How an automotive outsider forges Tesla's supply chain
In the past year, Peter Carlsson has taken Tesla Motors Inc.'s purchasing department and supply chain from handling "boutique manufacturing" to being capable of launching the company's Model S electric sedan. Tesla began delivering the Model S -- the company's second car after the Roadster -- to customers in June. The company anticipates ramping up production to 80 Model S units a day by year end.
Carlsson, 41, came to Tesla's Palo Alto, Calif., headquarters by way of Singapore, where he was in charge of NXP Semiconductors' purchasing operation. Earlier, he was chief purchasing officer of cell phone maker Sony Ericsson, where he oversaw the company's 8 billion euro per year purchasing department. He spoke with Staff Reporter Ryan Beene.
Q: What attracted you to Tesla?
A: Living in Asia, I didn't know much about Tesla. I came by during one of my business trips, and I was absolutely amazed by the vision, technology and management team that [Tesla CEO] Elon Musk had recruited.
And also, the type of energy that you see just stepping into our r&d or manufacturing, you can see the tremendous motivation and dedication of the team. It reminded me a little bit about when in the early '90s I stepped into the cellular phone industry.
At the time, at Ericsson we were about 350 people developing a pretty large-sized cellular phone -- I mean, we're talking brick-sized.
About seven years later, we had gone from about 350 to 20,000 people. We were doing over 50 million units annually and the price erosion, the supply chain and everything that came with that, it was a fantastic ride.
Were you apprehensive about entering the auto industry?
No. I've worked with the automotive industry in my previous roles. I saw the very systematic and structured approach and the long-term and reliability focus that comes with automotive.
Has your Tesla experience matched your expectations?
I expected to find a really strong technology company that was scaling up. That was exactly what I had found. What's been a key learning is the sheer amount of suppliers, tools, development activities and dependencies that go into a project of this character. That's been extremely challenging but also very motivating.
How far along were Model S development and Tesla's supply chain when you took the job?
I probably stepped in about halfway into the sourcing process. My focus has been managing the coordination of the industrialization at all of our suppliers. At the same time, it's been about building our supply chain team around both the commercial activity but also supplier quality assurance and logistics.
The logistics aspect of building up a large-scale manufacturing project in automotive has also been very interesting. When you come from consumer electronics, you're used to air-shipping pretty much everything. Automotive logistics is something very different.
What were your strategic priorities for sourcing the Model S supply chain, and how did those priorities affect your purchasing decisions?
Our strategic priorities were to make sure that the time plan for all our critical suppliers was aligned, meaning all the different tools, industrialization plans, all the plans for validating parts were coordinated.
It was also around analyzing the entire supplier base and seeing which of the previous suppliers that we worked with for Roadster and on other programs were fit as we were scaling up our operations, and which suppliers did we need to develop for Tesla's long-term success.
Were many Roadster suppliers kept for the Model S?
We produced about 2,400 Roadsters over a period of three years, so you can almost call it boutique manufacturing versus our clear ambition of doing a production rate of 20,000 vehicles and more next year. What we needed to assess was which suppliers were fit to do this and which suppliers we needed to scale up.
The truth of the matter is that there is very little reuse between Roadster suppliers and suppliers we're bringing along with the Model S.
How much of the Model S's content was sourced internally and how much has been sourced from suppliers?
You can look at it from a vehicle and a powertrain point of view. On the vehicle side, we're pretty much working with the mid- to big-size automotive suppliers for different systems. We might have a few suppliers that aren't directly automotive linked, but mostly we're using the same type of supplier base that the rest of the automotive industry is using.
That gives us a couple of benefits. In some sense, in certain areas we can reuse parts or processes that are being developed for others.
Not every supply relationship with Tier 1 suppliers has been fantastic. We have a mind-set of higher speed and a higher degree of change, and we're trying to apply a little bit more of a concurrent engineering and development process. And not all suppliers have worked as well with us when it comes to that. We might work a little bit differently than some of the big OEMs that they're used to working with, and that has been kind of a cultural -- I shouldn't say "clash" -- but a cultural change that many have adjusted to, but some have struggled with.
The other aspect of this is on the powertrain and electronics side. With the powertrain, we're almost developing a new supplier base as we are going into the high-voltage area and driving the technology development in this area. The supplier mix is not the same as you would see in a traditional vehicle setup.
If you have requirements on high-voltage connections that go up to 1,000 amps for certain connections, the application is more with companies like Siemens or ABB rather than traditional automotive suppliers.
We are going one step deeper in our supplier interaction in the sense that we are developing pretty much a lot of the systems ourselves, together with key suppliers but we're not using the traditional tiered supplier base.
An example of that would be our infotainment system. Pretty much for everyone else in the industry that would be developed by one of the big Tier 1s, but we have gone a step deeper and developed the systems ourselves.
Thereby we see a chance to differentiate ourselves from our competitors.
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