[aresant]

The Tesla story has effectively become a manufacturing story.

Can they meet production targets?

Can they maintain product quality while they scale?

Will they run out of money before they solve the CapEx intensive, low margin problem of automobile manufacturing!!!?

Despite the scrapiness of the "build a gigantic tent" story it's a bizarre risk.

Musk's desire for full vertical integration obviously mirror's that of Steve Jobs - who ALWAYS claimed a core apple advantage was total vertical integration.

But at Apple with the iPhone Job's knew he was outgunned by manufacturers and OEMs by a long shot.

And calculated that building fabs, plants, etc required a different set of skill sets and capitalization than he had at the time.

Where Jobs was a genius was that he maintained control over core manufacturing innovations (machining) and IP, while actually taking on very little manufacturing risk.

There's a really fascinating overview of this, published in 2011 and key quote

"China made Steve Jobs' revenge possible. Chinese OEMs could produce plenty of iPods, iPhones and iPads to meet demand, leaving Apple free not only to design as it wished, but to control what it designed."(1)

I wish for Tesla's sake that they'd taken a similar path, and I think a likely outcome on the downside of the Tesla story is a restructuring around a model like the above.

In the meantime I'm still rooting for them!

(1) https://www.thestreet.com/story/11737628/1/apple-and-the-ver...

[Animats]

Musk's desire for full vertical integration

One reason for Tesla's vertical integration may be that they want ordinary components like seats done Their Way, but they don't buy in big enough quantities to get major suppliers to do that. This is why you see a lot of high-end but low volume cars with Recaro-branded seats.

[joobus]

Maybe Musk just has a severe case of Not Invented Here syndrome.

[rossdavidh]

I'm not sure the "let's build it in China" route would have worked out well here. If you're building something that's just like what lots of other people are building, you can probably outsource it to somewhere that's already building something like that for other people. If you're building something that's not, then putting the manufacturing on the other side of the planet in a different company's hands, is suicide.

[dingo_bat]

Exactly, if the company is not able to convert its designs to product right here, how will they do that same thing but thousands of miles away in China?

[paxys]

Remember that China has had expertise in manufacturing personal electronics since well before the iPhone. Cars, not so much.

[fullshark]

Apple acquiring Tesla after they go bankrupt is the logical endgame here.

[brisance]

Acquiring a company means assuming its debt obligations as well. Apple is too well-managed to do something so stupid.

[jmvoodoo]

That's not always the case. It's common to do an asset sale when companies go bankrupt. I know. I've been involved in one such sale (on the buy side).

[brisance]

And Apple management would be stupid to pay $20.5 billion for Tesla's plant, property & equipment. They may acquire an interest in Gigafactory but that's not worth $20.5 billion.

And let's not forget Tesla's largest shareholder is Elon Musk, who went on record to explicitly disparage Apple and its employees not too long ago. Do you think he would sell his beloved company to Apple? https://www.theguardian.com/technology/2015/oct/09/elon-musk...

[mark212]

Exactly, that's the simple definition of a Chapter 11 workout: sell the assets without the debt and distribute the proceeds to the creditors

[dingaling]

Apple would swallow Tesla's debt within literally a few weeks of revenue.

[themodelplumber]

Is it still advisable to "take a similar path" to that of Apple, given recent trade relations with countries like China and potential risks of a more insular world?