As we discuss in Chapter 5, Design of Goods and Services, product strategy options support competitive advantage. Tesla does exactly that (see page 162) with an new huge casting system. Conventional construction of modern vehicles involves the assembly of numerous sections of stamped sheet metal that are joined together by welding, rivets, and epoxy to form the chassis structure of the car’s platform, reports Design News (Aug. 3, 2022).
New cars like the Tesla Model 3, Maserati SUV, and Volvo EV depart from convention by building the cars atop just a few very large, very complex aluminum alloy castings. These bolt together to form the entire chassis, with front, center, and rear sections that replace, in Tesla’s case, 370 discrete parts that would need to be joined together to form the car’s chassis.
The industry forecasts that the global market for all types of die casting will total more than $100 billion by 2026, from $76 billion this year. Demand for passenger cars and light commercial vehicles across the globe, more so importantly in developing markets, will especially drive robust demand for use of cast products for a range of automobile parts and components in the coming years. The market is also expected to benefit immensely from the shift towards aluminum over steel and iron products among automakers.
There are manufacturing benefits too. There is better modeling of performance and a simplified supply chain. There is just one piece for that whole weld assembly from a single source as opposed to numerous components, fastener nuts, and rivets coming from different places. Manufacturers can go to a single supplier from dozens–and a lot of those parts may have come from overseas.
Tesla explains the process in an 11 minute video that you may wish to share with your class: “Molten aluminum is forced into a high-pressure mold. It solidifies as it cools and is then dipped in water to speed up the cooling process. After some laser cutting and quality checks, the parts produced using this process will eventually become part of the floor structure in our new electric model range. This process significantly reduces the number of parts produced and allows for greater design and production flexibility.”
Classroom discussion questions:
- How is Tesla achieving competitive advantage?
- Why is this a supply chain issue?