Advances in Economics, Business and Management Research, volume 215
Proceedings of the 2022 7th International Conference on Social Sciences and
Economic Development (ICSSED 2022)
Research on the Advantages and Disadvantages of
Tesla's Supply Chain in China
Junyi Chen1, †, Shijie Wang2,*, †
1
World Foreign Language Academy, Shanghai, 200030, China
Email: chenjemmy27@[Link]
2
New Channel Foreign Language Centre, hangzhou,china
Email: 161849020@[Link]
*
Corresponding author. Email: 161849020@[Link]
†
These authors contributed equally.
ABSTRACT
The development of new energy vehicles has always been one of the development projects that countries attach
importance to, and major automobile companies are gradually turning their attention to the new energy vehicle market.
As a pioneer in the new energy vehicle industry, Tesla has a significant advantage in the new energy vehicle supply
chain, and the Monopoly Law has a great restriction on Tesla's further occupation of the market. This paper analyzes
the strengths and weaknesses of Tesla's supply chain based on the criteria of value, scarcity, irreplaceability, and
difficulty of exemplary identification of core competencies, and uses SWOT analysis to study how Tesla can expand its
market share through supply chain advantages. But as long as it can overcome these problems, Tesla can maintain its
position as the number one electric car company in China.
Keywords: Tesla, Monopoly, Supply Chain, China.
this, but also This means that domestic companies need
1. INTRODUCTION
to imitate and innovate in supply chain competition,
while Tesla's disadvantages are obvious, such as the
1.1. Research Background inimitability of its core competitiveness, which also
With the arrival of Tesla in the Chinese market, the reflects the necessity of innovation in enterprise
development of the domestic new energy vehicle competition.
industry has gradually matured, and the market
competition has become more and more fierce. It is not 1.2. Literature Review
difficult to see from the sales volume that, in addition to
For the supply chain technology discourse, Yang
the first domestic enterprises to enter the new energy
Yang and He Ziwei (2015) pointed out three basic
vehicle market and Wuling, which strives for cost
characteristics of the new energy vehicle supply chain:
performance, the number of state-created enterprises
first, short supply chain exploration time and high
accounts for a significantly higher proportion than
vulnerability of the supply chain; second, difficult to
foreign enterprises; Tesla is always in the first place in
predict the end demand of the supply chain; (3) high
the sales list among many competitors, and domestic
dependence on technology, once there is a technical link
enterprises have to compete in The first point is generally
failure, the supply chain management cannot continue [1].
not applicable to enterprises that attach importance to
For supply chain manufacturing direction analysis, the
technological innovation, which is related to the cost of
automobile is a big piece, its structure is complex, there
compressed manufacturing, the quality control of the
are usually tens of thousands of parts, different models
enterprise's goods, this paper attaches importance to
are completely different, and the same model has many
supply chain risks, so the technical aspects of the
individual requirements. Therefore, the process is quite
discussion; Tesla's exclusivity for technology has a
complex from order review to production planning and
greater connection with its supply chain advantages, such
material planning to sales [2]. Liu Haohua (2015) points
as its excellent three-electric technology is attributed to
Copyright © 2022 The Authors. Published by Atlantis Press International B.V.
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out the traditional cars are powered by internal advantages in the supply chain are inseparable, the latter
combustion engines, with 30,000 to 50,000 parts, closed part of this paper will mention the three electric control
production, and a long value chain with a high degree of systems that Tesla has, which has a huge advantage
interdependence [3]. In contrast, the structure of new among its peers, which will also involve its exclusive
energy vehicles is simple, such as pure electric vehicles, advantage. In the core competency criteria, this paper
only 3,000 parts, with the battery, motor, and electronic will analyze how Tesla obtains supply chain advantages
control in the powertrain system as the core components, incorporate cooperation by the direction of supply chain
using new lightweight, composite materials and partners mentioned in the previous literature.
advanced electronic devices, etc. The number of
The SWOT analysis used later in this paper will also
components in the powertrain will be reduced by more
be more focused on Tesla's disadvantages in the supply
than 100 from the traditional approximately 1400.
chain, how to find opportunities in the disadvantages,
Moreover, new energy vehicles are closely related to the
solve them and highlight their advantages, to find
energy supply industry, electronics industry, etc., and
relevant development opportunities, and suggest shallow
need charging infrastructure for protection. Second,
problem-solving directions to help relevant companies
specifically on the cooperation between new energy
find breakthroughs in the bottleneck period.
vehicle enterprises and other suppliers, Wang Yanchen
and Liu Ling (2019) new energy vehicle supply chain
contains all the processes from raw material suppliers to 1.3. Research Contents
the completion of product manufacturing and delivery to This paper will analyze the reasons for Tesla's
end-users, that is, including planning, procurement, advantages and disadvantages in the supply chain, and
acceptance, storage, manufacturing and assembly, secondly, this paper will analyze the disadvantages of
distribution and other processes, the supply chain system Tesla and propose solutions to prove that if the new
is more complex, and in actual operation, product flow, energy vehicle enterprises solve their more obvious
information flow, and capital flow are formed. Product disadvantages, they can get a greater chance of a
flow refers to the flow of auto parts from the supplier to competitive advantage.
the vehicle manufacturing plant, the vehicle from the
manufacturing plant to the customer's entity; information
2. CRITERIA OF CORE COMPETENCE
flow is the two-way communication between suppliers,
manufacturers, and customer on-demand, technology, The four main criteria for identifying a company's
quality, and other information in the production process core competencies include value, scarcity,
of auto parts and vehicles [4]. Further specifically to the irreplaceability, and difficulty in modeling. Core
new energy vehicle supply chain of the vehicle competencies are often one of the most important
technology as well as procurement direction, new energy elements of business competition and can continue to
vehicle electronic control sales continue to explode, bring stable and high profits for enterprises. As a pioneer
significantly exceeded market expectations, are expected in the new energy vehicle industry, Tesla needs to grasp
to achieve more than double the annual growth. Since the its core competencies. It has been proved that Tesla's
second half of this year, the production and sales data of advantages in the supply chain are inseparable from its
new energy vehicles continue to exceed expectations, the core competitiveness, and the disadvantages it faces are
latest Ministry of Industry and Information Technology also reflected in its core competitiveness, while most
announced that from January to September 2015 enterprises are aware of the importance of core
production of 156,000 units, an increase of nearly three competitiveness, and the unique technology of each
times. The fourth quarter is the peak season for new enterprise can also be unique in the industry competition.
energy vehicle production and sales, and new energy We take the famous American chain Wal-Mart as an
vehicle production is expected to rise all the way. example. Since its establishment in 1962 has endured, the
Benefitting from the rapid expansion of the new energy core competitiveness is one of the important reasons.
vehicle market scale, the production and sales of new
energy vehicle electric control will also grow [5]. 2.1. Value
In summary, most of the reports are designed to
Walmart can give a convenient and fast consumer
reflect the importance and irreplaceability of the supply
experience, and can also provide occasional promotions
chain of new energy vehicles, while several scholars and
because Walmart controls the cost of purchase and cost
reports can be concluded that supply chain advantages
of sales. For Tesla, value is one of the biggest advantages,
play a vital role in the new energy vehicle market
even if the price once required strong purchasing power
competition, the supply chain technology is crucial,
of consumers. The establishment of a super factory and
which will involve the level of technology owned by the
localized production in China is an advantage of Tesla
enterprise itself, as well as its ability to provide inimitable
over its overseas counterparts in terms of price. The shift
innovation, and scarcity. Rarity, but also reflects the
from overseas sales to domestic sales has significantly
market advantage that Tesla has gained and its
reduced the cost of sales and avoided a large number of
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Advances in Economics, Business and Management Research, volume 215
tariff expenses, and the reduction in labor costs has also electric system (including battery, motor, electric control
reduced the input for manufacturing costs. In this way, system), this technology and Tesla for the battery
the sales price is lowered several times, thus lowering the supplier cooperation has a close link [6].
threshold of consumption. Cooperate with Chinese
Before Tesla's domestic production, in-depth
communication operators to speed up the informatization
cooperation with companies such as Panasonic and LG to
of car products, and also increase or decrease the
ensure the supply of Tesla batteries and the advanced
visibility of the products. In terms of service, Tesla has
degree. And after the domestic production, Tesla due to
enhanced its after-sales service by establishing charging
domestic battery manufacturers to cooperate, for
piles on a large scale. Provide more obvious advantages
example, Ningde Time have cooperated with Tesla to
in the supply chain.
extend the contract to 2025. Tesla will purchase lithium-
ion power batteries from Ningde Time [7,8]. As can be
2.2. Scarcity seen from Table 1, compared to domestic brands, the
Wal-Mart's most unique service special logistics energy released by Tesla cars is stronger than that of
system, Wal-Mart's distribution stations have provided domestic brands when using the same battery type and
distribution services for more than 4,000 stores the same drive motor, and there is a considerable gap
worldwide and have the largest company transportation between domestic brands and Tesla in the more high-end
fleet in the United States. Tesla also has a strong car models.
advantage in scarcity, that is, Tesla's powerful three-
Table 1. Tesla electric control system disassembly
Trickle Charge Rapid Charge Energy
Cae Drive Motor Electrical Machinery
（0-100%soc/h） （0-80%soc/h） (kwh)
Weilai es8 AC asynchronism motor 8 1 Ternary lithium battery 67
modelx 75D AC asynchronism motor 6—8 0.75—1 Ternary lithium battery 75
modelx 100D AC asynchronism motor 6—8 0.75—1 Ternary lithium battery 100
modelx p100D AC asynchronism motor 6—8 0.75—1 Ternary lithium battery 100
is at a greater disadvantage and is one of the most
2.3. Irreplaceability important issues to be resolved.
In terms of irreplaceability, Tesla is facing a more At the same time, Tesla open all the patents, the
obvious disadvantage. For Tesla's unique entertainment public also makes Tesla cars more easily copied by others,
in-car system, compared with the same performance and which will make in the peer competition, Tesla can get
stability of the android system, Tesla's Linux-based in- the exclusive advantage is rarer. However, there will be
car system can get rid of the relative limitations of the differences in the supply chain, for example, the after-
android system suppliers, such as the potential risk of sales service provided by the company, and the
technology monopoly, and play a role in the supply chain. cooperation with suppliers usually mirror the strength of
However, due to the similarity of functions and the fact the company itself, which is often difficult to imitate, so
that the Android system is also based on the LINUX the supply chain advantage is the core competitiveness of
system for improvements and continuous updates, Tesla Tesla.
cannot surpass the Android system in terms of system
technology, and Tesla's on-board system has limited 3. SWOT ANALYSIS ON TESLA’S SUPPLY
functions and is difficult to achieve irreplaceability [9]. CHAIN
2.4. Difficulty in Model SWOT analysis is usually divided into the following
four points: Strengths, Weaknesses, Opportunities, and
For Tesla's brake system, the brake system used by Threats, and this paper will focus on the supply chain
Tesla is the BOOSTER brake system. Compared with the strengths and weaknesses of Tesla, and in this, it will
traditional brake system, this brake system makes the car combine the opportunities and threats of Tesla in the
consume less energy, is safer, and is more suitable for the market, which will help to further analyze the strengths
maximum energy recovery of new energy vehicles. In and weaknesses of Tesla in the market.
other words, the high performance of the braking system
will certainly prompt peers to follow suit and mass 3.1. Threats
market. The "brake failure incident" makes Tesla's
reputation damaged, in this part of the supply chain, Tesla According to the previous complaint, compared with
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other driverless technology companies, Tesla is at a software upgrades, and this is a new major advantage of
greater disadvantage in driverless technology, in terms of Tesla's supply chain in terms of performance, and at the
technical level, the technology used by Tesla is relatively same time, Tesla can also get good reviews from
backward, and it is difficult to stand in front of the customers to expand its market share, and the rise in
industry; in addition, the technology used by Tesla is customer purchases will generate more corresponding
misrepresented or over-exaggerated by public opinion advantages in the supply chain of production. The rise in
and other phenomena, resulting in a greater disadvantage, customer purchases will generate more opportunities in
so there is a greater threat in the supply chain and industry the production supply chain.
competition, and this will This means that the threat Tesla
encounters will not only be the threat of competition from
peers but will also involve the threat to the company's
reputation and technology development caused by the
technology used by Tesla.
3.2. Weaknesses
The disadvantages that Tesla faces in the industry
include the threats it encounters in the industry and the
huge impact it has, the bottlenecks it encounters at the
operational level of the system that it fails to excel, and
the advantages of the many technologies it uses that are
less and more problematic. According to the previous Figure 1 Amount of model3 delivered.
analysis of the threats encountered by Tesla, Tesla's
failure to excel in driverless technology, causing
problems and causing public opinion, will be one of the
most important technical problems that Tesla needs to
pay attention to, and Tesla also needs to upgrade this
technology to prove that Tesla's strength does not need to
exaggerate; on the system level, Tesla's use of the car
system according to the previous article can be learned,
Tesla failed to Tesla needs to make better optimization of
the system and more functions and upgrades, in other
words, it is dedicated to customer experience and after-
sales innovation, which will help Tesla to get better value
in its core competitiveness and compete with its peers. Figure 2 Tesla model3 price change.
This will make up for the supply chain disadvantages that
Tesla faces at the system level; among the many According to Figure 1 and Figure 2 about Tesla's
technologies used, Tesla has fewer advantages, typically annual report data can also be concluded that Tesla has a
the BOOSTER brake system used by Tesla, as we know huge competitive advantage in the marke[10], in the
from the previous article, the brake technology used by conditions of price reduction can have a significant sales
Tesla can better serve the electric car, but Tesla cannot increase benefit, so the opportunity is still obvious if, in
get the exclusive advantage of the disadvantages that may the case of solving the obvious disadvantage, it is
be brought by the mass, and, Tesla in the use of this expected that sales will continue to grow. For the
technology when the problems arise, such as brake failure advantage, the effect of price reduction is obvious, in the
brought about by traffic accidents, and Tesla needs to period of damaged reputation can still be appropriate to
carry out product optimization for this brake system, and reduce the price of the way to restore the reputation,
the related technical improvement of the cooperation improve sales and competitiveness, so for the same
company and related agreements. competitors that are, peer companies can also be
appropriate according to the situation to reduce prices
and rise in reputation and cost performance.
3.3. Opportunities
For the various threats and disadvantages 3.4. Strength
encountered by Tesla at the same time, in fact, the
improvement program is a relative opportunity. For Through the previous literature review, we can learn
example, Tesla has the disadvantage of not being able to that Tesla's supply chain advantage will be closer to the
excel in system operation due to the difficulty of hardware procurement aspect, because Tesla has a higher
innovation, but this can lead to solutions such as than industry average level of three electric technology.
improving the quality of after-sales service and multiple Which will mean that the Tesla car's electric performance
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can be higher than the peer level, it has proved that Tesla if Tesla is to continue to maintain its position as the
has a unique control system, in the company's world's number one electric vehicle manufacturer. Of
cooperation with more than battery suppliers for Deep course, there are certain research limitations in the
cooperation in order to supply timely, is one of the current paper, such as government policies are an
favorable evidence of Tesla's advantage here. At the important part of the picture, including people's attitudes
same time, combined with the previous analysis, Tesla's towards EVs. While we recognize the benefits of EVs,
opportunities can be understood that Tesla's advantages the pollution caused by disposing of batteries can also be
can still be obtained from solving the disadvantages. The a headache for people. At the same time, although the
reason is that if Tesla makes up for the obvious government is currently strongly supporting electric cars,
disadvantages. Then Tesla is highlighted is a more it is still unknown whether new policy adjustments will
obvious advantage. In other words, Tesla now has the be made after electric cars become truly popular. But as
advantages can also attract the corresponding customers, long as Tesla stabilizes its supply chain in the current
but if Tesla will highlight the advantages and situation, while defending its corporate position and
disadvantages, the resulting supply chain The advantage reputation, it can still gain a lot of profit and success.
will be more significant and more effective.
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tml 2012.07
In conclusion, this paper analyzes the strengths and
[10] Tesla, investor relations. the earnings for Tesla of
weaknesses of Tesla's supply chain based on the core
q3. q2.q1 until oct 20, 2021.
competencies of value, scarcity, irreplaceability, and
difficulty of exemplary identification criteria, and uses
SWOT analysis to examine how Tesla can expand its
market share through supply chain advantages. Through
the above series of studies, we recognize what necessary
adjustments need to be made to the current supply chain
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