Tesla · Republish # The Tesla Semi thesis, written March 22, 2023 *A March 22, 2023 MBA capstone on the Tesla Semi, republished as written except for valuation lines removed under BSM editorial policy, with a November 2026 look-back on the paper's claims.* By Brandon St-Martin · Published: March 22, 2023 · Look-back: November 2026 > This material is for education and entertainment only. It is not financial advice. Opinions are our own and should be verified independently. Mentioning others' views is not an endorsement. > The author holds long-term positions in Tesla, SpaceX and Bitcoin. [Summary](#summary) · [Original thesis](#original-thesis) · [Look-back](#2026-look-back) · [What held up](#what-held-up) · [Sources](#references) · [Corrections](#corrections-to-the-2023-text) **Original:** March 22, 2023 **Look-back:** November 2026 ## Summary This is a March 22, 2023 MBA capstone on the Tesla Semi, republished as written except for valuation lines already marked [trimmed]. A November 2026 look-back scores the paper's claims: one came true, four partly, three missed, and one is still too early to call. ## Original thesis **Original:** March 22, 2023 The original text is left as written. Then-current facts in that text are historical observations. Forward-looking claims are predictions; they are reviewed in the look-back and in What held up or changed. **Editor's note.** Brandon St-Martin wrote and submitted this paper as his MBA capstone, University of the People, BUS 5910 Management Capstone, on March 22, 2023, before using any AI tools. It is republished as written, except for valuation lines removed under BSM editorial policy and marked [trimmed]. A 2026 look-back on the paper's claims appears at the end. --- TESLA SEMI CASE STUDY : FINAL Brandon St-Martin MBA Program, University of the People BUS 5910 : Management Capstone March 22, 2023 ## INTRODUCTION Tesla, Incorporated (Tesla) is an American, NASDAQ publicly traded multinational conglomerate automotive, artificial intelligence (AI), and clean energy company headquartered in Austin, Texas, with 128,000 employees generating $82 billion in annual revenues (Tesla Wiki, n.d.). With [trimmed] and an annual production of 1.5 million electric vehicles, Tesla stands alone [trimmed]. Attributing its namesake to inventor and electrical engineer, Nikola Tesla, Tesla originally incorporated as energy technology company. In additional to its electric vehicle (EV) automobile portfolio of the Model S, Model X, Model 3, and Model Y, Tesla begins 2023 with new productions of the electric (consumer/commercial) Tesla Cybertruck, along with the Class 8 (industrial/commercial) Tesla Semi Truck (TST). With the emergence of Elon Musk as the company’s largest shareholder, Musk was elevated to CEO in 2008. Today, as CEO of Tesla, SpaceX, The Boring Company, Neuralink, and Twitter, Elon Musk is not only the world’s best known business tycoon and serial entrepreneur [trimmed]. ## PROBLEM STATEMENT The mission and vision for Tesla, is to transition the world from fossil fuels to sustainable, renewable energy practices, in large part through conversion from gasoline or diesel internal-combustion-engine transportation to fully electric vehicles. While a wide array of vehicle offerings might not compute from a branding perspective, it wholly falls in line with the company’s mission to produce an electric Tesla Semi Truck (TST). Therefore, the problem statement for the TST corporate division becomes how Tesla, a predominately consumer-centric automotive producer, successfully introduces a fully electrified Class 8 commercial semi-truck into a saturated market with incredible competition and no defined user audience. Pun intended, TST faces an uphill climb with concerns and unknowns pertaining to its total costs of ownership, powertrain and battery performance, customer experience, and production capabilities. ## LITERATURE REVIEW Corporate social responsibility (CSR) is an organization’s attempt to fairly engage in commerce in socially responsible ways that prioritize ethical, ecological, and sociopolitical implications for all affected stakeholders, including leadership, personnel, customers, vendors, contractors, shareholders, general public, and the environment (An Introduction to Business, 2012). According to researcher and author Thomas Ng, CSR and environmental, social, and governance (ESG) are corporate self-reporting of meta-analyses on their economic, environmental, and social performance, relative to company internal governance, risk mitigation, branding, climate change initiatives, supply chain protocols, and ethical labor practices (Klimsza, 2014). Lori Shelby is Tesla’s head of Environmental Health, Safety, Security, and Sustainability. Through pursuit of electrification and sustainable measures, Shelby shares that Tesla’s combined customer base removed 8.4 million metric tons of greenhouse gas out of the equation in 2022, equivalent to 1.7 million ICE vehicles removed from the road for one full year (Tesla Daily, 2022). Moreover, from the period of 2012 to 2021, Tesla products collectively generated 25.4 terawatt hours of power, while Tesla production factories consumed 25.3 terawatt hours. This points to a net positive power generation as electrification dramatically scales in the near future. As part of Tesla’s original 2016 Master Plan, the Tesla Semi Truck was formally announced at a press conference in November, 2017 (Tesla Semi Wiki, n.d.). At this event, Elon Musk brought to American public awareness the devastating ecological impacts of commercial/industrial semi (Class 8) trucks, responsible for vast majorities of carcinogenic, particulate emissions. Presently, there are more 3.5 million commercial truck drivers operating 4 million semi-trucks on the road in the U.S., traversing 400 billion miles and expending 45 billion gallons of diesel fuel annually. These semi-trucks account 20 percent of total vehicle carbon dioxide (CO2) emissions and 36 percent of all particulate emissions in the United States. (Tesla Semi Delivery Event, 2022). Particularly in urban environments, truck pollution poses huge population health and environmental hazards. Moreover, factoring energy expended to source, extract, refine, and distribute oil products, only one third of global expended fossil fuels deliver any intended purpose, work, or heat. Sadly, just 25 percent of automotive petrol is converted into motion, with the remainder converted to waste heat in a useless combustible exchange (Tesla Investor Day, 2023). Experts calculate that diesel ICE Class 8 transport is at least 20 percent more expensive per mile to operate over equivalent electrified semi-trucks. Electric and natural gas trucks get an 82,000 lb. gross weight ceiling, or 2,000 additional payload pounds beyond conventional diesel engine 80,000 lb. ceilings (USDOT, n.d.). Cost per mile for wholesale industrial electricity costs $.0943/kWh. Wholesale diesel runs $4.20/gal. Tesla Semi .5mi/kWh, and average Class 8 truck 5.29 mpg diesel. Tesla Semi powertrains are guaranteed for 1,000,000 miles. Over 1 million miles, electricity costs are $188,600 versus $794,000 in diesel fuel. Tesla reveals that they are going to guarantee $.07/kWh costs. With diesel fuel savings, it becomes possible to switch out Tesla Semi’s battery or the entire Semi truck itself (USEIA, n.d.). Well-to-wheel CO2 emissions equal everything required to use that amount of energy within the vehicle. Tesla Semi has .53 kg CO2/kWh emissions which includes transmission and charging losses. For diesel, it’s 12 kg CO2 per minute for every gallon of diesel burned, including fuel extraction and production (USEIA 2, n.d.). Assuming it takes 5,000 kg CO2 per ton to produce the Semi vehicle, along with the industry average 150 kg CO2/kWh associated with Semi battery usage, the lifetime CO2 emissions over 1 million miles for Tesla is somewhere between 175,000 and 1,235,000 kg CO2, as opposed to 2,311,000 kg CO2 for conventional diesel engines. (ICCT, n.d.). Professor Markus Lienkamp of the Technical University of Munich, shares that Tesla’s 1000 kWh battery is technically infeasible and potentially pointless, economically and ecologically (Kaufmann et. al, 2019). Moreover, Professor Viswanathan at Carnegie Mellon University believes the excessive weight and power constraints of today’s battery technologies will not suffice for real-world applications, such as long-haul, over-the-road transport at maximum allowable weights (Ohnsman, 2017). While the Tesla Semi Truck (TST) has its long list of detractors, Tesla is making a compelling argument that 2023 is the right time and North America is the right place to reveal the TST to the world, without reservations. ## ROOT CAUSE OF CONCERN #1 : COST OF OWNERSHIP The Tesla Semi has been one of the longest delayed products in Tesla’s history, even with substantial backorders for product from Walmart, FedEx, and other major fleet operators (CNBC, 2023). The flagship Tesla Semi offers a 500-mile range from its 900+ kWh battery, at a sales price point between $180,000 and $200,000. A lesser model with a smaller, lighter battery is projected to cost $150,000, with a 300-mile range that theoretically could haul larger payloads for shorter distances. Vice President of Supply Chain for PepsiCo Mike O’Connell, executive over one of North America’s largest semi fleets, pre-ordered 100 TS back in 2017, upon their announcements. While he admits he still has some cost/benefit concerns associated with electrifying his fleet, O’Connell anticipates that electric Semis are the future of transportation (CNBC, 2023). ## ROOT CAUSE OF CONCERN #2 : PERFORMANCE Many critics are skeptical of Tesla’s ability to create electrified semi-trucks with the power and towing capacity rivaling their diesel counterparts. However, the Tesla Semi draws upon the proven tri-motor system from Tesla Plaid sedan, with a 1000-volt power train that offers three times more power than conventional Class 8 diesel engines on the road today. To date, Tesla EVs have amassed 51 billion miles driven on the Semi’s same power train. Utilizing Tesla’s global vertical integration to achieve extreme cost efficiency, capability, and reliability, the Semi leverages the same power electronics, infotainments systems, HVAC systems, and power inverters found in Tesla’s counterpart vehicles (Tesla Semi Delivery Event, 2022). One motor is constantly engaged, for maximum efficiency for highway driving. Other two units are for torque and acceleration. When a driver needs it to get out of loading dock, or pass somebody, or tackle a grade, you have torque and power to do it. They are clutched automatically with no driver input needed, integrated seamlessly. The entire truck can be powered by an engine the size of a football, offering incredible, unrivaled power density (Tesla Semi Delivery Event, 2022). The Tesla Semi’s massive battery unit necessitates a new charging protocol beyond the limitations of Tesla’s Supercharger system for its electric automobile fleet. Tesla’s new Semi Megachargers deliver a full megawatt of power to Semis, at four to nine times the delivery capacity of a conventional Supercharger, with next-generation immersive, liquid cooled charging cables (Engineering Explained, 2022). Megacharger technology will be used for the Cybertruck as well. A 30-minute charge at a Megacharger station should provide 70 percent Semi battery top-up, for another 350 miles of long-hauls. Furthermore, Tesla’s Megapack power storage units provide redundancy and backup for fleet partners in need of continuous charging and run times, in the event of a power outage. Moreover, range anxiety, the fear of running out of power prior to destination arrival, should factor less for Tesla Semi operators, as EV truck routes are preplanned, remaining well within distance and charging limitations. Continuous vehicle utilization radically compounds fuel and maintenance savings, further driving down associated costs of ownership over time. Coincidentally, a newly minted $40,000 federal tax credit for large electrified semi-trucks provides fresh incentives for independent and enterprise fleet operators to immediately embrace and adopt EV trucking modalities into their business models. PepsiCo Modesto facilities installed new solar arrays, alongside Tesla Megapack and Megacharger stations for their 17 new Tesla Semis, partly funded from a $15 million subsidy grant from the state of California (CNBC, 2023). Just one hour of charging at their new station allows for 400 miles of delivery transport. Rebecca Tenucci, Leader of Tesla’s charging infrastructure team, indicates that Tesla is now opening up its charging networks on a global basis to non-Tesla electric vehicles. 50 percent of supercharger stations in Europe are now converted for other vehicles. Asia Pacific and Australia as soon to follow. North America is in process of converting all its supercharger sites (Tesla Daily, 2023). Since 2016, Tesla’s Megapack division has experienced a 65 percent compound annual growth rate (CAGR). In 2021, Tesla installed 16 gigawatts (gWh) of Megapack installations globally. This number swells to 35 gWh by year-end 2023. Beyond this year, Megapack projects 100 gWh/year annual demand growth for the coming decade. Today, the Megapack represents the most energy dense solution on the market, producing 300 megawatts (mWh) per acre, two times more power density per acre than a natural gas power plant (Tesla Investor Day, 2023). Its virtual machine mode helps stabilize the power grid, dynamically adjusting according to grid needs. Power stability is as important to the energy equation as production itself. Furthermore, Tesla’s proprietary autonomous trading software, Auto Bidder, buys low and sells high net positive energy, establishing Tesla as an electricity retailer and its customers as their own public utility, with abilities to sell power back to the grid. This means perpetual positive cashflow generation for end users. With a relentless focus on manufacturing process, Tesla Megapack has increased installation speed four-fold, while reducing production labor three-fold, with plug-and-play rapid deployment power factory capability for customers (Tesla Daily, 2023). ## ROOT CAUSE OF CONCERN #3 : CUSTOMER EXPERIENCE Uptime is imperative for commercial truck drivers. There exists trepidation amongst professional trucking owners and operators as to Tesla’s unproven track record in the trucking industry. Fleet owners are reticent to commit over $200,000 per TST for a truck with no history of performance, safety record, reliability, or customer satisfaction. The Tesla Semi Truck needs to be able to run essentially all the time, in any weather. Even though an electric Tesla Semi truck loses 6,000 lbs in hauling capacity, due to its excessive battery weight, Tesla is convinced its electric powertrain and battery reliability and lack of maintenance provide for greater in-service uptime and higher quality user experience. Furthermore, Tesla Semi’s have no CO2 emissions, no engine wear and tear during idle moments between load deliveries or in rough, stop-and-go urban traffic (Fully Charged Show, 2023). EV Semi regenerative (re-gen) braking is automatic, which does away with the need for conventional diesel Jake-brakes or engine brakes. Re-gen recaptures energy of motion or height, the potential kinetic energy, creating its own fuel during recharging, without need for braking. At the bottom of the grade, Semi has cold brakes. With regenerative braking, as long as the starting and stopping points of the journey are the same elevation, you can treat grade climbing at flat ground, assuming you come back down. The energy expended for the climb is regenerated upon descent, putting things back in line with trip power consumption (Engineering Explained 2, 2023). Driving precision is vastly improved over diesel engines, for traction control and prevention from jackknifing. It’s a step change in automotive technology. There are no third-party components to the Tesla Semi. Everything is in-house production, including a total chassis and stability control integrated system. Self-driving features such as Tesla’s enhanced autopilot, Armor Glass bulletproof windshields, automatic emergency braking, automatic lane keeping, and forward collision warning, all demonstrably improve driver safety and experience (Fully Charged Show, 2023). Tesla Semi drivers enjoy a one touch suspension dump for easy, safe, time-saving trailer attachments and detachments. Efficiency extends into the yard as well, before and after truck has done its job on the road. Drivers spend far less time idle in the yard, without having traditional diesel compliance issues. Elon Musk shares that Tesla has one of largest neural net training networks in the world, growing by an order of magnitude in 2023 and again in 2024, on scale with AI juggernauts, Nvidia and Dojo (Tesla Investor Day, 2023). Tesla’s Lead for its AI Autopilot Ashok Aliswami recently explains as Tesla continues to improve safety, reliability, and comfort of its AI Autopilot fully autonomous driving system, the company can then unlock driverless operations, which affords the vehicle to be utilized in infinitely more ways more than what it is presently possible (Tesla Investor Day, 2023). Musk adds that with autonomy, this potentially unlocks five times the utility of the asset. Where usage of conventional passenger cars equals 10-12 hours/wk of usage, plus parking expenses, Tesla autonomous vehicles could be utilized for 50-60 hours/wk., less parking expenses. [trimmed]. Tesla’s Lori Shelby maintains that a great charging experience is the lynchpin to electric vehicle adoption. Tesla is determined to make that a reality for its consumer and commercial drivers alike. In 2022, 9 terawatt hours of charging took place across global Tesla charging sites, with an impressive 99.9 percent uptime (Tesla Investor Day, 2023). Of the 1.5 million weekly supercharging sessions, approximately 50 percent occur at home. At present, 80,000 charging points exist nationally, 40,000 of them superchargers, at 20 to 70 percent lower installation costs than industry competitors. Vertical integration of Tesla’s charging equipment, with shared components across multiple product lines, results in a system-wide 40 percent reduction in per kWh costs. Tesla’s proprietary onboard Trip Planner software allows for optimization of charging site utilization, by routing vehicles towards available charging sites and away from congested sites. This serves to balancing power loads, lower user wait times by 50 percent, and increase site utilization by 30 percent (Tesla Investor Day, 2023). Trip Planner now anticipates wait times and power loads based on vehicle types charging, along with the vehicle types en route to the site. Tesla predicts that Trip Planner to become the air traffic controller for all electric vehicles types on a global basis. Annual projections for a total global electrified fleet are 9 petawatt hours of charging. To achieve this, AC chargers will need to be installed everywhere vehicles Install AC chargers are parked throughout the day (Tesla Investor Day, 2023). ## POSSIBLE ALTERNATIVE #1 : COST LEADER + LATE MOVER According to researcher Peng, the aspirational size of a firm and its present domestic market determine where, when, and how large multinational enterprises (MNEs) factor strategic considerations for expansion into foreign markets (Zamborsky, 2016). Institutional and resource considerations include regulatory risks, trade barriers, currency exchange, and cultural norms. According to Harvard professor and author Michael Porter’s Five Forces Model (PFFM), industry-based considerations revolve around degree of competitiveness, including rivalries, economic barriers to entry, bargaining power of suppliers or buyers, and availability of substitution of products and services. Michael Porter’s (1985) three generic strategies for strengthening strategic competitive position include cost leadership with emphasis on low cost and prices, differentiation with emphasis on delivery variable value to customers, and focus with emphasis on servicing particular niche segments within an industry or sector. The focus group is sometimes further delineated into cost-focus or differentiation-focus. Tesla could dip into its sizable cash reserves in attempts to corner the electrified and diesel Class 8 vehicle market by undercutting its competitor prices by tens of thousands of dollars upon TST’s rollout. South Korea’s Hyundai and Kia automobiles are both examples of cost leaders. Advantages associated with Tesla being a late mover into new markets involve gleaning insights on both successes and failures of first movers, with abilities to capitalize on first-mover technological and market shortcomings, through re-imagination, re-engineering, and re-introduction of refined products into the marketplace. Apple is an example of a high technology late mover that ended up dominating the cellular phone space, with the introduction of its iPhone smartphone concept in 2007. Conversely, first movers for entry into new markets enjoy advantages that later rival movers do not, such as proprietary and technological leadership, and pre-emption of scarce resources, such as natural or human capital (Zamborsky, 2016). ## POSSIBLE ALTERNATIVE #2 : STRATEGIC PARTNERSHIP Tallman (2009, pp. 182-189) synthesizes MNE market entry into four overarching strategic groups. Market strategies require no direct investment, to include exporting, licensing, or franchising. Cooperative entry strategies include non-equity alliances, partnerships, and equity joint-ventures. Acquisition strategies involve mergers of two equal enterprises, or horizontal integrations, along with acquisitions by a dominant player, or vertical integrations. Lastly, start-up entry strategies rely upon greenfields, buildouts of complete operations as wholly owned subsidiaries. There are roughly 15,000,000 passenger vehicles and 240,000 commercial/industrial (Class 8) semi-trucks sold annually in the U.S. 72 percent of all U.S. freight is moved by semi-truck, at almost $900 billion in gross freight revenues (Fully Charged Show, 2023). Rival EV semi-truck offerings, including Volvo’s VNR with a 275-mile range, Freightliner’s eCascadia at 230-miles, as well as Nikola’s TRE with a 330-mile range (Cooley, 2022). Freightliner presently enjoys a 23 percent marketshare of annual commercial Class 8 semi-truck sales in North America. Opportunities exist for Tesla to enter joint ventures with private and public sector organizations to for vehicle production. Tesla could lean upon their electric vehicle prowess to convince a leading semi-truck producer like Freightliner to enter into joint venture on their eCascadia semi. The state of California Advanced Clean Trucks law requires manufacturers to sell increasing percentages of their trucks as clean fuel trucks, getting to zero emissions by 2045 for heavy duty trucks. If California forces the trucking industry to go zero carbon emissions, the trucking industry has no recourse if it wants access to west coast ports, according to Craig Fuller, Founder and CEO, FreightWaves (CNBC, 2023). ## POSSIBLE ALTERNATIVE #3 : STRATEGIC QUALITY MANAGEMENT Business management icon Peter Drucker defines the concept of management by objectives (MBO), utilized in the pursuit of total quality management (TQM) to ensure individual objectives within management group sectors align purposefully with ubiquitous organizational aims. A common failing of MBO is its one-way, top-down reporting from leadership to management to subordinates, with little inputs from team levels, which can result in unrealistic goals and diffused execution. MBO is often weaponized to threaten employees into conformity and compliance. MBO is a conventional TQM tool for isolated process improvements towards fundamental problems, which result in incremental gains (referred to a Kaizen). Conversely, Hoshin Kanri (HK) is a Japanese approach to MBO, which dramatically melds TQM outcomes into strategic quality management (SQM) objectives by focusing on company-wide process redesign to solve chronic problems at known choke points. Tesla utilizes HK to translate long term vision more readily into strategic priorities, through its proposed five-year vision, a one-year plan, departmental level deployment and execution, and monthly diagnoses, followed by the President’s annual diagnosis (Knowles, 2014). HK is best implemented through Tesla’s cross-functional management (CFM) teams that continuously revisit organizational structures and management relationships to redefine implementation cycles and steer the organization in new directions. Developed in the late 1980s by process engineers at Motorola, today’s Six Sigma (SS) is largely a statistics and probabilities oriented model for eliminating causes of defects in business processes by focusing on outputs of critical importance to customers. SS is an ongoing evolution of the SQM and CFM movements across the global commerce landscape, from service, to transactions, to software, to supply chain, and especially manufacturing. Tesla engineering and manufacturing extensively utilize SS, resulting in significant financial savings, improved processes and product quality, shorter cycle times, improved design, increased customer satisfaction, along with rises in stock price and shareholder value (Knowles, 2012). SS is often applied in Tesla’s supply chain management models to strengthen the DMAIC cycle of: defining a project, modeling and measuring, analyzing, improving, and controlling outputs, with emphases on user and customer experiences. Tesla Giga factories are vertically integrated to the point where almost every vehicle component is internally sourced and produced. Elon Musk maintains that Tesla’s real product is the Giga Factory itself, in designing a machine that builds a machine, that is the factory. The cars and the car production system is designed as it should be, and then components are fabricated to accommodate the design, as opposed to retrofitting homogenous, commoditized auto parts from myriad producers. The same approach is warranted in building the machine maker, the factory (Elonism, 2023). Tesla Head of Engineering Roshan Khan reveals that thousands of products designed and produced at right cost and scale within Tesla. This presents a huge strategic advantage for its supply chain partners (Tesla Daily, 2023). Tesla maintains incredibly high standards, where perfection is a passing grade. The goal is to vet and reduce the number of Tier 1 suppliers to those who can scale accordingly with Tesla. In 2022, Tesla moved 16 million pallets of materials amongst its factories in just-in-time supply chain modality, with one billion electronic components shipped weekly between 685 global service locations in 45 countries (Tesla Investor Day, 2023). Tesla continues to scale through the global Covid-19 pandemic, while maintaining direct sales relations with Tier 2 suppliers, swarming at the points of constraint, for remediation. By maintaining best possible relationships, vendor capacity is aligned and ready amongst the tiers before it’s needed to scale. Tesla’s Lead over powertrain engineering Colin Cambell shares that the next powertrain design is now compatible with any battery chemistry, offering great flexibility in battery sourcing. The Tesla Semi Truck and Cybertruck have approximately 85 percent of their parts and controllers designed or produced by Tesla. 100 percent of the next generation vehicle in 2024 will have Tesla designed or produced components (Tesla Investor Day, 2023). Presently, Tesla produces 40,000 vehicles per week, or 1.8 million annually. Moving towards full AI robotic automation, Tesla is also experiencing a 99 percent reduction in human labor force, with a product defect rate less than .005 percent (Tesla Investor Day, 2023). A global labor costs are increasing while labor participation continues decreasing with huge associated turnovers, Tesla’s cost of implementing assembly automation is projected to decrease by three-fold over the coming 10 years. Automation presents the only viable way to scale to Tesla’s target of 20 million vehicles annually by 2030. ## SQM ACTION PLAN #1 : SCALING With production lines, Tesla’s goal is to balance parallel and serial assembly in tandem, where workers and robots only do things that are absolutely necessary, offering a much shorter line. This blocks a lot less of the rest of the factory footprint, so Tesla can optimize material flow using best practices. To increase the scale and adoption of electric vehicles on orders of magnitude, Tesla must make constraints part of the solution (Tesla Daily, 2023). This goal realized means a 40 percent reduction in factory footprint, which lends to building factories faster with less capital expenditures and more output per unit, with cost reductions up to 50 percent. ### Gigafactory Nevada With any great project undertaking, an organization formulates its milestone plan, adapting its present actions to its anticipated future needs, through determined commitments to technical equipment, financial resources, and sustained human effort (Jessen, 2012). A milestone plan is the system control that forms critical chains of events, specifying degrees of work requisite for which objectives towards what expected outcomes, without committing as to how. Tesla Global Production Lead Tom Zhu explains there presently exist four giga-factories, with 65,000 employees on three continents, with production capacity for 2 million vehicles annually: Gigafactory Nevada (GFNV), Gigafactory Shanghai (GF China), Gigafactory Germany (GF Berlin), and Gigafactory Austin (GFTX). According to Zhu, Tesla has achieved a 5X reduction in factory footprint and volume from its original Lathrop California facility, through a series of actions taken with a highly integrated, in-house holistic design team across product design, manufacturing design, process design, equipment design, and facilities design (Tesla Investor Day, 2023). With GF China, Tesla’s first, second and third tier venders are 95 percent localized, at localized costs for supply chain, generating a train of production savings. By design, from GF China’s 30,000 total employees, all are local save for 20 are expatriates. With two billion cars and trucks on the road globally, a staggering number of electric vehicles must be built to supplant existing ICE inventories. Two new manufacturing units at Tesla’s Giga Factory Nevada (GFNV) are the high-volume Tesla Semi truck production facility, adjacent to its 100 gWh 4680 lithium cell battery division (Giga Nevada, 2023). Musk has confidently projected ramping up to 50,000 Semis annually by 2024, an exponential increase beyond 2023’s projected production of just 500 units (CNBC, 2023). Since 2016, GFNV has increased annual economic output and impact from $200 million to almost $6 billion today. Phase II commences in 2023, with $3.6 billion in additional new investment towards completion of 4 million sq. ft. of new manufacturing space and the addition of 3,000 new personnel. By year-end 2023, Tesla anticipates total global production capacity from all Tesla Giga factories superseding two million cars annually, or 5,480 vehicles per day, or 1 car every 16 seconds. During a Q3 2022 earnings call with financial analysts, Tesla CEO Elon Musk confirmed that first-generation Tesla Semis will not utilize 4680 cells. However, it stands to reason that the Semi will adopt 4680 technology in the near future, as 4680 production ramps up alongside Semi production at GNFV (Alvarez, 2023). Elon Musk shares that GFNV initially set out to make more lithium-ion batteries than the rest of the world combined, because total world supply was insufficient to produce electric vehicles at scale. Tesla has thus far invested $6.2 billion in total investment into Phase I of GFNV’s 5.4 million sf. facility on 3,200 acres, with more than 11,000 employees (Giga Nevada, 2023). To date, GFNV has produced 7.3 billion Panasonic and 4680 battery cells (37 gWh in total), along with 1.5 million vehicle battery packs, 3.6 million drive units, and 1 million energy modules (14 gWh total) for consumer and industrial stationary power storage. The long-term aspiration of Tesla GFNV two to three thousand gWh of 4680 annual battery output, enough to power 1.5 million Model 3 and Y vehicles. Today’s 4680 battery production at GFNV represents a 5x reduction in factory footprint size, number of parts, and process steps, as compared with initial 4680 production at Tesla Shanghai (Tesla Daily, 2023). ### Gigafactory Mexico A particularly effective method of entry into foreign competitive markets is Tesla’s utilization of greenfield strategy, whereby a local manufacturing enterprise and accompanying land becomes wholly purchased and operated by Tesla as its newest subsidiary (Kennedy, 2020). Greater risk of exposure is assumed, alongside greater degrees of control, ownership, and profit potential. After GF China, Gigafactory Monterrey (GF Mexico) is Tesla’s next greenfield Gigafactory to come online, producing its next generation EV at huge volume. Musks reveals that through first principles thinking, Tesla plans to bring scale Gigafactory launches aggressively, until its EV production is increased eleven-fold from 2022 numbers (Tesla Daily, 2023). ### Tesla Corpus Christi Lithium Refinery Global Lead Drew Baglino reveals that Tesla will begin to enter upstream materials processing, with its new 50 gWh/year Corpus Christi lithium refinery, commissioning in late 2023 and entering production in late 2024 (Tesla Investor Day, 2023). Smaller scale onsite lithium refining capability is planned for Gigafactory Shanghai and Gigafactory Texas in Austin. ## SQM ACTION PLAN #2 : COST REDUCTIONS Costs unrelated to the production of goods are non-manufacturing costs, or period costs, such as selling, general, and administrative costs (SG&A). Selling costs incur in facilitating customer orders, which include sales commissions, sales personnel overhead, finished goods storage, shipping, marketing, and advertising. General and selling costs encompass support staff overhead such as accounting, human resources, legal, executives, and information technology (IT), along with associated depreciation of office equipment and fixed capital (Heisinger and Hoyle, 2012). Tesla has been able to achieve 30 percent cost reductions in the Model 3 since 2018, from gains in volume growth, productivity, overhead efficiency, engineering changes, localization, and supplier scale. According to Tesla CFO Zach Kirkhorn, next generation vehicles should achieve 50 percent further reductions in costs, through gains in battery technology, powertrain, and manufacturing efficiencies (Tesla Daily, 2023). Tesla’s Model 3 and next generation vehicles’ total cost of ownership per mile over five years, from financing, insurance, fuel, and wear-and-tear maintenance, should be lower than the Toyota Corolla, the world’s best-selling vehicle. Those costs of ownership comparisons mirror realities for Class 8 semi-trucks as well. Since 2018, Tesla reduced non-GAAP operating expenditures are 60 percent of revenue, or 75 percent of delivered car basis. Throughout the pandemic, Teslas was able to fully fund its R&D initiatives, through constraining the number of programs running in parallel, while maximizing revenue generation and technology sharing between programs. This means a 60 to 70 percent lower selling, general, and administrative expenses (SG&A) per vehicle than the traditional OEM and dealership industry average, resulting in improved affordability for consumers, to the tune of thousands of dollars per vehicle (Tesla Daily, 2023). Increased margins allow for reinvestment to grow sales volume, which generates cash flows for investments and unprecedented scaling, which acerbate the world’s transition to a sustainable energy future. Kirkhorn adds that for Tesla to achieve 20 million vehicles produced annually, with 1 terawatt annual production, expansion of battery cell production, service, and charging, an estimated $150 to $175 billion total investment is required, with $28 billion funded thus far (Tesla Daily, 2023). Tesla is a working capital-intensive business, directly funded by operating cash flow. Over the quarter, multibillion-dollar swings in cash flows are not uncommon, dependent upon timing of building and delivering vehicles. Tesla sets aside large sums for downside protection, preserving daily operations, which protects the engine that generates cash, that affords growth reinvestment (Tesla Investor Day, 2023). Tesla leans on innovation intensely to drive down costs and improve efficiencies, which improve affordability. This allows for reinvestment that grows volume that generates cash, allowing for compounding reinvestment, at unprecedented scale (Tesla Daily, 2023). ## SQM ACTION PLAN #3 : HUMAN RESOURCES Human resource management (HRM) at Tesla is an extension of senior management industrial relations, moving beyond short-term personnel management focus to a strategic function aligning recruitment, selection, development, and retention of human capital in keeping with enterprise mission, vision, objectives, and policies, to foster long-term strategic competitive advantage (Senyucel, 2009). Rapid globalization of commerce coupled with increasingly competitive markets necessitate proactive, dynamic HRM solutions to develop skilled flexible workforces deployable into flatter, project-oriented teams more readily adaptable to exponentiation of market data inputs. Tesla HRM manages 129,000 global personnel, with half of them housed in manufacturing, and 60 percent of them residing in the United States. In 2022, Tesla HRM received and processed over 3 million engineering applicants. Today, SpaceX and Tesla are the world’s two most coveted employers for engineers, followed closely by NASA in third position (Tesla Investor Day, 2023). Elon Musk is masterful at acquiring top talent able to marshal resources for meaningful change towards an electrified world, where Tesla enjoys unparalleled market success, shareholder value, brand awareness and brand loyalty in the space. Over time, researcher Edgar Schein posits that a winning company culture becomes its strategic competitive advantage, which management fosters for continuing organizational motivation and adherence to the overarching values and mission. Culture becomes a company pattern of basic assumptions, normative values, and artifacts (visible, tangible symbols) towards a derived learning process that adapts and integrates externalities into purpose (Laegaard and Bindsley, 2006). McClelland’s APA Needs motivational theory helps management organize work hierarchies around workers ’culturally acquired needs for meaningful work, through high-performance achievement (mastering complex tasks), power attainment (leveraging social influence), and affiliation (socially engineering relationships) (Laegaard and Bindsley, 2006). Kouzes and Posner reveal that true leadership moves beyond managing people, to creating shared visions and influencing their actions, while encouraging personal responsibility and autonomy, which manifest results. Researchers Hersey and Blanchard build upon Posner’s findings, where circumstances and levels of employee development and degrees of task involvement determine situational leadership styles: instructing, selling, supporting, and/or delegating (Laegaard and Bindsley, 2006). Tesla’s human capital feedback loop for processing data within the company is astounding, relative to its industry peer set (Tesla Investor Day, 2023). Most recently, almost all departments run on Tesla Operating System (TOS) software, from leadership, to factories, warehousing, service solutions, customer service, Tesla mobile app, finance, HRM, recruiting, and data analytics. Tesla’s in-house software applications team, created dedicated lightweight software, working very closely with process improvement teams within the business to simplify, delete, and automate steps. Combined efforts resulted in a four-fold increase in North American sales, a four-fold increase in order operations, a five-fold increase in financial services, a six-fold increase in accounts payable, and a seven-fold increase in documents generation. TOS is responsible for order modification, captive lease/loan servicing, captive insurance, ubiquitous real time data visibility across channels and locales, and all 10-Q and 10-K reporting timelines. In developing cross-cultural multidisciplinary project teams from multiple countries of origin, it becomes imperative to for Tesla to respect and address the existence of diverse cultural backgrounds, along with means for successfully bridging divides for performance optimization. Geert Hofstede’s cultural dimension model (CDM) proves insightful for understanding and valuing cultural perspectives amongst national cultures (Henman, 2023). CDM weighs in the balance a culture’s bias towards power distance relationships amongst actors, its propensity for individualistic versus collectivist mindsets, its embrace of masculine versus feminine relationship dynamics, its degree of uncertainty avoidance in dealing with unknowns, its long-term versus short-term timeline orientation, and also its attitudes towards indulgent versus restrained normative behaviors. From these perspectives, Tesla project leaders become empowered to assess factors that affect team collaboration, as well as establish new norms for interaction, such as standard operating procedures, punctuality, or frequency of meetings (Henman, 2023). Tesla’s multicultural teams must possess a clear and compelling direction, with access to information and resources to deliver results amongst a balanced team with requisite proficiencies, cultural competence, and global dexterity (Molinsky and Gundling, 2016). Contextual diversity amongst multinational team members can also positively impact cultural exchanges, creative ideation, and dynamic critical thinking, as teams share their unique perspectives on political systems and social dynamics within their countries of origin (Kvasnevska, n.d.). Culturally competent project managers at Tesla help determine low-context versus high-context communication, first principles versus application-first thinking, egalitarian versus hierarchical leadership style, consensual versus top-down decision-making, task-based versus relationship-based trust building, along with monochromic versus polychromic time scheduling orientation (Szablewska, 2022). Lack of cultural awareness instigates cultural blunders, which hamper relations, perpetuate inefficiencies, and degrade quality outcomes. Ultimately, global organizations like Tesla experience higher costs for goods sold due in part to cultural insensitivity or incompetence (Hehl, 2010). ## CASE SOLUTION : RELEVANCE TO BUSINESS Tesla’s corporate directors and officers have fiduciary obligations to all stakeholders to act honestly and in good faith to the best interests of the corporation, through exercise of care, diligence, prudence, and skill commensurate with industry standards and applicable laws governing compliance (Sarna, 2012). Verbeke argues that winning organizational routines can become highly prized, rarely imitable resources in which MNEs like Tesla are able to capitalize on their customer and vendor relationships, unlocking tremendous value during exchanges (Zamborsky, 2016). Peng references this phenomenon as the VRIO network, where value, rarity, imitability, and organizational exploitation help determine MNEs’ future sustained competitive advantage and superior corporate performance. According to Musk at Tesla Investor Day (2023), a clear path to a fully sustainable earth, with abundance, supporting a civilization even greater in size than today’s population, is feasible based on sound physics and real-world calculations, not wishful thinking. In 2022, global solar energy deployment grew 50 percent year-over-year, while global electric vehicle (EV) production grew 59 percent and hit 10 percent of all vehicle market share. Tesla optimistically predicts that cars will go electric, with full autonomous driving capabilities, or 2 billion cars/trucks in total. According to Tesla’s 2023 White Paper, with global electrification achieved, total energy usage is effectively halved, through efficiency gains, renewables, and recycling measures (Tesla Daily, 2023). According to Musk, what is needed at very large scale not currently present is a vast amount of battery energy storage, 240 terawatt (tWh) hours, or 240,000 gigawatt hours. As the world becomes more advanced and proficient at rare earth mineral sourcing and extraction, more supply manifests through process discovery. Cumulative mineral supply is plentiful to demand through 2050 projections. Remarkably, transitioning away from a fossil fuel global economy to a sustainable energy economy requires an order of magnitude less global mineral extraction, decreasing from 58 gigaton to 54 gigaton annually (Tesla Investor Day, 2023). Musk anticipates that as humanity improves energy density of batteries, all vehicles will go fully electric, including long-haul cargo ships and airplanes, except for rockets. Wright’s law states for every cumulative doubling in the number of units produced, costs associated with each technology drops at a consistent percentage rate. When you cut prices, you get more of something (ARK Invest, 2023). Units go up. Consensus estimates are 2.6% GDP growth through 2040. Technological convergence of five innovation platforms, including artificial intelligence, energy storage, robotics, genomic sequencing, and public blockchains, should create exponential growth more like 8.5% GDP annually. Tesla comprises three of these five main innovation platforms. AI training costs are dropping at a 70% annualized rate, for both hardware and software. [trimmed]. EV sales up 62 percent. Wright’s law and it’s impact on batteries and drive trains. EV’s have hit price parity with gas powered vehicles, as they transition into another accelerated decline in prices, where ICE vehicles will not be able to compete. Tesla is in the pole position for autonomous ride-hail, AI logistics, commercial trucking, and EV production. Global oil demand is at real risk because of electrification and autonomous logistics. Resultantly, by 2035, oil demand should decline precipitously, 30 percent from today’s production levels (ARK Invest, 2023). With this case study of Tesla’s newest electric vehicle, the Tesla Semi Truck, Tesla powerfully demonstrates a path forward to electrification and a sustainable future. Automotive and transportation companies take heed, as Tesla applies first principles thinking towards real world applications that address Earth’s most pressing challenges, including the climate change crisis. ## 2026 look-back **Look-back:** November 2026 I wrote this paper in March 2023. In November 2026, I went back through the claims. Here's the scorecard: 1 came true (range); 4 partly (Nevada, PepsiCo, the Megacharger, and the lithium refinery); 3 missed (the 2024 volume target, the $150,000 to $200,000 price, and the 7-cent charging promise); and 1 too early (the million-mile guarantee). ## What held up or changed Forward-looking claims from the original thesis are reviewed below as predictions. **Range: came true.** In March 2023, [Tesla's Semi page](https://web.archive.org/web/20230312053712/https://www.tesla.com/semi) listed about 300 or 500 miles at 82,000 pounds. Production trucks are a 325-mile Standard Range and a 500-mile Long Range, both at 1.7 kWh per mile, confirmed in that October 21, 2026 update. I also wrote "900+ kWh"; Tesla has not published a pack size, and [The Verge](https://www.theverge.com/transportation/1000317/tesla-semi-launch-customer-delivery-freight-battery-engineer) later described an 822 kWh pack. **Nevada ramp: partly.** In January 2023 Tesla [announced](https://techcrunch.com/2023/01/24/tesla-invests-3-6b-in-two-new-nevada-factories-to-build-semis-and-cells/) a $3.6 billion expansion for a high-volume Semi factory and a 100 GWh 4680 cell plant. The Sparks factory [opened September 24, 2026](https://electrek.co/2026/09/25/tesla-semi-volume-production-launch-nevada-factory/), after a first truck in April. As of October 21, 2026, installed capacity is 25,000 a year — three years late, at half the planned rate. The 100 GWh 4680 plant next door is not in Tesla's current capacity table; 4680 production is listed in Texas. **PepsiCo: partly.** PepsiCo reserved 100 Semis in 2017 and took the first trucks on December 1, 2022. By mid-December it was running 36 trucks — [15 at Modesto and 21 at Sacramento](https://www.cnbc.com/2022/12/16/pepsico-is-using-36-tesla-semis-in-its-fleet-and-is-upgrading-facilities-for-more-in-2023-exec-says.html) — not 17, helped by a $15.4 million California state grant. A 425-mile Frito-Lay run recharged in about 35 to 45 minutes. A 2025 [Fresno deployment of 50 trucks](https://www.pepsico.com/esg-topics/fleet-decarbonization) brought the last public count to 86, still short of 100. **Megacharger: partly.** The megawatt claim held and was exceeded: today's Megacharger delivers up to 1.2 megawatts. The 70% in 30 minutes figure was revised down. Tesla's current spec is [up to 60% of range in 30 minutes](https://electrek.co/2026/02/09/tesla-reveals-final-semi-specs-with-two-trims-ahead-of-customer-deliveries/) — about 300 miles on the 500-mile truck, not 350. **Lithium refinery: partly.** The [Investor Day slide](https://s203.q4cdn.com/655419027/files/doc_financials/2023/ar/Investor-Day-2023-Keynote.pdf) said the Corpus Christi plant "starts commissioning end of 2023," and [TechCrunch](https://techcrunch.com/2023/05/08/teslas-new-texas-lithium-refinery-to-support-1m-electric-vehicles-by-2025/) reported Drew Baglino saying production would start in early 2024, not late 2024 as I wrote. Tesla [first fed the kiln in December 2024](https://www.teslarati.com/tesla-first-us-lithium-refinery-texas/), with full startup in 2025. As of October 21, 2026, Texas lithium refining is listed at 30 GWh, in early ramp — about a year late, and below the 50 GWh target. **Production volume: missed.** I wrote that Tesla was ramping to 50,000 Semis a year by 2024. On the [Q3 2022 call](https://www.teslarati.com/tesla-to-produce-50k-tesla-semi-next-year/), Musk was "tentatively aiming" for 50,000 units in North America in 2024. Tesla kept the Semi in [pilot production through 2024](https://www.sec.gov/Archives/edgar/data/1318605/000162828025003063/tsla-20241231.htm), and volume production began only in the third quarter of 2026. As of Tesla's [October 21, 2026 update](https://www.sec.gov/Archives/edgar/data/1318605/000162828026066738/exhibit9914.htm), installed Nevada capacity is 25,000 a year — half the target. **Price: missed.** Tesla advertised $150,000 for the 300-mile truck, $180,000 for the 500-mile truck, and $200,000 for a limited Founders Series in 2017, and never officially updated those list prices. Reported 2026 quotes are about $250,000 to $300,000, according to [Electrek](https://electrek.co/2026/02/10/tesla-quoting-price-500-miles-electric-semi-truck/), including a Long Range quote around $290,000 and a [November HMD Trucking deal](https://electrek.co/2026/11/11/tesla-semi-delivery-50-trucks-chicago-hmd/) of roughly $300,000 a truck. **Charging: missed.** The 7-cent charging promise missed. By May 2026, Tesla's Semi [network fee](https://electrek.co/2026/05/01/tesla-semi-charging-business-megacharger-basecharger-pricing/) was 8 cents per kilowatt-hour, before the cost of the electricity. **Million-mile guarantee: too early.** I wrote that the powertrain was guaranteed for a million miles. Musk said that at the [2017 unveiling](https://www.cnbc.com/2017/11/16/tesla-semi-truck-has-a-500-mile-range-ceo-elon-musk-reveals.html), but no published Semi warranty turned up, and the fleet is too young to test it. That's still too early to call. 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They are not silent edits. 1. **"12 kg CO2 per minute for every gallon of diesel burned."** The unit is wrong. A gallon of diesel produces about 10.19 kg of CO2 at the tailpipe, according to the [EIA](https://www.eia.gov/environment/emissions/co2_vol_mass.php). About 12 kg per gallon is a reasonable well-to-wheel figure once extraction and refining are included; the paper's own diesel total implies about 12.2 kg per gallon. The cited EIA FAQ covers CO2 from electricity, not diesel. Read this as "about 12 kg CO2 per gallon of diesel, well-to-wheel (about 10.2 kg at the tailpipe)." 2. **"Industry average 150 kg CO2/kWh associated with Semi battery usage."** The label is wrong, but the lifetime math holds if 150 kg is treated as a one-time manufacturing figure on a 900 kWh pack. That 150 kg figure is the low end of a 2017 [IVL](https://www.ivl.se/english/ivl/press/news/2017-07-03-ivl-comments-to-reactions-in-media-on-battery-study.html) battery-manufacturing estimate, not an in-use electricity number. Read this as "about 150 kg CO2 per kWh of battery capacity to manufacture the battery." 3. **Unit labels.** "16 gigawatts (gWh)" should be gigawatt-hours (GWh), an energy unit. "300 megawatts (mWh) per acre" should be megawatt-hours (MWh) per acre; the lowercase "m" also means milli, not mega. Tesla reported deploying [3.99 GWh](https://www.sec.gov/Archives/edgar/data/1318605/000095017022000796/tsla-20211231.htm) of storage in 2021, not 16 GWh. The 16 GWh figure may have been meant as a cumulative total, but that could not be confirmed. The "300 MWh per acre" value also could not be confirmed. 4. **"Tesla begins 2023 with new productions of the … Cybertruck."** Cybertruck was not in production on March 22, 2023. Tesla's [FY2022 annual report](https://www.sec.gov/Archives/edgar/data/1318605/000095017023001409/tsla-20221231.htm), filed January 31, 2023, listed it at Giga Texas with status "Tooling." Tesla's [FY2023 annual report](https://www.sec.gov/Archives/edgar/data/1318605/000162828024002390/tsla-20231231.htm) says first deliveries came in November 2023. 5. **"An annual production of 1.5 million electric vehicles."** That figure is overstated for 2022. Tesla produced 1,369,611 vehicles that year, about 1.37 million, and delivered 1,313,851, per the same FY2022 annual report. This material is for education and entertainment only. It is not financial advice. Opinions are our own and should be verified independently. Mentioning others' views is not an endorsement. The author holds long-term positions in Tesla, SpaceX and Bitcoin. Also available: [Markdown version](/blog/tesla-semi-2023.md) and [fact sheet (JSON)](/blog/tesla-semi-2023.facts.json). *Updated Nov 14, 2026: We added a November 2026 look-back on the paper's claims, and footnotes flagging errors in the 2023 text.* --- > This material is for education and entertainment only. It is not financial advice. Opinions are our own and should be verified independently. Mentioning others' views is not an endorsement. > The author holds long-term positions in Tesla, SpaceX and Bitcoin.