Tesla Motors Supply Chain Maker Shares Past Issues and Outlook

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Peter Carlsson, chief executive of a Swedish involved in the manufacturing of large-scale batteries, SGF Energy, served almost half a decade at Tesla Motors Inc (NASDAQ:TSLA). The former executive actually formed the automaker’s supply chain for the launch of both the Model S and Model X as the Vice President of Supply Chain.

Speaking at the annual KPMG Automotive Executive Forum in Los Angeles, CA last November, Mr. Carlsson gave a small interview to Automotive News, highlighted issues in the supply chain in early days, the significance of Fremont as the home to Tesla Factory, as well as his supply chain’s outlook as the company prepares to start production of the Model 3.

First, he said that the biggest challenge for Tesla was to gain trust of suppliers in the early years, as the company had neither relationships nor history of volumes with many suppliers. The company could not always achieve the “capacity commitments” it intended and therefore they had to win suppliers’ trust regarding future plans.

Back in 2010, Tesla was the only car manufacturer in California and Mr. Carlsson believes that Fremont was chosen as the manufacturing facility for the Model S, as the company made a “choice between being really close to engineering but far from the big automotive supplier clusters.”

He added that Tesla made the “right choice,” given how new it was in the technology cycle and the level of engineering changes it introduced. However, the move resulted in more complexity and high logistics cost.

The former supply chain chief left the company in October 2015, after managing Tesla’s global supply chain operations and bringing the Model X on the roads. Now he believes the car company has resolved some supply chain obstacles via vertical integration and bringing more operations in-house, and he expects the challenges to become “a bit easier” in the future.

He concluded by saying that the business volumes will get “more attractive” with the Model 3 launch, expecting more suppliers to relocate near Fremont. Last year, TheCountryCaller reported that Tesla has become the most powerful engine in the Bay Area manufacturing, as it is encouraging suppliers to relocate near its car manufacturing plant, before the Model 3 production.

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