Research Proposal: Tesla's Vertical Integration vs. Traditional Automotive Partnerships

Part 1: Information Collection

Recommended Framework: Value Chain Analysis & Porter's Five Forces

• Framework Teaching:
  • Value Chain Analysis: This framework views a company as a series of activities that create value. It divides a firm's operations into "Primary Activities" (like making the product, shipping it, and servicing it) and "Support Activities" (like R&D, HR, and procurement). A competitive advantage is created by performing these activities at a lower cost or in a way that provides superior differentiation.
  • Porter's Five Forces: This framework is used to analyze the competitive intensity and, therefore, the attractiveness of an industry. It assesses five key forces: the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products, and the intensity of rivalry among existing competitors.
• Applicability Explanation:
  • Value Chain Analysis is perfect for breaking down exactly where and how Tesla's vertical integration creates advantages. We can map Tesla's in-house activities (e.g., battery manufacturing, software development) against a traditional automaker's outsourced activities and compare them step-by-step. This directly addresses your goal of identifying which elements provide the greatest advantage.
  • Porter's Five Forces is essential for evaluating the external market and answering whether the strategy will remain advantageous. It will help us understand if Tesla's integration builds a stronger defense against competitors, suppliers, and new entrants as the EV market matures.

1. Web Search Plan

• Content to Search:
  • Value Chain - Cost & Efficiency: Search for reports and articles comparing production costs between Tesla's integrated components (e.g., 4680 cells, in-house software) and the components traditional automakers buy from suppliers (e.g., CATL batteries, third-party software). Look for data on capital expenditures, cost per unit (e.g., cost per kWh of a battery), and production speed.
    • Analytical Purpose: This will provide the quantitative data needed to compare the "Operations," "Inbound Logistics," and "Technology Development" stages of the Value Chain for both models.
  • Value Chain - Service & Customer Experience: Search for studies, forums, and articles that compare the reliability, availability, and user experience of Tesla's Supercharger network versus other public charging networks like Electrify America. Also, look for customer satisfaction and loyalty surveys.
    • Analytical Purpose: This provides qualitative and quantitative data to evaluate the "Service" and "Marketing & Sales" components of the Value Chain, which are key sources of differentiation.
  • Five Forces - Industry Landscape: Search for market analysis reports on the global EV industry. Look for data on market share of major players (Tesla, BYD, VW, Ford, etc.), the number of new EV models being launched, and overall market growth rates in key regions (China, Europe, North America).
    • Analytical Purpose: This data is crucial for assessing the "Intensity of Rivalry" and the "Threat of New Entrants" in the Five Forces analysis.
  • Five Forces - Supplier & Buyer Power: Look for information on the concentration of key suppliers (e.g., battery manufacturers like CATL, LG) and the availability of substitutes for consumers (e.g., plug-in hybrids, gasoline cars).
    • Analytical Purpose: This will help in assessing the "Bargaining Power of Suppliers" and "Threat of Substitutes," completing the Five Forces framework.

2. User Interview Plan

• Interview Subjects:
  1. EV Industry Analysts/Journalists (2-3): Individuals who cover the auto industry for financial news outlets or specialized publications.
  2. Long-Term Tesla Owners (3-4): Owners who have had their vehicle for at least two years and rely on the Supercharger network for travel.
  3. Long-Term Non-Tesla EV Owners (3-4): Owners of vehicles like the Ford Mustang Mach-E, VW ID.4, or Hyundai IONIQ 5 who have also owned their car for at least two years and use public charging networks.
• Interview Purpose & Core Questions:
  • For Industry Analysts: To get an expert, high-level strategic perspective on the sustainability of Tesla's model.
    • Core Question 1: "Looking ahead 5-10 years, which elements of Tesla's vertical integration (batteries, software, charging, retail) do you believe will provide the most enduring competitive advantage, and which are most vulnerable to being neutralized by competitors?"
    • Core Question 2: "As traditional automakers and their suppliers scale up EV production, do you see the advantages of a partnership model (flexibility, lower capital risk) beginning to outweigh the advantages of Tesla's integration (control, speed)?"
    • Analytical Purpose: Their answers will directly inform the assessment of whether the strategy will remain advantageous as the market matures.
  • For Tesla Owners: To understand the tangible benefits and drawbacks of a fully integrated ecosystem.
    • Core Question 1: "Can you describe your experience on a recent long-distance trip using the Supercharger network? What aspects of planning, charging, and payment were seamless, and were there any frustrations?"
    • Core Question 2: "Thinking about your car's software and features, how have over-the-air updates impacted your ownership experience? Can you give an example of a valuable update?"
    • Analytical Purpose: These stories provide concrete evidence for the value of differentiation in the "Service" and "Technology Development" portions of Tesla's Value Chain.
  • For Non-Tesla EV Owners: To create a direct comparison point for the user experience in a non-integrated ecosystem.
    • Core Question 1: "Please describe your experience on a recent long-distance trip using public charging networks. What apps or methods do you use to find chargers, and what has been your experience with reliability and payment?"
    • Core Question 2: "How does your vehicle's manufacturer handle software updates? Have you seen significant new features or improvements added since you purchased the car?"
    • Analytical Purpose: Contrasting these answers with those from Tesla owners will highlight the specific "gaps" in the value chain where Tesla's integration creates a tangible competitive advantage (or where it doesn't).

Part 2: Information Analysis

Final Output Goal:

1. A clear verdict on the current effectiveness of Tesla's vertical integration versus the partnership model.
2. A prioritized matrix of Tesla's integrated elements, ranking their impact and defensibility.
3. An analysis of stakeholder impact (customers, suppliers, investors).
4. A future-state recommendation for both Tesla and its competitors as the EV market matures.

Analytical Steps:

1. Construct Comparative Value Chains:
   • Action: Create two diagrams. One for "Tesla's Integrated Model" and one for "Traditional OEM Partnership Model."
   • How-To: For each primary and support activity, populate it with the information you collected.
     • Example (Primary Activity - Operations): For Tesla, you'd list "In-house 4680 battery cell manufacturing" and note any cost-per-kWh advantages found in your research. For the Traditional OEM, you'd list "Battery packs sourced from LG/CATL" and note the associated purchasing and logistics costs.
     • Example (Primary Activity - Service): For Tesla, you'd list the "Proprietary Supercharger Network" and include data on its reliability and seamless user experience from interviews and reports. For the Traditional OEM, you'd list "Reliance on third-party charging networks (e.g., Electrify America)" and include the user-reported issues with reliability and fragmented payment systems.
2. Identify and Prioritize Competitive Advantages:
   • Action: Compare the two value chains activity by activity. Identify where Tesla's model creates significant value (either cost savings or differentiation) that the partnership model struggles to replicate.
   • How-To: Use this comparison to build your "Prioritized Advantage Matrix." For each integrated element (batteries, AI chips, software, charging network, retail), assess its "Current Impact" (High/Med/Low) and "Long-Term Defensibility" (High/Med/Low).
     • Example Analysis: You might find that the Supercharger network has a High current impact due to superior reliability. However, based on expert interviews and the industry's move to the NACS standard, you might assess its long-term defensibility as Medium, as the advantage will lessen as other networks improve and become more compatible. In contrast, the integration of AI chip and software development might have a High long-term defensibility because the feedback loop between the fleet and R&D is difficult for competitors to replicate.
3. Evaluate the Future Market with Five Forces:
   • Action: Use your web research to score the current state of the EV industry's Five Forces. Then, project how they will evolve.
   • How-To: For each force, analyze how Tesla's vertical integration strategy interacts with it.
     • Example Analysis (Threat of New Entrants): The analysis shows rivalry is high and the threat of new entrants is moderate. You can argue that Tesla's massive capital investment in Gigafactories and the Supercharger network creates a significant barrier to entry, thus weakening this force for Tesla compared to a new entrant that must rely on suppliers and third-party infrastructure.
     • Example Analysis (Bargaining Power of Suppliers): With traditional OEMs heavily reliant on a few large battery suppliers, the "Bargaining Power of Suppliers" is high. Your analysis should show how Tesla mitigates this force by producing its own batteries, giving it more control over cost and supply.
4. Synthesize and Formulate Recommendations:
   • Action: Combine your Value Chain and Five Forces insights to answer the final, forward-looking question.
   • How-To: Build your argument. Does the evidence suggest Tesla's moat is widening or shrinking?
     • Example Synthesis: "While the value chain analysis shows Tesla's charging network is currently a powerful differentiator, the Five Forces analysis suggests that as rivalry intensifies and standards converge, this specific advantage will erode. Therefore, the most durable advantages lie in the 'Technology Development' activities, specifically the tight integration of hardware and software, which is harder for partnership-based models to copy. My recommendation is that competitors should focus less on replicating Tesla's charging infrastructure and more on forming deep JVs for software and chip development to close this critical gap." This logic directly leads to your final, actionable recommendations.