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1. How much does the company currently produce?
Between January and December 2019, Tesla produced 365,300 vehicles. Tesla Inc.'s most recent quarterly vehicle production volume reached almost 105,000 units. The level of production in the fourth quarter of 2019 was approximately 20% higher than during the fourth quarter of 2018, when Tesla produced 86,555 vehicles.
Tesla's stellar year was driven primarily by the production and sales figures of the Model 3. Around 87,000 Model 3 units were assembled and about 92,550 of these vehicles were delivered between October and December 2019. With around 145,850 units, the Model 3 from Tesla was the world's best-selling plug-in electric vehicle in 2018. With domestic sales of just under 140,000 vehicles, the Model 3 accounted for almost 40% of all sales of plug-in electric cars in the United States. That said, these figures also show how much Tesla depends on the US market.
https://www.statista.com/statistics/715421/tesla-quarterly-vehicle-production/

3. Select at least 2 activities performed by the company and for each of them...
SECOND ACTIVITY: PRODUCTION OF THE CARS

Tesla uses a lot of technology and a big infrastructure in order to produce its final products, the electric cars. In this video we can watch the whole process of producing one of its models: https://www.youtube.com/watch?v=8_lfxPI5ObM

It is common knowledge that the fixed costs of these machines are huge and not every company has the power to enter in this electric cars market with this power. Amortization, legal revisions of the machines, maintenance, marketing and promotion, cleaners, security, rents, no operative workers (staff, managers, etc.), among others. These fixed costs are not related to the production and the company has to suffer them even if the company stops the production. Because of this, they have to be covered with economies of scale or with big margins.

There are also variable costs, such as the energy and the power to enable the machines in order to work, all the materials that the company uses in order to produce the cars (motors, wheels, breaks, seats, paint cans, etc.) or workers. These are costs that have to be covered also. In this case, Tesla covers them with big margins. The prices of its cars are really high, but the company justifies them with the quality and innovation that all of them offer. In other words, the strategy of Tesla is differentiation.

However, the company can try to take advantage of the economies of scale with some changes in the production process. It can establish a non-stop type of production, which includes 24 hours per day of production (24-7). If the company takes advantage of a bigger amount of time, the production can increase up to a point that economies of scale can be established.

Tesla works with orders and requests of the clients (kind of a JIT process) so it is possible for this company to take advantage of economies of scale also by reducing the transport costs of each order. It can implement a new geographically different system of supply in order to reduce these costs.

Tesla can also be influential with its suppliers and have power to negotiate. In this case, it can take advantage of economies of scale because the company can “force” its suppliers to save the spares until Tesla needs them. With this, Tesla will be able to reduce inventory costs.

Regarding diseconomies of scale, it is very difficult that Tesla will suffer them because it works by order. Working by orders is fine if the company has the capacity, the technology and the infrastructure to produce the many orders it is going to recieve. The problem can come if a bigger order comes. In this case, Tesla will have to deal with making decisions related to new works, new machines, new factories, etc.

1 comment:

  1. Well done, but I miss some reflections on the learning economies that may be generated.

    ReplyDelete