How Elon Musk Is Taking Tesla Global | WSJ

Summary

The script details Tesla's journey from its first Roadster release in 2008 to its global expansion efforts today. It discusses Tesla's challenges and strategies, including opening new factories in Texas, Nevada, California, and potentially Russia, as well as the upcoming Berlin plant. The video also touches on regulatory hurdles, cultural adaptation in China, and the company's response to criticism, highlighting CEO Elon Musk's hands-on approach and the need for local management to navigate complex global markets.

Takeaways

• 🚗 Tesla's first car, the Roadster, was released in 2008 and marked the beginning of their journey in the electric vehicle (EV) market.
• 🌏 Tesla cars are now found worldwide, with the company establishing a global presence over the past 13 years.
• 🏭 Tesla is not only expanding its sales but also setting up manufacturing facilities globally to meet the growing demand for EVs.
• 📈 The EV market is expected to surge significantly, with projections estimating a 775% increase by 2030, indicating the importance of Tesla's global expansion.
• 🇨🇳 Despite facing challenges and bad publicity in China, Tesla is still striving to maintain its growth in one of its most significant markets.
• 🌟 Elon Musk aims to leverage Tesla's first-mover advantage in the EV industry to retain its leading position.
• 📢 Musk's speeches reveal Tesla's strategy to increase its vehicle presence worldwide, including potential expansion into Russia.
• 🇷🇺 The hint of a new Tesla factory in Russia came as a surprise, considering the company's limited sales in the country, but it aligns with Tesla's strategy to tap into new markets with potential.
• 🏗️ Tesla's new plant near Berlin is expected to open in early 2022, allowing the company to serve the European market more directly and efficiently.
• 🤔 There is speculation about Tesla's next move, with some analysts suggesting a focus on BRIC countries, including Russia, which saw a 95% growth in the EV market last year.
• 🛠 Building factories in new countries presents significant logistical challenges, especially for a hands-on CEO like Elon Musk, who prefers to be on the factory floor.

Q & A

What was the first car Tesla released and when was it launched?

The first car Tesla released was the Roadster, which was launched in 2008.

What is Tesla's strategy for global expansion according to the script?

Tesla's strategy for global expansion includes selling cars abroad and setting up factories around the world, with a focus on quickly expanding manufacturing capacity.

How does the script describe the potential growth of the EV market by 2030?

The script suggests that the EV market is expected to surge by 775%, reaching about 35 million cars by 2030.

What challenges did Tesla face in China as mentioned in the script?

Tesla faced a setback in China due to a series of bad publicity incidents, which led to a drop in sales in April, and there were concerns about the company's ability to maintain rapid growth in this key market.

What is the significance of the factory Tesla is planning near Berlin?

The new plant near Berlin is significant as it is expected to produce half a million cars a year, allowing Tesla to sell vehicles directly to European countries instead of importing them from China and the US.

What is the current situation of Tesla's presence in Russia according to the script?

Tesla has not sold many cars in Russia, with only around 700 vehicles on the roads. However, the company hinted at future plans for a new factory in Russia during a speech by Elon Musk.

How does Elon Musk approach working with his engineers according to the script?

Elon Musk prefers to work closely with his engineers on the factory floor rather than spending too much time in conference rooms, as he believes this is essential for creating good products.

What are the challenges Tesla faces in ramping up production compared to traditional automakers?

Tesla faces challenges in ramping up production due to building many parts like battery packs in-house and developing much of the software, which makes it harder to scale production compared to traditional automakers that are converting existing plants into EV plants.

What is the potential solution for Tesla if it fails to scale production quickly enough?

If Tesla fails to scale production quickly, it may need to think more like a traditional automaker, either by building its own factories or potentially relying on contract manufacturers like Foxconn.

How does the script describe Elon Musk's approach to working in China?

Elon Musk has taken a conciliatory approach in China, praising the Chinese system and government officials, which has contributed to Tesla's success there, including the quick construction of the Shanghai factory.

What issues is the Berlin plant facing according to the script?

The Berlin plant is facing a six-month delay due to issues such as German bureaucracy, environmental concerns over water usage and the plant's impact on local wildlife, and Tesla's own lack of coordination.

Outlines

00:00

🚗 Tesla's Global Expansion and Manufacturing Strategy

The script discusses Tesla's journey from releasing its first car, the Roadster in 2008, to becoming a global presence with a significant impact on the electric vehicle (EV) market. It highlights Tesla's aggressive global expansion plans, including setting up factories in Texas, Nevada, California, and potential future locations like Russia, which aligns with the company's strategy to tap into new markets with high growth potential. The script also touches on the challenges Tesla faces, such as the need to quickly expand manufacturing capacity to meet the projected surge in the EV market by 2030, and the pitfalls of international growth, exemplified by a dip in sales in China due to bad publicity. The importance of establishing a first-mover advantage and retaining the top spot in the EV market is emphasized, with an analysis of Elon Musk's speeches to understand Tesla's strategy for global vehicle distribution.

05:00

🌏 Navigating International Markets and Regulatory Challenges

This paragraph delves into the complexities of Tesla's international market approach, particularly in China and Germany. It contrasts Elon Musk's public demeanor in China, where he praises the government's commitment to a sustainable energy economy and the rapid construction of the Shanghai Gigafactory, with the challenges faced in Germany, where bureaucratic hurdles and environmental concerns have led to delays in the Berlin plant's construction. The summary also examines Tesla's response to a public relations crisis in China, where the company took a conciliatory approach, apologizing and committing to improving customer satisfaction. The paragraph underscores the importance of local management and understanding regulatory environments for global success, suggesting that Tesla's centralized leadership style might pose challenges in dealing with diverse international markets and could affect its growth trajectory.

Keywords

💡Roadster

The Roadster is the first car model released by Tesla in 2008. It symbolizes the company's entry into the electric vehicle (EV) market and its origin as a California-based manufacturer. The Roadster is significant in the video as it represents the starting point of Tesla's journey towards becoming a global EV powerhouse.

💡Global Expansion

Global expansion refers to the process of a company extending its business operations to various countries around the world. In the context of the video, Tesla's global expansion is a central theme, highlighting the company's efforts to increase its manufacturing capacity and establish a presence in international markets, such as Russia and Europe.

💡Manufacturing Capacity

Manufacturing capacity is the maximum amount of output that can be produced by a production process. The video emphasizes the importance of quickly expanding Tesla's manufacturing capacity to meet the growing global demand for electric vehicles and to solidify its position in the market.

💡Electric Vehicle (EV) Market

The EV market encompasses the industry and trade of electric vehicles powered by electricity. The video discusses the significant growth expected in the EV market, predicting a surge to about 35 million cars by 2030, which underscores the importance of Tesla's expansion efforts.

💡First-Mover Advantage

The first-mover advantage is a competitive edge gained by a business that is the first to introduce a new product or service to the market. The video suggests that Tesla is trying to leverage this advantage by being the early entrant in the EV market and maintaining its leading position.

💡Factory

A factory is a building or site where goods are manufactured or assembled. The script mentions Tesla's plans to build new factories in Texas, Nevada, California, and potentially Russia, as well as the establishment of a plant near Berlin, to increase production and cater to regional markets.

💡BRIC Countries

BRIC is an acronym for Brazil, Russia, India, and China, which are seen as emerging markets with significant potential for growth. The video discusses the possibility of Tesla focusing on these countries for further expansion, especially given the untapped market potential in Russia.

💡Regulatory Environment

The regulatory environment refers to the rules and regulations that govern a particular industry or market. The video highlights the challenges Tesla faces in navigating different regulatory environments, particularly in the US and China, and how it adapts its approach accordingly.

💡Customer Satisfaction Unit

A customer satisfaction unit is a department or team within a company dedicated to addressing customer concerns and improving their experience. The video mentions Tesla's establishment of such a unit in response to public complaints in China, demonstrating the company's commitment to customer service.

💡Software Upgrade

A software upgrade is the process of updating a software application to a newer version. The script refers to Tesla's compliance with Chinese regulators to address safety issues through a software upgrade in over 285,000 vehicles, illustrating the company's responsiveness to regulatory requirements.

💡Startup

A startup is a young company that is typically seeking to develop a scalable business model. The video describes Tesla as being organized like a startup, with Elon Musk as a charismatic leader controlling operations, which can present challenges in dealing with local regulatory issues and scaling the business.

Highlights

The Roadster was the first car Tesla ever released in 2008, developed and produced in California.

Fast forward 13 years to today, and you can find Teslas on the road around the world.

Tesla is not just selling cars abroad but also setting up factories around the world.

The global expansion of Tesla is crucial as the EV market is expected to surge by 775% to 35 million cars by 2030.

Tesla faced a hit in sales in China after a spate of bad publicity in April.

Elon Musk hinted at future plans for a new factory in Russia during a video conference speech.

Tesla's new plant near Berlin is expected to open in early 2022 and will produce half a million cars a year.

Analysts are divided on where Musk will set up the next factory, with some suggesting BRIC countries like Brazil, Russia, India, and China.

Building factories in new countries poses major logistical challenges, especially for a hands-on CEO like Elon Musk.

Musk emphasizes the importance of being on the factory floor to create good products.

Tesla's in-house production makes it difficult to ramp up production compared to traditional automakers.

Building a factory from scratch can cost billions of dollars and requires navigating different regulatory environments.

Musk has been known to clash with regulators in the US but has taken a more conciliatory approach in China.

Tesla's Shanghai factory was built in just 10 months, highlighting a different approach to regulatory challenges.

The delay of the Berlin plant due to German bureaucracy and environmental concerns shows the difficulty of navigating local approval processes.

Tesla's growth as a global player may be hindered by its startup-like structure and lack of strong local management.

Transcripts

- [Narrator] This is the Roadster,

(Roadster whooshing)

the first car Tesla ever released in 2008

and it was developed and produced in California.

(upbeat music) (tape whirring)

Fast forward 13 years to today

and you can find Teslas on the road around the world.

- I think we're close

to establishing a Tesla presence in Russia.

- [Narrator] But Tesla isn't just selling cars abroad,

it's also setting up factories around the world.

- The key for Tesla's global expansion

is going to be expanding manufacturing capacity quickly.

- [Narrator] Tesla's push comes at a time

when the stakes of going global are big

as the EV market will surge 775%

to about 35 million cars by 2030

and that can come with pitfalls.

(woman shouting in foreign language)

- [Narrator] After a spate of bad publicity in China,

Tesla sales took a hit in April

and auto analysts aren't sure if the company

can keep growing as fast

in one of its biggest markets.

- I think what Tesla's trying to do

is really drive home that first-mover advantage,

make sure it retains that number one spot.

- [Narrator] We analyzed three key speeches by Musk

in the past year to understand how Tesla plans

to put more of its vehicles on the road

all over the world.

(upbeat music)

First, we go to Moscow.

In May, Musk gave a speech via video conference

to hundreds of students

and tech entrepreneurs at a forum sponsored

by the Russian government.

He spoke about a wide range

of topics from politics and religion

to outer space.

- We need to establish a self-sustaining base

on the moon and up on Mars.

- [Narrator] But what really made headlines

was when he hinted at future plans

for a new factory.

- We're building one in Texas, Nevada, California

and over time, we will look to have factories

in other parts of the world

but potentially Russia at some point.

- [Narrator] The suggestion came as a surprise

because Tesla hasn't sold many cars in Russia.

There are around 700 vehicles on the roads there.

But Russia could fit a template Tesla has used before,

to open factories where it sees market potential.

- There are two big electric vehicle markets in the world:

China and Europe.

Tesla's already in China

and now it's opening up plants in Europe.

- [Narrator] That new plant is near Berlin

and auto analysts expect it to open in early 2022.

It's planning to produce half a million cars a year

and this would allow Tesla to directly sell its vehicles

to European countries

instead of importing them from China and the US

as it currently does.

With the three biggest markets covered,

auto analysts have been divided

over where Musk will set up shop next.

Some say he should double down

on the so-called BRIC countries.

- Brazil, Russia, India and China,

the big automakers are in Brazil

because that's a big market.

It's probably a good guess

that Tesla's looking at that.

- [Narrator] And of course, one of them

is the untapped market of Russia,

which grew by 95% last year.

- I think there's a lot of talent

and energy in Russia.

- [Narrator] Building factories in new countries

is a major logistical challenge,

especially with a hands-on CEO like Elon Musk.

- The big thing for Tesla right now

is the Giga Berlin, so it's in Berlin.

I've spent a fair bit of time in Berlin working on that.

- [Narrator] In a one-on-one video call

with The Wall Street Journal's editor in chief

in December last year,

Musk explained how he liked working closely

with his engineers.

- When I have spent too much time in a conference room,

that's generally when things have gone awry

and when I go to spend time on the factory floor,

we're really using the cars,

that's where things have gone better.

- [Narrator] Musk says being on the factory floor

is essential to creating good products,

especially because his company builds many parts,

like the battery packs and develops much

of the software in house.

But this makes it difficult for Tesla

to ramp up production,

compared with traditional automakers

that are moving into EVs.

- It doesn't have the factories,

it doesn't have the distribution networks on the ground.

Existing manufacturers like Volkswagen, Toyota, GM,

they already have a global manufacturing footprint

and they already have global distribution networks.

So what they're doing

is converting existing plants into electric vehicle plants.

- [Narrator] Plus building a factory from scratch

can cost billions of dollars.

And if the company fails to scale quickly enough

before other EVs flood the market,

a solution may be to think

more like a traditional automaker.

- It may be able to do this by building its own factories

or it may one day have to rely on contract manufacturers,

like Foxconn, which builds for Apple,

and is now getting into electric vehicles.

(upbeat music)

- [Narrator] Working in new markets

also means navigating different regulatory environments.

And in the US, Musk has been known

to collide with regulators.

- But the best thing that government can do

is just get out of the way.

- [Narrator] It's a contrast to his public persona in China.

- I'm very confident that the future in China

is gonna be great.

And that China is headed towards being the biggest economy

in the world.

- [Narrator] In March, Musk sat down for an interview

with China's national television channel

to talk about the country's economic plan.

- What attracts me most about China's five-year plan

is the tremendous commitment

to a low-carbon economy

and ultimately, to a sustainable energy economy.

♪ That I would go anywhere for you. ♪

- [Trefor] That says a lot about how he's been willing

to change his approach when working in China.

- I really wanna thank the government officials

that have been really helpful.

- [Trefor] Conflict with the authorities

really doesn't work here at all.

He obviously knows that

and has really done everything he can

to praise officials, to praise the Chinese system.

- [Narrator] Tesla has taken

a conciliatory approach when challenged.

For instance, at the Shanghai Auto Show in April,

a woman climbed on top of a Tesla vehicle

to shout allegations about faulty brakes.

(woman shouting in foreign language)

- [Narrator] The woman's claims

couldn't be verified independently

but complaints about Tesla spread

across the Chinese internet.

The company publicly apologized

and pledged to set up a customer satisfaction unit.

A few months later, Tesla complied with Chinese regulators

to address safety issues with the software upgrade

in more than 285,000 vehicles.

Musk has been less contentious with Chinese officials

and that has played a part

in Tesla's success there.

For example, the factory in Shanghai was built in 10 months.

Just compare that with his plant in Berlin.

As far back as 2015,

Musk has courted German officials.

Even the country's head of state, Angela Merkel.

But the plant is still facing a six-month delay.

Some industry watchers say it was caused

by Tesla's own lack of coordination,

given the company had benefited from legislation

that helped to fast track construction.

Musk has said German bureaucracy

and activists' environmental concerns

over water usage and the plant's impact

on local wildlife are why the project is behind.

He tweeted that the factory wouldn't use as much water

and that trees in the area were originally planted

to be turned into cardboard.

The delay of the Berlin plant shows

how even a superstar CEO

can't get around German approval processes.

- It's still organized kind of like a startup

with a charismatic leader

who basically controls everything from the top down,

which makes it very hard

for a company to deal with local regulatory issues.

It needs strong management on the ground,

which it doesn't really have here.

Maybe it needs a CEO and a real board.

That could, in the long run,

hinder Tesla on its path to growth.

- [Narrator] So if Elon Musk wants

to convert Tesla into a truly global player,

the billionaire CEO may have to buckle up

and prepare for a bumpy ride.

(upbeat music)