Tesla vehicles are the newcomers in the automotive world, and they have made a name for themselves by depending on electricity to run. These vehicles have slowly become a household brand, and most people want to own them.
But like most brands, does Tesla outsource parts from other places, or does it do its own in-house manufacturing?
Let’s find out.
Table of Contents
Does Tesla Outsource Manufacturing?
Tesla outsources some basic components of the car from other manufacturers. Most of these parts are supplied from Europe, the US, and Asia. However, they also produce some parts to reduce overreliance on outside suppliers.
Why Does Tesla Outsource From Outside?
One of the main reasons Tesla works with outside suppliers is because they want to have options.
The car industry has its fair share of shortages. Depending on in-house production only isn’t enough to sustain the company.
Tesla sources most of its raw material from the mines.
They source 30% of nickel, 50% of cobalt, and 95% of lithium hydroxide directly from mines, eliminating a lot of middlemen.
However, they still get other ordinary car products, such as steel and industrial products, from third-party suppliers.
Are Tesla Cars Manufactured 100% In-House?
Although people might argue that Tesla is the most American car manufacturer, they don’t do 100% in-house production.
Some parts are manufactured in other countries, including Japan, and some unique components like power drive units, battery modules, and battery packs are manufactured in-house.
Tesla’s manufacturing plants have a high level of integration, unlike other car assembly plants. That’s why most processes take place inside the factories. This includes stamping and machining, some coding, and painting. More than 60% of car parts are sourced from the USA, and the design engineers work in these factories instead of a separate facility.
Does Tesla Manufacture Computer Components As Well?
Tesla manufactures its own computer components, particularly microchips.
This has been done in a bid to reduce their dependence on Asian chip makers and enhance energy efficiency. Also, instead of making their chips with silicon only, the company chose a new material technology called Silicon Carbide.
Silicon Carbide has unique properties that make it more durable and energy efficient compared to the traditional chips made on silicon wafers.
These chips have improved thermal conductivity that prevents energy loss by approximately 50%. This has seen Tesla enjoy great success in its latest models.
But with that said, reports indicate that Tesla is planning to outsource its next-generation chip to Samsung. Their latest vehicle, the Tesla Cybertruck, will have the latest Hardware 4 computer made by Samsung.
The new Hardware 4 Computer replaces Hardware 3, which is used by Tesla vehicles. According to Musk, this new computer is 1000% safer than human drivers. Tesla decided to work with Samsung on this project after considering the availability of Samsung tech and production costs.
Tesla also never outsources its software. Developing their software in-house has given them a huge advantage over other large companies.
They develop their software by collecting data from over a million beta testers and enhancing the areas that need improving.
Does Tesla Outsource Battery Production?
In 2020, Elon Musk announced that he was planning to cuts the cost of making their vehicles by producing their battery. But as expected, such a move comes with some challenges and takes time before the dream is achieved.
Despite the company having plans to make its own Lithium-ion batteries (LIBs), they are working with suppliers from different parts of the world.
The company outsources the lithium needed from Ganfeng Lithium Co. Ltd, a company in China. The required nickel is from an Australian mining company called BHP, and the cobalt needed is from Glencore, an Anglo-Swiss company.
According to reports, Panasonic, a Japanese company, is planning to build a factory in Kansas and Oklahoma to help supply Tesla with lithium-ion batteries.
This will help Tesla meet the vehicle demand it is expecting as more people continue embracing electric vehicles.
Panasonic has a market advantage in that they have the skills to raise the performance of the battery while maintaining safety.
Who Are Tesla’s Battery Material Suppliers?
Besides the companies mentioned, other companies supplying battery material to Tesla include:
- Guizhou CNGR – Cobalt and Nickel
- Hunan CNGR- Cobalt and Nickel
- Albemarle- Lithium
- Prony Resources -Nickel
- Livent- Lithium
Does Tesla Outsource Any Services?
Tesla doesn’t outsource services. It hires in-house employees for different roles.
Are Materials for Teslas Ethically Sourced?
In 2019 Tesla released its impact report stating that it’s committed to only using materials that are ethically sourced. Thanks to the Tesla Supplier Code of Conduct, the company only uses materials that have been produced responsibly.
Aside from that, the company also has a Human Rights and Conflict Minerals policy, stating Tesla’s expectations towards its partners and suppliers. They require the suppliers to follow their human rights policy and safety requirements.
Consequently, they are committed to ensuring the working conditions of all the people involved in the supply chain are humane and safe and that everyone is treated with dignity and respect. On top of that, they require proof from suppliers that policies exist to address environmental, social, and sustainability issues.
Tesla has admitted that most of its suppliers fall in the Tier 1 category.
That means they do not get all their raw materials directly but instead obtain from downstream suppliers or brokers of some sort.
As such, this makes it hard to determine the origin of the material. However, they have measures in place, ensuring that suppliers adhere to responsible sourcing principles.
For instance, Tier 1 suppliers must register and complete the domestic and international material compliance requirements, ensuring they meet the laid out standards. This requirement is a must for any supplier who provides raw materials or products to Tesla.
The company also does risk-based assessments on Tier 1 suppliers to identify which direct suppliers are not adhering to the laid out requirements. All this is done to ensure the whole supply chain is ethical.
Are All Teslas for the U.S. Market Manufactured in the US?
Tesla vehicles in the US market are manufactured on U.S. ground, specifically in Austin, Texas, and Fremont, California. The company outsources most parts domestically, and some parts are built in-house.
This can make you wonder whether Teslas made in China are shipped to the US. Well, not exactly. For instance, a model like Tesla Y is produced in both China and the US.
Instead of importing, the US market is supplied with cars from the Fremont, CA factory.
Models Y made in the Chinese market are often exported to Europe because it’s cheaper to export cars to Europe than to export from China to the USA.
Does Tesla Outsource Anything to China?
Tesla outsources some of its car production to China. In fact, during the earlier months of 2022, the company celebrated its one-millionth car made in China.
This news was released by Elon Musk, who mentioned that by the end of July, the company had already manufactured more than 974,000 cars in China.
Now, there’s also an interesting story of how Tesla entered the Chinese market.
Considering that the company was producing over 67,000 cars every month, by the end of August, they had surpassed the one million mark.