn’t go it alone, they couldn’t invent a unique battery with limited application – it was simply too expensive. So Tesla to piggy-backed onto the economy of scale of the consumer electronics industry to use the guts of a lithium ion laptop battery that was already being produced in the billions. Tesla’s commitment to lithium ion was critical . 4x the gravimetric energy density . 6x the volumetric energy density . 3x the life cycle It was the simple rethinking of an existing technology, put to new use. This little module, the guts of the system, drove the whole thing. Systems-driven design. (Click) Can’t we think more this way? What can we adapt in our practices?
- Slide 22: Performance + Design – Thermally Managed Battery Module So, they accomplished this with consumer electronics cells, 7,104 of them, assembled into 16 modules. Thermally managed and fire protected with intumescent goo.
- Slide 23: Performance + Design – Skateboard and Low CoG And they took all these and made a skateboard. They were able to deliver their battery packs for less than half the cost of competitors who designed custom batteries. It's almost counterintuitive to start with the part you can’t see to catalyze the whole design. But they did this with Model S.
- Slide 24: Performance + Design – Optimize Packaging The skateboard has performance benefits in many ways. It allows for optimized packaging - great spatial efficiency - for the car’s systems. The motor, inverter and gearbox sit directly on top of the axles, essentially a direct drive. Not only does it optimize their performance, this compact 3D packaging of systems creates spatial opportunity for the car cabin above. Additionally, the lack of driveshaft and tunnel, no fuel lines, no exhaust systems shuttling themselves from one end of the car to the other frees up more interior cabin space. (Click) Wouldn’t our industries offer better designs if we dedicated our efforts similarly, towards optimally efficient packaging?
- Slide 25: Performance + Design – Optimized Packaging So using all that electric power mass as a skateboard, and concentrating other elements to create spatial efficiency, leads to some exceptional outcomes: Model S has the lowest Center of Gravity of any production sedan 17.5” – supercar territory. The heavy battery creates a great dampening element for vibration and road noise – it’s also an exceptionally quiet car. The battery weight is evenly distributed front to rear, leading to stellar handling. Lack of engine allows for space framing the front of the car – a light way to transfer forces and increase safety.
- Slide 26: Performance + Design – Language of Safety The integrated systems, packaging, and shell all intertwine to create the safest car on the road. That stiff battery housing connects to the body shell and creates exceptional torsional rigidity – 3 times stiffer than an average sedan - which increases safety. The car achieves 5 stars in all NHTSA crash tests, in fact scoring the highest ever in its occupant safety tests. It actually broke that agency’s roof crushing test machine during testing. Despite the sensational stories from a year ago, Model S is more than 10 times less likely to catch fire than gasoline cars.
- Slide 27: Performance + Design – Exceptional Envelope When you start adding all this up, you come to the inevitable conclusion – the Model S has a Form Language of Performance Tesla’s lead designer Franz Von Holzhausen says of the Model S’ design ‘it’s like an endurance athlete’, everything in balance, expressing purpose, athletic.’ (Click) Rather than chasing style and fashion, shouldn’t a form language of performance be one of our imperatives?
- Slide 28: Performance + Design – Aerodynamics Perhaps that’s best revealed in the engineering of the car’s envelope and its aerodynamic efficiency. The skateboard allows the exterior shell, the body shape, to laser focus on aerodynamics – we might say, form following function. Aerodynamically, Model S has the lowest coefficient of drag of any production car, a CoD of .24. That aerodynamic efficiency is critical to defining many design elements, the tear-drop, fastback shape, flat floor, retractable handles. But most significantly, the aerodynamics influence the range performance of the Model S.
- Slide 29: Performance + Design – Drag & Power Draw With lots of focus on aerodynamics, Tesla was able to offer a car with 275 miles in range, roughly 3 times their nearest competitor. As this graph shows, after 50 mph, power consumption is mostly about, exponentially about, aerodynamics. Since range is the typically largest issue for many when considering the purchase of an electric car, this focus on the car’s envelope was key.
- Slide 30: Performance + Design – Intersection So when design is derived from performance, and performance amplified by design, we arrive at a truly transformative spot. It’s design and engineering that are purposeful, meaningful, and memorable. Resonant. Integrated. It’s a spectacular outcome when design and engineering join to make the whole more compelling.
- Slide 31: Performance + Design – Intersection Would we love this car as much if it was simply a golf cart that went 0-60 in 3.1 seconds? It would novel and interesting, but not compelling.
- Slide 32: Performance + Design – Human Centered Design A car also must focus on the human body, ergonomics, human-centered design. The design of Model S considers this in highly integrated ways – all its pieces fuse engineering purposes with aesthetic resolution and contribute to an integral whole. The Door Handle – Oh the door handle, my favorite!!! It sits flush to the body of the car when the car is in motion, improving aerodynamics over a projected handle. But as you approach the car, it projects, it appears when needed (my wife would say, ‘sort of like a husband’), and reaches out to you, a first introduction. (Click) Shouldn’t all designs be more about human interaction than composition? Again, if we fully embraced that, what might we achieve?
- Slide 33: Performance + Design – Human Centered Design The car’s interior continues the design theme of ergonomic, sinuous shapes and continual flows, a space at rest yet somehow in visual motion. It really starts with the car’s controls, which are not buttons and dials but essentially all embedded in the 17” Touchscreen – a consumer electronics paradigm, a technological fascia, refreshing design.
- Slide 34: Performance + Design – Human Centered Design Overall, the interior is probably best described as opportunity space, created by that skateboard battery pack we discussed earlier. Down low, the flat floor creates opportunity. The rigid car structure allows for a glass cockpit up top, mixing with the silence and acceleration of the electric motor to really feel like you’re flying. Think of this – when I was a kid growing up, we were a family of five, I had two sisters. Guess who got to sit on the hump in the middle of the back seat all the time? Sore bottom, knees in my chin. No more hump. In fact, the middle seat has the best view of the 17” screen! Just think of that - the worst seat in every other passenger car is now the best seat in the Model S. How cool is that?!? So all those pesky automotive systems – battery, motor, inverter, etc. all conspired to make this opportunity space, human space, which Tesla made elegant.
- Slide 35: Performance + Design - Integrated Design It continues with door pulls that happen simply by folding the door panels, repeated with the latch pull, and providing clever, unexpected storage. The panoramic roof, which allows for light and ventilation while creating a continuous expanse of glass that’s in keeping with the sweeping design gestures of the car. Charge Port – Like door handles, hides when not in use, part of the car’s safety reflector system. The headlights, with a distinctive eyelid profile, another favorite of mine, with LED technology accenting a crisp, linear look. All these, and many other pieces, a marriage of beauty and performance.
- Slide 36: Performance + Design – Holistic And the ethos of Model S extends beyond the car itself, creating a connected universe for the Tesla brand, a holistic ecosystem of holistic design. The Stores The Superchargers (we’ll come back to those) The keyfob Wine glasses (OK, I had those made). The experience of Model S is enhanced by the holistic approach to design and engineering. (Click) Why wouldn’t we all move to reclaim a more holistic approach in our efforts, in our work?
- Slide 37: Performance + Design: Summary 1. Rethink on a systems level – adapt technology 2. Optimize packaging 3. Commit to a form language of performance 4. Embrace human-centered design 5. Create a holistic ecosystem of design
- Slide 38: Innovation – Manufacturing In 2010, Tesla acquired the NUMMI Factory in Fremont, California. Previously jointly operated by GM and Toyota, Tesla was able purchase the factory for pennies on the dollar. At over 5M sf, they’ll be able to manufacture 500,000 cars per year there when fully built out, sometime in the 2018-2020 timeframe. Acquiring such a large space and fitting it out allowed Tesla to approach manufacturing in innovative ways as well.
- Slide 39: Manufacturing – In-House Fabrication The first is Tesla’s ability to insource approximately 60% of their parts, with that number set to grow when they bring battery production back to the US next year. Most auto manufacturers basically make their engines and that’s it. There’s a reason that they operate on model years, they are ocean liners when it comes to changing directions. Not Tesla, they have literally improved the car’s hardware (physical parts) dozens of times in the first three years. It’s a software notion of upgradeability that they have applied to manufacturing. (Click) Shouldn’t we use digital technologies to test and prototype?
- Slide 40: Manufacturing – Highly Adaptable Robotic Assembly I have been on a factory tour twice, I highly recommend it to anyone who can wrangle a spot. The integration of these Kuka robots into production allows for things to be built and tolerances to be observed that just wouldn’t be possible otherwise – the process of auto manufacturing informing the product. These adaptable robots allow Tesla to alter production as they implement improvements in the car. Not in model years, but as they are able to. And just as significantly, there are literally hundreds of engineers on the floor at the factory, right adjacent to production. An amazing, recursive loop of feedback from one discipline to the other. (Click) How might we collaborate with others to imagine a more efficient production process, one that feeds back to design?
- Slide 41: Manufacturing – Internally Coded Software Development Much like part manufacturing is dramatically more integrated at Tesla than conventional automakers, so is the software that runs the factory (and the car, but we’ll get there in a minute). Rather than buying 3rd party software and adapting it, Tesla has written their own, for the robots, for assembly, for diagnostics, etc. Adam Jonas has said that software will move from being 10% to 60% of the value of a car in the next decade. (Click) should more of the value of what we do be embedded in writing code for to help us design?
- Slide 42: Manufacturing – Gigafactory! By the end of this decade, Tesla expects to be producing and selling 500,000 cars/year. However, to supply batteries for a half million cars/year would require doubling the world’s production of lithium-ion batteries. How do you do that? The answer is Tesla’s Gigafactory, an enormous facility being built outside Reno that will at least double the world’s lithium-ion battery production, manufacturing 50 gWh of batteries per year. They think the economy of scale and in-housing battery production will drop battery costs by at least 30%, and that’s before technological advances are applied, which are on the order of magnitude of 5%-7%/year. (Click) Do we have an equivalent? What will your Gigafactory be?
- Slide 43: Manufacturing – Stationary Storage Products When batteries become produced at this scale and their costs come down, they become very competitive in other applications, such as stationary storage for residential, commercial, and utility customers. Tesla just announced their first stationary storage products 2 weeks ago – Powerwall and Powerpack. The automotive use of batteries drove the technological advances and cost reductions. This is going to accelerate the adoption of stationary storage and intermittent, renewable energy dramatically. It’s a virtuous circle. (Click) What related products or processes would impact your industry similarly?
- Slide 44: Manufacturing: Summary 1. Internalize prototyping and fabrication 2. Initiate adaptable digital design and fabrication 3. Internally develop and code software 4. Pursue technological advances 5. Seek symbiotic opportunities
- Slide 45: Innovation – Sales and Service Lastly, we get to Tesla’s most direct interface with the public, with their clients, through sales and service. With their unique approach to design, engineering, and manufacturing, they could have said, “that’s good, that’s enough”. But to meet their mission, to accelerate the adoption of sustainable transport, Tesla needed to offer a fundamentally different approach to engaging their clients to breed brand loyalty and the best marketing they could hope for – passionate owners. (Some of whom , I understand, might even be here today…)
- Slide 46: Sales and Service – Direct to Consumer Sales In those beautiful stores of theirs, Tesla sells cars direct to consumers. Perhaps many of you have seen them. In some of the highest trafficked malls in the country. They are really new-customer education centers, demystifying the company, the car, and the ownership experience for a skeptical general public. In those stores – except in a few states – Tesla sells direct to consumers. There is no auto dealership involved. No added cost. Tesla may one day sell through a dealer network. But for now and the foreseeable future they sell through their own stores - a departures from the multi-generational industry standard that speeds the adoption of electric cars. (Click) When we think about our sales model, are we serving our clients best with our traditional ways?
- Slide 47: Sales and Service – Continual Software Upgrade Tesla is covered on Wall Street by a number of automobile analysts. Recently, one made a dramatic claim – that today, 10% of the value of the automobile is in its software, but in 10 years 60% of its value will be. Guess which Silicon Valley based automobile company is best positioned to be the leader in this space? Many elements of automotive innovation can be migrated to software, where technology accelerates much more rapidly as computing costs fall. For example, every couple months we all get over-the-air updates for our Model S’, which might fix small bugs but more frequently add functionality to the car. We can control some car functions via a phone app. So the software-centric Model S is the first continually upgradeable car, and the first where so much data about it is constantly being collected and analyzed to improve it. (Click) How can we harness data to improve our offices and projects?
- Slide 48: Sales and Service – Perpetual Product Improvement What exists in software similarly extends in hardware. Tesla is perpetually improving their product. If something can be improved, after testing, it’s implemented. Not in the next model year, but in the next time production can be reasonably adjusted. Improved seats. Better battery shields. New shims and gaskets, for things that need shims and gaskets. Perhaps the biggest improvement has been their introduction six months ago of the first dual-motor, all-wheel drive. They did this not in a model year change, but in October when it was ready. It’s been an instant hit. (Click) How do we create an ability to perpetually improve our projects, post-occupancy?
- Slide 49: Sales and Service – Autopilot Uber and Lyft – Driving services we order from the palms of our hands. Someone else does the driving for us. What if that someone was your car? Perhaps the most dramatic hardware and software upgrade to the ownership experience is Tesla’s integration of autopilot sensors into the car – cameras, radar, and sonar – and interpolation software to run them. It’s there in cars today, some of it functional but most of it awaiting regulatory approval and a simple software update. Other manufacturers have some of the functionality, but I bet Tesla will be the best – in part because of the software culture of Silicon Valley and in part because an electric car is simpler and more easily controlled that a gasoline-powered one. In doing all of this, they give us back something very precious – time. (Click) What can we put on automate to increase efficiencies?
- Slide 50: Sales and Service – Supercharging And finally, supercharging, Tesla’s fast, DC charging stations that dot the country, really the world. It’s their effort to overcome ‘range anxiety’ that some people feel with battery electric cars. Charging at their superchargers is free to Tesla owners. It’s like Ford and Exxon got hooked up and you could go into any Exxon and get gas for free. So they took what was perhaps the car’s greatest perceived weakness and made it an amenity – free supercharging. (Click) The question for us is, what are our perceived weaknesses – and how can we turn them into our strengths?
- Slide 51: Sales + Service: Summary 1. Question antiquated delivery methods 2. Continually upgrade the user experience 3. Perpetually improve products and service 4. Automate the mundane to open up opportunity 5. Make a perceived weakness a strength
- Slide 52: Conclusion I come back to a sentence in a letter I received a few years back from the Department Head in the College of Architecture at Cal Poly, San Luis Obispo, my alma mater, extolling the virtues of an architectural education. In it he remarked that true architecture resides where the intuitive and the artful meet the scientific and the demonstrable. I think of this often when I think of Tesla and Model S, and how they operate at the intersection of innovation and integration. It was pretty hard for the automotive industry to see this 10 years ago, but these ideas were crystalizing among a few leaders at Tesla.
- Slide 53: What’s Next for Us What can’t we see that’s 10 years in front of us? And who among us will see it? Will our professions and industries have similar leaders? Fortune favors the bold – let’s go forth and be brave.