Tesla – The OM Blog by Heizer, Render, & Munson

Guest Post: The Two Stories of Tesla’s Solar Panels

Temple U. Professor Misty Blessley provides interesting blog topics monthly.

In our 2023 OM blog, New York State Built Elon Musk a $1 Billion Factory, we learned that building a solar panel facility was “a bad deal” for NY. The state built a massive plant and provided solar-panel manufacturing equipment. Tesla’s end of the deal was to churn out enough solar-panel shingles by 2020 to cover 1,000 roofs on a weekly basis.

These solar panels are finally on the verge of materializing, and with this are two stories. One connects Tesla’s long game in vertical integration and the other is New York’s long-delayed economic vision.

Tesla’s Long Game in Vertical Integration
Tesla’s new residential solar panels fill the company’s missing piece. The firm was missing the energy generator (aka solar panel). Despite the solar factory in New York, Tesla spent years relying on third-party suppliers for its solar panels. Now, it can fully optimize performance across the entire home energy stack. Tesla can vertically integrate the full chain from generation (solar panels), to conversion (inverter), to storage (Powerwall), and to consumption (EV charging).

New York’s Long-Delayed Economic Vision
This pivot finally gives New York its payout. By bringing solar panel manufacturing in-house, Tesla is delivering the kind of industry and employment the state originally hoped for. The region, once defined by its industrial decline, gains a foothold in the clean energy manufacturing economy. The move aligns with federal and state incentives that reward U.S.-made components, strengthening the economic logic behind NY’s investment. Tesla’s shift toward a unified home energy ecosystem mirrors the vision that justified the state’s $1 billion bet. The factory, once criticized as a stranded asset, now becomes the manufacturing backbone of Tesla’s residential energy strategy.

Tesla didn’t just release new solar panels. It connected the car in the driveway to the sun, and in doing so may have finally delivered the manufacturing story NY was waiting for.

Classroom Discussion Questions:
1. How is vertical integration good for Tesla? For Tesla owners? To compare this to an internal combustion engine, it is somewhat like having petroleum, a refinery and a gas pump in the garage or driveway.

2. Knowing that Tesla’s occupation of the Buffalo facility is long overdue, what stipulations should a city or state impose on a firm when incentivizing a location decision to the tune of $1 billion?

OM in the News: The Electric F-150’s Short Life Cycle

The first Boeing 737 jet rolled off the assembly line 58 years ago, on April 9, 1967. That is a long life cycle, given it has still not reached the “decline” phase in Figure 2.5 in your text. But the life cycle certainly looks a lot shorter for electric pickup trucks.

Ford is planning to scrap the electric version of its F-150 pickup, according to The Wall Street Journal (Nov. 7, 2025) which would make the money-losing truck America’s first major EV casualty. “The demand is just not there” for the F-150 Lightning and other electric trucks, said one dealer. Stellantis earlier this year called off plans to make an electric version of its Ram pickup. GM plans to discontinue some electric trucks and sales of Tesla’s Cybertruck tanked this year. The trucks seemed a good bet amid booming EV demand and clean-air mandates that required automakers to sell fewer gas-guzzlers.

Ford halts production of the F-150 Lightning

The Lightning fell far short of expectations as American truck buyers skipped the electric version of the top-selling truck. Overall EV sales are plummeting in the absence of government subsidies. Ford dealers sold 66,000 gas-powered F-Series pickups, and just 1,500 Lightnings, the fewest of any model. (Ford has racked up $13 billion in EV losses since 2023).

When Ford launched the Lightning 5 years ago it promised a pickup as fast as a sports car and as affordable as a conventional truck. It would drive hundreds of miles on a single charge, and carry enough voltage to power a home for days. “It’s like a smartphone that can tow 10,000 pounds,” said the CEO at the launch.

But truck buyers worried the pickups would run out of juice in the middle of a job or a long haul as their range is dramatically reduced when towing big loads or operating in cold weather.

GM has also lost billions on electric trucks after rolling out a string of them, including an electric version of the popular Chevrolet Silverado. GM has three electric pickups, and it sold about 1,800 of them last month.

Ford built up the capacity to make as many as 150,000 Lightnings a year. But the EVs cost billions to develop and manufacture, and are only profitable if they sell in large enough volumes, which they did not.

Classroom discussion questions:

Where do you think all EVs are on the life cycle curve?
Why did so many auto manufacturers misread the demand for electric pickups?

Guest Post: EV Charging– Driving Toward Universal Accessibility

Prof. Misty Blessley at Temple U. looks into an issue facing EV owners.

New Jersey is removing Tesla Superchargers from Turnpike and Parkway service areas and replacing them with universal chargers provided by Applegreen Electric. These new stations will feature CCS1, CHAdeMO, and J1772 connectors, making them compatible with a wider range of EVs. Tesla owners can use these chargers with adapters. Most newer Tesla models can accommodate J1772 (Level 2) and CCS (DC fast charging) connections through external adapters.

This shift reflects a broader trend toward open-access infrastructure aimed at increasing accessibility for all EV drivers. It also introduces new OM considerations around the production, availability, and use of adapters.

The Shift Toward Open Infrastructure
New Jersey’s decision mirrors historical tech battles between proprietary systems and open standards. Tesla, like Apple in its early days, built a closed ecosystem. The state’s move to universal chargers signals a shift toward interoperability over exclusivity. As one article put it, “Up until recently, the vast network of more than 1,600 Tesla Supercharger fast EV charging stations in the U.S. was a perk exclusive to Tesla owners.” That exclusivity is
now being replaced with inclusivity, with the cost falling on Tesla drivers now being dependent on an external device.

In this context, adapters become the modern equivalent of USB driver software, seemingly minor components that play a major role in user experience and system reliability.

Adapter Implications for Operations and Supply Chain
 Forecasting and Demand Planning: Widespread reliance on adapters will drive new demand. Manufacturers must scale production, distribution, and after-sales support.
 Inventory Management: Retailers and even rest stops may need to stock or rent adapters, creating SKU complexity.
 Station Capacity: Adapters can increase setup time, and Level 2 chargers provide only 13–25 miles of range per hour—far slower than Tesla’s V3 Superchargers (over 200 miles in 15 minutes), potentially reducing the number of EVs that can be charged at a station.

 Risk and Reliability: Adapters introduce new points of failure because they are mechanical devices prone to wear, damage, or user error. This raises customer service and warranty cost concerns.

Classroom discussion questions:
1. In Ch. 11 of your Heizer/Render/Munson textbook, component standardization is discussed. What are the benefits of standardizing EVs and charging stations?
2. What advice would you provide to operations managers on the adapter implications mentioned above?

OM in the News: Tesla Recalls its Cybertrucks Over a Soap Issue

Tesla is recalling every Cybertruck built thus far to fix a defective pedal pad that could cause accelerator pedals to get stuck in the depressed position, raising the risk of a crash, reports USA Today (April 22, 2024). Specifically, when someone stomps on the accelerator, the pad can come off and get trapped in a bit of trim.

Cybertrucks are lined up at the Tesla Giga Factory in Texas this month

That would leave the accelerator stuck in the “on” position — something that has happened at least twice. When a driver hits the brake pedal, the truck will stop even if the accelerator is depressed. No injuries or crashes have been reported.

The problem, as Tesla reported to the National Highway Transportation Safety Administration, originated on production lines with soap. “An unapproved change introduced soap to aid in the component assembly,” the report says. Evidently, workers used soap to help get the pad into place on the pedal. Traces of that slippery soap remained, hence the problem.

The recall involves all 3,878 of the aesthetically-divisive angular trucks that have been sold so far. While some Tesla recalls are for software fixes that can be issued over-the-air, meaning a vehicle downloads an update without a trip to a mechanic, this one is a physical defect. It requires a physical repair.

This is the second soap-related manufacturing process to make headlines this month. A Boeing supplier recently defended the use of Dawn dish soap as lubricant in assembling door seals in manufacturing jets like the one that lost a door mid-flight.

Meanwhile, the Tesla Cybertruck, a vehicle with an extremely unusual manufacturing process, has also faced complaints since its launch about problems with rust and potentially finger-pinching trunks.

Classroom discussion questions:

Is this a quality issue–or a design issue?
What are the strengths and weaknesses of Cybertrucks, according to early reviews in auto magazines?

OM in the News: Robots Are Looking Better to Detroit

United Auto Workers (UAW) members recently approved a labor contract with Ford, General Motors, and Jeep maker Stellantis that included a record 25% wage increase over 4 years and marked the sharpest labor-cost increase for the companies in recent memory. The auto makers did avoid a strike, but the longer term cost was great, reports The Wall Street Journal (Jan. 15, 2024).

Robots weld the body of a Model Y EV at a Tesla factory

The effect from the deals in Detroit quickly rippled through the industry, with Toyota, Hyundai and other nonunionized automakers increasing wages to stay competitive. The contracts were richer than Detroit had planned for, and the auto makers are strategizing ways to blunt the increased costs. Ford said the new terms would add $900 in cost per vehicle by 2028.

So the firms are looking to an old friend to help offset rising labor costs: robots. For decades, car companies increased automation inside their factories. Now, they are looking even more seriously at this approach, to address the rising labor bill and take advantage of more sophisticated technology. Competition from newcomers like Tesla, which has been more aggressive in deploying robots, is also nudging more traditional auto manufacturers in this direction.

The global auto industry is a top consumer of robots, having installed 136,000 new industrial robotic units in 2022. Often these so-called cobots work alongside workers to access hard-to-reach spots or perform tasks that are particularly physically demanding.

Dozens of new battery and EV plants in the works will also open the door to broader use of high-tech systems. It is easier and less costly to install robots in a new facility versus retrofitting an existing one. Plus, it is more streamlined to have updated systems that “speak” to each other smoothly, as opposed to popping in a new machine among older ones.

The UAW may have attained major wage increases, but the trend is making its members nervous about the prospect of machines replacing jobs. “The companies have used technology as a way to cut jobs instead of interjecting robots and technology to make our jobs easier,” says the UAW president.

There are risks to automating. Adding robots to a process for the first time can introduce quality problems. And whatever machines gain in terms of productivity can be zeroed out by the needed personnel to fix or program robots.

Classroom discussion questions:
1. Discuss the advantages and disadvantages of robotics in the auto industry.
2. What is Tesla’s edge?

OM in the News: New York State Built Elon Musk a $1 Billion Factory

The new Tesla facility in Buffalo was supposed to house a huge solar-panel operation, the largest one in the Western Hemisphere, but the project hasn’t turned out as planned. “It was a bad deal.” writes The Wall Street Journal (July 7, 2023).

But we have written about government incentives many times in this blog and discuss them in detail in Chapter 8 of our text, Location Strategies. When NY’s then-Gov. Andrew Cuomo, cut the ribbon in 2015, he proudly stated: “This is too good to be true.” It seems he was right.

New York paid to build a quarter-mile-long facility with 1.2 million square feet of industrial space, which it now owns and leases to Tesla for $1 a year. It also bought $240 million worth of solar-panel manufacturing equipment. Tesla said that by 2020 the Buffalo plant each week would churn out enough solar-panel shingles to cover 1,000 roofs. It is, however, averaging just 21 installations a week. The suppliers that Cuomo predicted would flock to a modern manufacturing hub never showed up. Auditors have written down nearly all of New York’s investment.

The state has agreed to amend the terms of its subsidy 12 times over the years, including by reducing the number of jobs to be created in manufacturing and shifting deadlines to accommodate the company. “In terms of sheer direct cost to taxpayers, this may rank as the single biggest economic development boondoggle in American history,” says a think tank founder.

Buffalo, once an engine of manufacturing, has stagnated for generations as industrial companies headed south. Previous efforts at renewal largely fell flat. In 2012, Cuomo said he wanted to spend $1 billion in state taxpayer money to turn Buffalo around.

America’s governors are swept up in an arms race of awarding packages of taxpayer money to attract industrial megaprojects. Last year, states gave each of eight company facilities more than $1 billion in tax breaks and other aid. In Wisconsin, a factory by Taiwan’s Foxconn that was to employ 13,000 workers in exchange for some $3 billion in state subsidies sits mostly empty. Suburban Virginia offered tax breaks to win a competition for Amazon’s “second headquarters,” but much of that project is on hold.

Classroom discussion questions:

What incentives do governments often offer companies to entice relocation?
What are the major factors that companies consider when making location decisions? (Hint: see Chapter 8 in your Heizer/Render/Munson text).

OM in the News: The “Nickel Pickle” and Other Electric Vehicle Tales

The Wall Street Journal (June 5, 2023) led with a front page article called the “Nickel Pickle” and then went on with two more stories about EV headwinds. Let’s summarize: To make batteries for EVs, companies need to mine and refine large amounts of nickel. The process of getting the mineral out of the ground and turning it into battery-ready substances is particularly environmentally unfriendly. Reaching the nickel means cutting down swaths of rainforest. Refining it is a carbon-intensive process that produces waste slurry that’s hard to dispose of.

Mining and refining nickel is a dirty business

The nickel issue reflects a larger contradiction within the EV industry: Though EVs are designed to be less damaging to the environment in the long term than conventional cars, the process of building them carries substantial environmental harm. One Indonesian miner, for example, said that rainforest clearing caused greenhouse gas emissions equivalent to 56,000 tons of carbon-dioxide. That’s equal to driving 12,000 conventional cars for a year.

Tesla adds that EVs cause more emissions during the manufacturing phase than conventional vehicles, due in part to the process of extracting and refining minerals. Nickel is responsible for 1/3 of the carbon emissions generated from making a battery cell.

The second piece states that battery-powered EVs “are not the only way to achieve the world’s carbon neutrality goals.” Toyota is promoting its hybrids and plug-in hybrids as alternatives to battery-powered EVs. Plug-in hybrids contain an engine that can kick in when the battery runs low and are cheaper than EVs. That firm has pledged to make all its vehicles carbon neutral by 2050.

Toyota’s CEO made news when he claimed that a “silent majority” in the auto industry “is wondering whether EVs are really OK to have as a single option.” He added that “the amount of raw materials in one long-range battery EV could instead be used to make 6 plug-in hybrid electric vehicles or 90 hybrid electric vehicles.” For that anti-EV comment, progressive investors and government pension funds have moved to oust him.

The 3rd article reports that VW “is searching the world, from Canada to Indonesia, for supplies to make the batteries in EVs it sells less dependent on Chinese components,” especially nickel. China dominates global production of refined battery materials used in EV batteries. “Today we are 100% dependent on China,” says a VW exec.

Classroom discussion questions:

Why is nickel a supply chain problem?
Why is the Toyota position controversial?

OM in the News: An Army of Robots is Coming

A new wave of robots is arriving—and, in a world short of workers, businesses are eager to welcome them. A combination of hard-pressed employers, technological leaps (like vision systems) and improved cost effectiveness has fueled this rapid global expansion. A half-million “industrial robots” were installed globally last year, an all-time high. There are now 3.5 million in use..

This amounts to a titanic shift in the way things are made, transported and even consumed, ushering in a “roboconomy,” states The Wall Street Journal (Oct. 15-16, 2022) In the future, says WSJ, we will depend on robots to grow our food, make our goods, care for our elderly and continue to grow the global economy.

Tesla just unveiled its humanoid robot called Optimus that it plans to sell for less than $20,000 and use in car production. “It will, I think, turn the whole notion of what’s an economy on its head, at the point at which you have no shortage of labor,” said Elon Musk.

The “service” robot industry, which basically encompasses every kind of robot that isn’t bolted to the floor, is also growing at a rapid pace. These service robots include everything from autonomous cleaning robots scouring the floors of your local grocery store—nearly all Sam’s Club and Walmart already has one—to delivery robots and mobile robots taking over jobs like unloading trucks.

“Starting in 2018, many workers could no longer be counted on to show up for their after-hours cleaning shifts, and even when they did, they often weren’t doing a very good job,” says the VP of Schnuck Markets, which operates 112 supermarkets. Labor shortages worsened during the pandemic, leading Schnuck to test autonomous floor-scrubbing robots. “We used a shine meter to see how much shine we got on the floor, and it was beating the quality from human-driven scrubbers,” he says.

The convergence of three forces is driving the robot renaissance: (1) demographic trends in rich countries mean there simply aren’t enough workers; (2) robots have become more capable, more quickly, than at any other point since their earliest adoption; and (3) surging human labor costs and more-capable robots mean the amount of time it takes a new robot to pay for itself is shrinking.

Classroom discussion questions:

How else can robots be used in the service sector? (See Table 7.3 in your Heizer/Render/Munson text).
Elon Musk once said: “humans are underrated” and excessive automation at Tesla was a mistake. Why the change?

OM in the News: Battery Supply Chains

For the first time in more than a decade, the cost of an electric car battery is set to rise this year, reports The Financial Times (Oct. 10, 2022). Soaring prices for battery raw materials — such as lithium, cobalt and nickel — have led to the reversal of a long-held trend towards cheaper cells, which had seen costs come down from $1,220 per kilowatt-hour in 2010 to $132 per KWH last year. And a return to more expensive batteries, alongside a supply chain squeeze, calls into question how quickly electric vehicles can become affordable mass-market products — at a time when transport still accounts for a quarter of the carbon dioxide emissions that are a driver of global warming.

Some carmakers are going directly to lithium mining companies to source raw materials

This means that carmakers will experience prolonged production disruptions, akin to those caused by semiconductor shortages over the past two years. So, faced with constraints on their ability to acquire raw materials, some companies are planning to take over the buying of vital inputs themselves, rather than leaving it to a vast base of suppliers.

Tesla was the first carmaker to venture onto this path in 2020, saying the company would intervene directly, where necessary, to supplement the supply of battery materials. The EV maker has applied for tax breaks to build a potential lithium refinery in Texas or Louisiana. Such a move is seen as necessary to achieve Tesla’s ambition of 20 million electric car sales by 2030.

It comes with great risk, though. Lithium refining — complex chemical processing — is a far cry from the carmaker’s core expertise of designing vehicles (see Chapter 2’s discussion of core competence), and relies on the company being able to secure a type of lithium ore known as “spodumene”. (Prices of lithium hydroxide, the refined product, have skyrocketed to more than eight times the level of the start of 2021 at almost $70,000 per ton, close to record highs.) Ford, GM, and Stellantis are following Tesla’s path in investing in lithium mines.

Battery costs are forecast to be $138 per kilowatt-hour in 2024 — the same level as last year. A cost of $100 per KWH is viewed as the level that will make EVs affordable. Industry advancement rests on batteries getting more powerful and cheaper and cheaper every year.

Classroom discussion questions:

Should automakers go out and buy lithium mines? Why or why not?
Why is this an important OM issue?

OM in the News: Large-Scale Castings Revolutionize EV Auto Production

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?

OM in the News: Tesla Rewrites Software to Get Around Chip Shortages

Chip shortages have weighed heavily on Tesla’s production, with Elon Musk saying that part constraints were one of the primary reasons the automaker would not release any new vehicles this year. The EV maker has increased its focus on innovation amid what Musk has called “chip drama central.”

Tesla’s strategic use of semiconductors has lowered the number of chips required to produce vehicles, allowing the automaker to maximize production. writes Supply Chain Dive (July 26, 2022). Musk said “the chip shortage has served as a forcing function for us to reduce the number of chips in the car. Yes, turns out we had more chips than we needed.”

Semiconductor constraints have hammered the auto industry, which requires thousands of chips to produce a single vehicle. Electric cars need even more chips — one hybrid electric vehicle, for example, needs 3,500 semiconductors on average. In 2021, semiconductor shortfalls cost automakers an estimated $210 billion in lost revenue or 7.7 million vehicles in lost production.

Tesla procures about 1,600 unique silicon parts from 43 semiconductor companies and finding new uses for chips has allowed the company to save costs and maximize production. Reducing the number of semiconductors used also makes the reliability of the end product better because there is less failure points. Going forward, Tesla will work to “integrate more functionality into fewer chips, like the way that it’s gone with laptops and phones,” said Tesla’s VP.

Still, limited supply of parts has limited Tesla’s ability to keep up with explosive demand. The carmaker is taking control of its own supply chain when it can, heavily investing in battery production and lithium refining to ensure that it can meet future demand. “If our suppliers don’t solve these problems, then we will,” Musk said.

Classroom discussion questions:

What are other auto makers who are short on chips doing to alleviate the problem?
How can an auto maker lower the number of chips used in production?

OM in the News: The Auto Industry Embraces Vertical Integration

The auto industry is once again embracing elements of vertical integration (see Chapter 11), a strategy that traces its roots to its early days when manufacturers owned or acquired much of the supply chain necessary for production. Ford, at one point, owned mines and a steel mill. In recent decades, car companies had largely shifted away from vertical integration, spinning off parts-making operations and relying more on outside suppliers to provide components. Vertical integration can be capital-intensive and risky, and in the past, auto manufacturers have struggled to bring new competencies like software development in house, leading to delays and dented sales.

But now, auto makers are trying to control more of the supply chain for electric vehicles, forging new partnerships with raw materials producers and investing in facilities that make chemicals for batteries, writes The Wall Street Journal (Jan. 4, 2022). GM, VW, and other major car companies have already been spending heavily on joint-venture factories to ensure their own supplies of EV batteries. Now, they are also looking to expand further as they seek to lower costs, secure sought-after components and exert more control over battery quality and performance.

Tesla was among the first to insource more of its EV-battery making. The push by auto makers to control more of their supply chains also comes as a semiconductor shortage has hampered vehicle production. GM is investing in a new North American factory with a Korean firm to produce cathode materials, a critical component of the battery that accounts for a big chunk of its cost. VW has plans to build a similar cathode-material factory of its own with Belgian materials company Umicore. “Everybody wants to secure the supply chain and not repeat the very painful experience of the semiconductor shortage,” says Umicore’s CEO.

The change also comes as electrification threatens to disrupt the industry’s normal hierarchy between auto makers and their suppliers. Traditionally, auto makers have been able to improve profitability by pitting suppliers against one another. With just a handful of players making the highest-quality batteries and chemicals, auto makers have diminished pricing power. Relying solely on suppliers to develop their battery technology would be akin to not making their own engines.

Classroom discussion questions:

Explain the concept of vertical integration.
How has the move to EVs impacted supply chains?

OM in the News: The Exploding Tesla

The San Francisco home burns after 2 Tesla Model S sedans erupted in flames in the garage.

Automakers face numerous challenges as they race to get electric vehicles to consumers ahead of regulatory and company deadlines for shifting production away from gas-powered vehicles. They face skepticism about the availability of charging stations, concerns about vehicle range and apprehensions over cost. Fires have drawn attention because of the high-profile recalls and blazes that followed product rollouts, writes The Washington Post (Aug. 4, 2021), further complicating the automakers’ calculations.

In San Francisco, a Tesla Model S (the expensive one) blew up in the owner’s garage, set fire to their second Tesla, and destroyed the million dollar home. “Gasoline driven cars don’t catch fire in the garage when they’re sitting there. And that’s the difference,” said the owner who has since witched brands. “I don’t worry about my Audi catching fire downstairs when it’s not running.”

The fire is one in a string of recent examples showing what can happen when electric cars are left parked in garages to charge overnight. The issue is causing mounting concern as a number of EV makers have warned owners not to leave the cars charging unattended in certain circumstances, or sitting fully charged in garages. “Battery fires can take up to 24 hours to extinguish,” Tesla’s website says. “Consider allowing the battery to burn while protecting exposures.”

Automakers including GM, Audi and Hyundai have recalled EVs over fire risks in recent years and have warned of the associated dangers. Chevrolet advised owners not to charge their vehicles overnight or keep their fully charged vehicles in garages. It recalled more than 60,000 of its Bolt EVs over concerns about the cars spontaneously combusting while parked with full batteries or charging, after reports of 5 fires. Hyundai advised owners to lower the maximum state of charge in their vehicles to 80%, and park outside until the state of charge is lowered. Battery-powered vehicles have not been shown to catch fire at rates higher than gasoline cars, but when fires do erupt, they burn longer and hotter, propelled by lithium-ion batteries that supercharge the blazes.

Classroom discussion questions:

Will incidents like this impact the transition to EVs?
How is this an issue for operations managers?

Good OM Reading: Power Play–Tesla, Elon Musk, and the Bet of the Century

Tesla has earned a prominent place in auto history under the genius of Elon Musk. While the rest of the auto industry sought to protect its internal-combustion business under the assumption few people would buy an alternative, Musk showed that stylish, fast and fun electric cars would prove popular.

Musk’s approach to many manufacturing issues was, and is, keeping the assembly line moving while line problems are being fixed. He’s not a fan of the Toyota method, where a worker can stop the line until the problem is solved. He’s about volume. That may be one reason why the quality of Teslas is so variable. Some owners report their car is perfect; some say they were sold a piece of junk.

In 2016, Musk promised that a self-driving car, a Tesla semi truck and a new, possibly jet-powered roadster were imminent. None are remotely close to production. Since Tesla was founded in 2003, it has undergone a truly hellish 15 years, beset by rivals, pressured by investors, hobbled by whistleblowers, but lauded by its loyal supporters. Musk himself would often prove Tesla’s worst enemy.

Building the Teslas proved much harder than Musk expected, resulting in a” would-he or-wouldn’t-he” drama in 2018 to reach a weekly production level of 5,000 Model 3 cars—the volume needed to make the company sustainable. Problem after problem resulted in money-eating delays that left the Tesla and its employees badly shaken. Musk, often sleeping in the Fremont, California, factory, had dubbed it “Manufacturing Hell.”

Wall Street Journal reporter Tim Higgins had a front-row seat for the drama: the pileups, wrestling for control, meltdowns, and the success. His new book, Power Play, is an exciting tale that deals with a myriad of OM issues. You and your operations management students will find much worth discussing in class after reading Higgins’ book.

OM in the News: The EV Revolution’s Missing Link

While EVs can be powered up at home, a fast-charging infrastructure is essential to getting beyond their current limited adoption, writes The Wall Street Journal (Feb. 27-28, 2021). But there are problems: too few charging stations, too much demand at the stations that are available, broken chargers, confusing payment systems, exorbitant electricity rates, and uncertainty over how long cars need to charge.

So far, only Tesla has offered a reassuring pitch about conveniently and reliably recharging on the go. Tesla built a nationwide fast-charging infrastructure for its vehicles even before its cars were widely adopted. But this technology doesn’t work on non-Tesla cars. While Tesla offered “open source” charging technology, using it meant signing off on terms the world’s biggest automakers were unwilling to accept. They instead collectively adopted a competing standard in the U.S., making their vehicles incompatible with Tesla’s.

Drivers of EVs who wish to take them on road trips need to plan ahead carefully

Building the requisite charging infrastructure for the rest of the EV universe will be expensive. The U.S. government has proposed building a network of 500,000 chargers in 5 years, which would cost billions–and probably won’t be profitable. There are currently about 128,000 gas stations in the U.S., but only about 5,000 fast-charging stations. The result is a patchwork of stations is improving but still needs work.

Many stakeholders—from automakers and charging companies to utilities and government agencies—have an interest in a reliable national network of fast chargers. But if the sole source of income for these charging stations is from dispensing electricity, it doesn’t appear they’re a viable business. The average fast-charging station, charging market price for electricity, would take 20-25 years to pay off. Part of the problem is that when in use, a single fast-charging stall can draw the equivalent of a whole neighborhood’s electricity needs. So it can be very expensive to connect a station with up to a dozen individual chargers to the local electrical grid, and secure enough energy supply.

Classroom discussion questions:

How does this problem relate to the Triple Bottom Line discussed in Supp. 5 of your Heizer/Render/Munson text? (see p. 195)
What do you see as the future for EVs in the U.S.? Will it be different in Europe? Why?