Knowing Yourself and Supplier Selection Analysis

Knowing Yourself & Supplier Selection Analysis for Tesla’s Battery Supply Chain

Explore and Select Suppliers Globally

Jose Vasquez

Supply Chain Analytics Essential

Prof. Yao Zhao

Spring 2025

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Tesla Car's Evolution

Tesla Car: Electric Vehicle

Tesla 's second-quarter 2024 earnings were down more than 40 percent year-on-year to $1.48 billion, compared with $2.70 billion in Q2 2023.

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Tesla's market cap overtakes Ford's in 2017

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It's Common for One Company to Invent Technologies but Suppliers to Take Over by Cost Advantage …

How to source globally to maximize benefits and minimize risks?

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Benefits of Global Sourcing

Sourcing can significantly improve net income and thus stock market performance!

Source: https://www.scdata.ai/project/19934

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Sourcing Analytics

Supplier intelligence: Explore and select suppliers globally.
Bargaining power analysis: Measure leverage.
Supplier benchmarking: Compare suppliers’ pricing, profitability, health and supplying capability.

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Evaluating Requirements and Supplier Selection Standards

Aligning supplier selection criteria with the company’s strategic objectives

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Needs & Supplier Analytics

Methodologies:
- Industry trend
- Competition positioning: strengths and weaknesses
- Breakdown analysis: identify strategic priorities

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Knowing Yourself

Tesla’s Needs and Selection Criteria

Tesla’s battery requirements are driven by its mission to accelerate sustainable energy adoption. Key needs include:

High energy density for longer vehicle range.
Cost efficiency to maintain competitive pricing.
Scalability to meet growing production targets (e.g., 20 million vehicles annually by 2030).
Sustainability (e.g., low-carbon footprint, ethical sourcing of raw materials like lithium and cobalt).

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Automobile Components Industry Trend

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Total Revenue and net income somewhat decreased in pandemic but slowly gaining momentum.

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Tesla's global competitors

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Comparison of Tesla, Volkswagen, AG Toyota Motor Corporation, and Stellantis N.V.

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Profit frontier

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Within the SP500 IT companies, Ford led in total revenue but not in profit margin, Tesla is better in operating margin than Ford.

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COGS is the major cost driver

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Tesla's COGS is low compared to others. Additionally, Tesla's net income was 25.6% in 2022 but decreased to 15.7% in 2023.

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EV Battery Supplier Selection Criteria

Supplier Selection Criteria
Based on Intel’s supplier intake framework6 and Boeing’s evaluation methodology3, Tesla’s criteria should prioritize:

Technical capability: Ability to innovate (e.g., solid-state battery technology).
Quality compliance: Adherence to ISO 9001 and Tesla’s proprietary standards.
Cost competitiveness: Willingness to participate in Tesla’s cost-reduction initiatives.
Supply chain resilience: Geographic diversification to mitigate risks (e.g., avoiding over-reliance on Chinese suppliers).
ESG alignment: Commitment to reducing carbon emissions and ethical labor practices.

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Supplier Intelligence

Exploring & identifying potential suppliers globally

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Market Intelligence and Suppliers

Steps:
- Where to find them? Business geo-information.
- Market trend and stability.
- Market concentration & competition intensity – competitive vs. monopolized.

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Where to look for Automobile Battery suppliers?

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Where to look for Automobile Parts & Equipment suppliers? Let us check out the countries with the strongest semiconductors industry. By revenue, we have Japan, USA, and China…

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Where to look for Automobile Battery suppliers?

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In terms of size Japan is the largest then USA and China.

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Industrial Trend - Automobile Parts and Equipements

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Trend and stability: Overall, the Automobile industry of USA, China, Germany, and Japan are rising; Japan's Automobile industry is the largest and most profitable, but it has decreased during COVID. In terms of profit China is catching up with Japan. The Influence of Germany and USA is comparatively low.

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Potential Suppliers (EV Battaries)

Company	Founded	Location
Contemporary Amperex Technology Co., Ltd. (CATL)	2011	Ningde, Fujian, China
BYD Co., Ltd.	1995	Shenzhen, Guangdong, China
LG Energy Solution Ltd.	2020	Seoul, South Korea
China Aviation Lithium Battery Co., Ltd. (CALB)	2009	Luoyang, Henan, China
Panasonic Energy of North America	1918	Sparks, Nevada, Unites States
Guoxuan High-tech Power Energy Co., Ltd.	2006	Hefei, Anhui, China
Samsung SDI Co., Ltd.	1970	Yongin-si, South Korea
SK Innovation Co., Ltd.	1962	Seoul, South Korea
Sunwoda Electronic Co., Ltd.	1997	Shenzhen, Guangdong, China
Farasis Energy	2002	Hayward, California, United States

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Bargaining Power Analysis

What is my leverage? Who has the bargaining power?

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Power of Bargaining

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Summary Table: Tesla’s Bargaining Power Over EV Battery Suppliers

Supplier	Battery Type	Tesla Bargaining Power	Notes
Panasonic	Cylindrical (18650, 2170)	High	Long-time partner, joint Gigafactory
CATL	LFP	Medium to Low	Leading supplier, dominant in China
LG Energy	NCM, NCMA	Medium	Competitive but less dependent
BYD	LFP Blade	Low	Also a rival EV maker
Tesla (in-house)	4680	Very High	Vertical integration in progress

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Supplier Benchmarking

Compare suppliers’ pricing, profitability, health and supplying capability

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Supplier Benchmarking of EV Battaries

Here are the key benchmark variables for EV battery suppliers:

Price per kWh
Profitability
Production Capacity
Technology Type (e.g., LFP, NCA, 4680)
Supply Chain Integration
Raw Material Access
Geographic Location
Delivery Lead Time
Quality & Performance Metrics
R&D Investment
Client Dependency
Contract Duration
ESG Compliance
Government Subsidies/Incentives
Innovation Rate
Scalability
Financial Stability
Automation Level
Vertical Integration
Flexibility in Customization

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Profitability Analysis

Pricing: Gross margin, value added (e.g., technology)
Profitability: Net margin.
Ideal suppliers: Attractive pricing and very profitable.
Deceiving suppliers: Attractive pricing but barely profitable.

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Pricing and profitability

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Micro Vision from USA is facing loses. Others are relatively the same but sourcing Votesco Tech and ALPHA corporation comparatively in good position.

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Enterprise Trend - Profitability

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The net margin is low for MicoVision Inc, while others are relatively the same. In Return on assets CALB and ALPHA are slighly in good position than Vitesco.

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Liabilities vs. Equity

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The MicrovVsion Equity is high, and liability is low meaning it is in good health despite loses. The ALPHA corporation is also in good health for its high equity and low liability. On the other hand, CALB is in better position than Vitesco

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Assets%

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In terms of Equipment and inventory CALB is in good position than ALPHA and Vitesco but MicroVision is showing less.

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Property, Plant and Equipment

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Suggested Suppliers for Tesla EV Batteries

Dual sourcing: ALPHA Corporation, and CALB
Cultivating Vitesco as a backup foundry.
Spread some work to MicroVision for observing.
Tesla needs to diversify its supply base to reduce cost & risk.

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Knowing Yourself and Supplier Selection Analysis

Tesla’s Needs and Selection Criteria

Primary Modal