Analysis of the entire industry chain: How is a Tesla made?

Recently, Tesla announced its production and delivery data for 2020. In 2020, Tesla produced a total of 509,737 vehicles, the first time it achieved an annual production capacity of more than 500,000 vehicles; in 2020, it delivered 499,550 vehicles, an increase of 36% from 367,500 vehicles in 2019, but still a hair's breadth away from the 500,000 vehicle delivery target set at the beginning of the year.

At the 2020 Annual Shareholders' Meeting, Musk stated that benefiting from "China Speed" and "Made in China", Tesla's Shanghai Super Factory is moving towards an annual production of 1 million electric vehicles, and the production capacity of Model 3 and Model Y will reach about 500,000 vehicles in the future.

There are currently six factories in the world, including three in the United States, one in China, and two in Europe, with two factories to be built. The Berlin factory in Germany will start producing the new version of Model Y as early as the end of Q1 2021, and the progress of the self-made battery factory lags behind the vehicle factory. Tesla's Austin factory in Texas has begun construction and will be put into production as early as June-July 2021, mainly producing electric pickup trucks and Semi trucks.

Tesla plans to build a total of 10-12 Gigafactories around the world.

Deutsche Bank believes that 2025 may be Tesla's "breakthrough year", and it is expected that Tesla's revenue will reach US$94 billion and vehicle deliveries will exceed 2 million in 2025. However, short-term forecasts still depend on Tesla's production and demand growth, especially on the progress of Tesla's super factories in Texas and Germany.

Tesla's supply chain is divided into three categories: mass-produced traditional parts, mass-produced innovative parts, and North American innovative parts.

Among them, due to their rich experience in the field of traditional fuel vehicles, domestic brands have already possessed good supporting capabilities and foundations in the fields of chassis, suspension systems, glass, interior and exterior decoration assemblies, etc. Mature supporting experience, sufficient production capacity supply, and competitive product prices have become the core capabilities of these companies to surpass Tesla.

The parts with a higher localization rate are mainly concentrated in traditional components such as body chassis, interior and exterior decoration, and hardware parts in automotive electronics. The localization progress of key components of electric vehicles such as motors and electronic controls, control chips and system software is temporarily slow.

Among the suppliers that have already supplied or reached supply agreements, those with higher single-bike supporting value include CATL (48,000-60,000 yuan), HUAYU Automotive (15,000-20,000 yuan), Top Group (about 6,000 yuan), Lingyun Holdings (about 5,000 yuan), and Joyson Electronics (3,000-4,000 yuan).

Since the transportation costs of most parts in the automotive industry chain are high, domestic procurement is more advantageous. Therefore, Tesla's popularity in China will also drive sales growth in related industry chains. Leading companies in batteries, battery materials, thermal management systems, and electric drive systems with strong R&D capabilities and large scale advantages will gradually enter Tesla's supply chain, gaining greater growth space and product premiums.

Tesla industry chain companies review:

▌Tesla's three-electric system supply chain

The three-electric system is one of the most differentiating components of electric vehicles compared to fuel vehicles. It has high technical barriers in electric vehicles. Once it enters Tesla's supply chain, it will have greater room for growth and will not be easily replaced by other manufacturers.

▌Three- Electric System--Battery Materials

Panasonic and Tesla grow together

Tesla batteries have always been supplied by Panasonic. The Roadster mainly uses lithium cobalt oxide 18650 batteries, and the rest are NCA batteries. The two companies signed a contract worth US$7 billion in 2013. In the second half of 2017, the Gigafactory jointly built by Tesla and Panasonic went into production, producing cylindrical 21700 batteries (not simply purchased) for Model 3.

The 21700 uses a silicon-carbon negative electrode (3.5%), the battery capacity is increased by 55% to 4.8AH (18650 is 3.1AH), the system energy density is increased by 10% to 165wh/kg, and the system cost is reduced by about 20% to US$0.15/wh.

Previously, Tesla was exclusively supplied by Panasonic, but in 2020, Tesla introduced LG and CATL as suppliers of the Nanjing factory, and Panasonic's share dropped to 70%; Panasonic carbonated water battery factory in Norway is expected to support some European factories in the future.

Shanghai factory: LG is the main supplier for the time being, and the number is expected to double in 2021

LG is currently the main supplier for the Shanghai factory, supporting Model 3 long-range and Model Y, and its production is expected to double in 2021.

Previously, the M3 was supplied by LG. Starting from October 2020, the standard endurance version was gradually switched to the Ningde era iron lithium version; the domestic MY was also supplied by LG in the early stage. In 2020, LG equipped Shanghai Tesla with a 10GWh production capacity, which was basically full.

In 2021, Shanghai Tesla will radiate to Europe and Southeast Asia, with the overall output expected to reach 400,000 to 500,000 vehicles. LG is expected to supply 200,000 to 300,000 vehicles, and the corresponding power battery demand will exceed 20 GWh, doubling year-on-year.

LG's materials are highly localized, and domestic leaders have benefited greatly. Compared with Panasonic's closed supply system, LG Nanjing's procurement suppliers are mostly domestic manufacturers, such as Enjie, Tinci Materials, Kedali, Xiangfenghua and other leading manufacturers.

CATL and Tesla have close cooperation

The domestically produced standard-range iron-lithium version of the M3 has been mass-produced, and more than 150,000 vehicles are expected to be produced in 2021. In February 2020, CATL signed a procurement agreement with Tesla, and in September it officially began supplying lithium iron phosphate batteries to equip the domestically produced standard-range version of the Model 3, which has a battery capacity of 55kwh and is expected to be equipped with 150,000 vehicles in 2021.

In 2021, ternary batteries are expected to enter the domestic ternary Model 3 and Model Y. Ningde ternary batteries are sent for testing at the same time, and are expected to officially enter the MY supply chain in Q2-3. Ningde is expected to become the main supplier in the domestic market in the future.

At the same time, second-tier suppliers of battery materials such as positive electrodes, negative electrodes, diaphragms, electrolytes, structural parts, etc. in the battery link also have high single-vehicle supporting value and barriers.

▌Three-electric system-- thermal management system

The core technology of electric vehicles lies in batteries, and the performance of batteries is closely related to thermal management. As a pioneer in thermal management design, Tesla has pioneered the design ideas of integrating thermal management parts and structural innovation.

As its core competitiveness, the thermal management system will be updated and upgraded with each new car.

Model 3 thermal management system diagram

Model Y's thermal management system introduces a new heat pump system, which combines parts integration and structural innovation to become the most compact heat pump in existing models.

Sanhua Intelligent Control has a dominant advantage in R134A and 1234YF refrigerants. Sanhua Intelligent Control's valve body is the best track in thermal management; Kelai's layout includes pipelines and electronic expansion valves, and its R&D strength in the field of carbon dioxide is relatively strong; Aotecar mainly produces heat pump solutions and modules, and its value is mainly reflected in its integration capabilities.

▌Three-electric system-- electric drive system

Tesla's price in China has dropped to less than 250,000 yuan (after subsidies), which will place higher demands on the parts supply chain while also bringing greater room for growth.

Relying on China's mature and efficient parts supply chain system, a large number of parts are expected to be domestically produced and locally supplied. Among them: Xusheng Co., Ltd., Top Group, Sanhua Intelligent Control, Ningbo Huaxiang, Huayu Automotive, Daimei Co., Ltd. and other companies have large single-vehicle value.

▌Automotive Electronics

In addition to the three-electric system, automotive electronics is also an incremental value point for electric vehicles compared to fuel vehicles. Domestic suppliers that can enter Tesla's supply chain have high barriers and weak substitutability, and their performance has the ability to continue to grow.

Currently, the products supplied by domestic suppliers are mainly hardware, and the core technologies of software control parts such as ADAS/FSD are in the hands of Tesla itself. The supplier barriers are high, and it is very difficult to break through.

▌Tesla's self-made batteries: entering mass production after 22 years

Tesla announced at its 20th anniversary battery day that the diameter and height of the cylindrical large battery are 46mm/80mm respectively. The tabs are removed by laser technology, making the battery flow shorter and more efficient, with energy increased by 5 times, power increased by 6 times, and battery life increased by 16%. Tab-free battery enables continuous production, and the speed of the production line is increased by 7 times. It is expected that the cost will drop by 14% after mass production. The subsequent energy density will reach more than 200wh/kg.

Tesla is expected to adopt the domestic material supply chain on a large scale. Tianci has signed a supply contract with Tesla, and there may be more cooperation and orders in other links in the future.

Tesla has an "innovative gene" and takes electric vehicles as its starting point. The three-electric technology ensures vehicle performance and is equipped with a centralized electronic and electrical architecture to further realize whole-vehicle OTA and gradually realize fully autonomous driving functions through OTA. In this process, Tesla not only sells cars, but also realizes a transformation in its business model, providing FSD options and other services, with obvious economies of scale.

Compared with traditional cars, Tesla lags behind in manufacturing and scale, and this is also what Tesla needs to solve in the next step of growth, including accelerating production capacity and launching new models to open up a larger market.

"Tesla remains the best-positioned company in the electric and autonomous vehicle space within our coverage universe due to its people, technology, business model, and funding," Morgan Stanley analyst Adam Jonas wrote in a report.

"In addition, it is worth noting that Tesla does not have to worry too much about environmental liabilities at a time when its traditional competitors are under pressure to do so. All things considered, we believe Tesla's business model can release recurring mobility service revenue faster and more profitably than its competitors."