E-car components Tesla: German Under the Hood

Electric carmaker Tesla may play off its cool Silicon Valley image, but a closer inspection reveals many of its key components are made in Germany.
Germany's All-American car? A Tesla Model S.

Elon Musk, the chief executive of California-based automotive firm Tesla, loves revolutions. Four years ago, his all-electric Model S luxury sedan was the first such vehicle on the market that could cover 400 kilometres (248 miles) in one go. Late last year, he followed it up with his Model X sporty SUV with winged doors.

But Tesla engineers still have to deal regularly with almost unsolvable tasks. The rigidity of the Model X's body, for example, poses plenty of challenges to the company’s experts.

Even so, the firm often manages to make the German car industry look dated.

At least at first glance. On closer inspection, however, it becomes evident that Tesla is a lot more German than one would expect. From the electrical engine to the coatings or the voice command system – many components come from German suppliers.

The sales numbers are still small, but many suppliers hope to profit from Tesla's good image. Stefan Bratzel, Head, Center of Automotive Management

"Tesla as a small enterprise is not able to be innovative in all fields of car engineering," said Stefan Bratzel, head of the Center of Automotive Management at FH Bergisch Gladbach College. As a result, Tesla's value creation is smaller than that of other established car manufacturers.

German industrial giant ThyssenKrupp supplies Tesla with steering columns and control shafts as well as shock absorbers.

"When it comes to the body, we are involved in all components that we can deliver,” said a spokesperson at ThyssenKrupp’s car components section. The company’s Facebook page shows chief executive Heinrich Hiesinger at the steering wheel of a Model S. The message is clear: Tesla from the outside, ThyssenKrupp from the inside.

The electronic steering is provided by another German supplier: Bosch Mobility Solutions. Without the component, Tesla's electronic assistant wouldn’t work. The supplier also developed parking sensors and a radar system for Tesla. Working with the Californians challenged some of the processes at the big German supplier.

“This cooperation was a great case for the application of agile methods of development,” said Volkmar Denner, Bosch's boss. With Tesla, the so-called Scrum method was applied – referring to a set play in rugby in which part of the team huddle to gain control of the ball. In car manufacturing, small teams similarly work with a dedicated, independent focus on any given innovation.

Tesla is a great partner in learning how to adapt to the flexible work flow of Silicon Valley, particularly for large and established corporations. Still, with sales as low as 52,000 units, large profits haven’t yet been attained.

Nevertheless, working with Tesla is valuable for high-tech companies such as Munich-based Infineon, a producer of semiconductors. The company supplies Tesla with computer chips. An electrical car contains semiconductors worth €6,000 ($6,500), twice as much as one with a combustion engine.

The German roots of Model S cars run deep. The hydraulic springs in the front and rear compartment doors are delivered by Stabilus in Koblenz; the voice control system is by Peiker in Friedrichsdorf; and the sound system is supplied by Stuttgart-based S1nn, a subsidiary of Kardon.

Talking with Handelsblatt a few weeks ago, Mr. Musk praised German know-how and one supplier in particular: Dräxlmaier, which specializes in the interior of luxury cars. The family-owned business also supplies Audi, BMW and Mercedes.

German Parts in the Tesla Model S-01

 

After the 2013 International Motor Show in Germany, 20 Dräxlmaier engineers visited Tesla’s Silicon Valley headquarters for detailed discussions. The quality of Tesla’s interiors has risen considerably since then, according to Mr. Musk. As a result, Dräxlmaier has been involved in the creation of Tesla's new Model X from the start.

"The sales numbers are still small, but many suppliers hope to profit from Tesla's good image,” Mr. Bratzel said.

Coroplast, a cable manufacturer in Wuppertal, supplies Tesla with high-voltage cables.

"Tesla is extremely fair,” said Natalie Mekelburger, Coroplast's boss. In front of its headquarters, the mid-sized company displays its own Model S - "powered by Coroplast."

Tesla's suppliers have publicized their roles. When the Eisenmann firm from Böblingen announced in April 2015 that it would deliver two automated coating lines to the Tesla factory, manufacturer Dürr reacted immediately and highlighted its own role as producer of the 174 coating robots used within Eisenmann's system.

Co-operation with Tesla can cause tension, however. Last week, Tesla sued Swiss hydraulics specialist Hoerbiger. The supplier was supposed to deliver the winged doors for Tesla's Model X but technical issues intervened. Tesla contends this is mainly Hoerbiger's responsibility. Their doors would lose oil or became so hot that they stopped working. Hoerbiger misrepresented its own abilities, Tesla said in a statement. In May 2015, Tesla chose another supplier on short notice. Still, Hoerbiger insists on its right to be paid in full.

The episode shows that Tesla's high-speed operation can create problems, Mr. Bratzel said.

"Other manufacturers always have several alternative options for production up their sleeve,” he said. Tesla needs to learn a few hard truths about the car industry, he added.

Some executives in the car components industry agree.

"Tesla has a bit of a puppy license," said one of the bosses of a German Tesla partner. Tesla would often approach suppliers with an idea, rather than with a solid plan. As a result the need for communication would be pretty high and most of the know-how would be put in by the suppliers.

"That can become a challenge, especially should sales figures rise according to plan,” Mr. Bratzel said.

Another key issue is profitability. Tesla is operating in the red. In the coming years its new Model 3 is supposed to have a production run of more than 100,000 cars.

"By then, the cost structure has to be right,” Mr. Bratzel said.

And that's also something the Californians might be able to learn from the Germans.

 

Handelsblatt's Martin Wocher is an editor focusing on the the mechanical engineering and steel industries. Joachim Hofer covers the high-tech industry and IT sector. Axel Postinett specializes in consumer electronics, the video game industry, e-commerce and Internet corporations.To contact the authors: [email protected][email protected][email protected]