For years, comparisons between Apple and Tesla were not merely common – they were expected.
Some of these things can be attributed to time. Apple co-founder and CEO Steve Jobs died in 2011, leaving the world of technology with a visionary vacuum. Tesla was about to launch its first original vehicle, the Model S sedan, positioning Elon Musk to take on Jobs’ role as America’s biggest business futurist.
Tesla was also a creation of Silicon Valley. The auto industry native to the United States was represented by the Big Three – General Motors, Ford and Chrysler – which emerged in Detroit a century earlier, when California was best known for its burgeoning film industry and as an agricultural powerhouse.
Tesla was therefore the new Apple, Musk the next Jobs, and the goal of creating a fully electric car that would rescue the planet from global warming was the 21st century version of the personal computer revolution that Apple led in the 1980s.
It looked great, but there was a problem: Musk was not playing well.
Instead, he should imitate a much, much older American visionary: Henry Ford.
Elon wants to be more like Henry – Henry Ford
Ford pioneered the mobile assembly line to build the Model T, reducing production time to 90 minutes and making it the most successful vehicle of its time. Later, Ford created the paradigm for what we now call “vertical integration” in manufacturing: the River Rouge plant in Michigan, which was completed in 1928 and at one point literally had wagons full of iron ore rolling to one end of the installation, finished cars rolling out each other.
Musk is obsessed with the legacy of this famous factory, partly because the global automotive business completely abandoned vertical integration in the 1980s. Toyota developed a new production system that emphasized significantly reducing inventories and allowed automakers to call up or down depending on consumer demand. In combination with distant global supply chains, a new process called “lean” manufacturing has replaced vertical integration.
But Musk wants Tesla to drive manufacturing into a new, highly automated 21st century iteration, and to do that, he needs to control much more of what goes into every Tesla vehicle, from batteries to seats, software to windshield glass, stand-alone sensors for chassis components.
This back-to-future approach means that Tesla is, in fact, doing the opposite of what Apple did. Cupertino is certainly invested in having the user experience, establishing what is often called a “walled garden” ecosystem, where an Apple person lives in a totally Apple world.
However, Apple, in essence, is a design, software and marketing company that does not actually manufacture anything except intellectual property and surprising profit margins. Millions of iPhones have been assembled by partners in Asia, and it is a testament to the genius of CEO Tim Cook and the supply chain management that Apple thrived in the post-employment era.
Tesla, for its part, is tending to manufacture almost everything that goes into its vehicles. In fact, Musk often complains that the automaker’s progress has a speed limit set by exactly one obstacle: the company’s slowest supplier.
Elon follows his game plan
Musk has been admirably stubborn in following his game plan, even openly criticizing the so-called Toyota Production System, a jaw-dropping but understandable move. He thinks Tesla can do better, with factories built quickly and filled with robots instead of human workers. He dreams of cars being manufactured like Coca-Cola currently bottled, on automated assembly lines, and Tesla has begun to exploit this innovation in the manufacture of its new and larger lithium-ion battery cells. (Tesla also saw the dream become a nightmare when it tried to automate the assembly line for its Model 3 sedan in 2017 and had to launch a legitimate Henry Ford era temporary line under a tent in its parking lot.)
This does not mean that competitors do not intend to emulate the Apple model and produce the iPhone of the cars. Apple itself is probably looking to follow its own model, with its hard work from Project Titan. Serial entrepreneur Henrik Fisker emphasized that his new company, Fisker Inc., is seeking a “light asset” approach, partnering with Canadian Magna International to build a debut vehicle, the Ocean SUV, in 2022, and joining if the famous iPhone maker Foxconn is going to produce another, dubbed “Project PEAR”, in 2023.
The traditional auto industry is sharing the difference. General Motors is investing $ 27 billion to launch 30 EVs by 2025 – and the auto giant is converting existing factories into EV production while partnering with battery supplier LG Chem to build a new plant in Ohio. If you wanted to break it down, you could say that GM’s goal is to be average in assets, versus Fisker’s light assets and Tesla’s heavy assets.
Each system has a reasonable chance of winning. GM knows what it is doing. Tesla could reduce the time it takes to get plants up and running and cars leaving lines. Fisker could quickly establish a new transport brand, accomplishing what Tesla needed two decades to achieve in two years.
But one thing is certain: Tesla is not, positively, the Apple of cars. It is time to remove this comparison once and for all.