23 Feb '13, 8pm

Official: Tesla CEO Elon Musk on high cost of building Model S: "I wanted to punch myself in the face"

Another area where Tesla is achieving large cost savings is in its supply chain. As a startup, suppliers didn't offer Tesla the same sort of deals they might to an established OEM. They used industry estimates of 1,500 units per year – rather than Tesla's figure of 20,000 – to set pricing. That's now changing and, as the company meets certain volume targets, the prices (particularly for the all-important battery cells it's sourcing from Panasonic) are falling to more reasonable levels. Even the supply-chain logistics are improving as its industrial relationships mature. Musk told one anecdote that encapsulated many of the company's teething experiences. Apparently, it was taking longer than the 30-day financial terms in place to receive 21-inch tires from a tire supplier, so that the company was overdue payment on goods that hadn't yet been delivered. The supplier then put...

Full article: http://green.autoblog.com/2013/02/23/teslsa-ceo-elon-musk...

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