Slide 1: How Tesla’s Vertical Integration Drives Its Success
Script:
“Imagine a company that controls every part of its journey—from raw
materials to the final product in your hands. That’s exactly what Tesla
does. Their vertical integration strategy is more than just a choice; it’s a
revolution that has reshaped the electric vehicle market. By owning
critical parts of its supply chain, Tesla doesn’t just participate in the EV
industry—it dominates it. Today, we’ll explore how this strategy gives
Tesla an edge and why it’s not a one-size-fits-all approach for every
industry.”
Slide 2: What is Vertical Integration?
Script:
“Let’s break this down. Vertical integration is like owning every piece
of a puzzle. Tesla doesn’t just make cars. They produce their batteries,
build the vehicles in their factories, and even sell them directly to
customers, skipping dealerships entirely. This allows Tesla to save
costs, maintain quality, and control the entire process. Think of it like
this—it’s owning the farm that grows the wheat, the bakery that makes
the bread, and the truck that delivers it. Tesla’s approach ensures their
product is exactly how they want it, without relying on third parties.”
Slide 3: Tesla’s Strategic Benefits
Script:
“Now, why is Tesla’s vertical integration so powerful? First, there’s
cost savings. Tesla’s giga factories produce batteries more cheaply than
buying them from outside suppliers, cutting out the middleman. Next,
innovation happens faster. Because Tesla controls production and
R&D, they’re able to develop breakthroughs without waiting for
suppliers to catch up. Reliability is another major benefit. By owning
their supply chain, Tesla avoids delays or disruptions that can impact
production. Finally, they sell directly to customers, eliminating
dealership hassles and creating a seamless customer experience.”
(Point to visuals as you go through each benefit.)
Slide 5: Does Vertical Integration Work Everywhere?
Script:
“Vertical integration sounds great, but it doesn’t work for every
industry. So, when does it work? It’s ideal in industries with advanced
R&D needs, like Tesla’s EV market or technology sectors. It’s also
effective in industries with emerging or unreliable supply chains. But
where it struggles is in mature industries with well-established
suppliers. For example, fast food chains don’t need to own farms and
delivery trucks—it’s too expensive and unnecessary. Vertical integration
requires significant investment and isn’t practical when existing
suppliers are reliable and cost-effective.”
(Use visuals to highlight where it works and doesn’t.)
Slide 6: Wrap-Up & Class Takeaways
Script:
“To wrap up, let’s consider this—what’s the biggest challenge of
vertical integration?”
(Pause for class responses. Hint if needed: cost.)
“Tesla’s vertical integration works because it reduces costs, speeds up
innovation, and enhances customer experience. But it’s not a universal
solution. Its success depends on the industry’s needs and market
challenges. So, as you think about vertical integration, ask yourself—
does owning every piece of the puzzle help or hurt the overall strategy?
For Tesla, it’s a game-changer.”
