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TeslaMotors – At the Intersectionof Innovation and Integration
Slide 1:Title
Welcome, thank you for delaying you’reyour tr...
Slide 2:Tesla’s Mission
Tesla’s Mission: Do accelerate the adoption of sustainabletransport.
Why does this matter to me?
I...
Slide 3:Tesla Motors –Why a Relevant Model
The automotive industry has operated essentially the sameway for the
past centu...
Slide 5:Secret Master Plan
Tesla began with a Secret Master Plan, which they published in a blog post
in 2006. Itessential...
Slide 7:History – SpaceX
PayPalled to SpaceX.
To breach another industry set in its ways, SpaceX needed a model that was
p...
Slide 11:Innovation+ Integration
Tesla’s survival, let alone its transformationalapproach to mobility,
required ingenuity,...
Slide 14:Vertically IntegratedTeam
It’s hard to imagine Tesla starting at any other time, and in any other place,
than the...
Slide 16:Culture of Innovation
All this supports, really compels and fuels Tesla’s culture of innovation.
Tesla recently o...
WAY have they done it, NO WAYis it American, NOWAY is it 7,000 laptop
batteries in the rightkool-aid. NO WAY did I just la...
Working atTesla (as you might imagine) is far harder than anything I have
ever done in my life. When I was interviewing fo...
Slide 21:Performance – LithiumIon, Thermally ManagedBattery Module
Itall starts with the batteries.
Let’s go back two deca...
Slide 23:Performance – Skateboardand Low CoG
And they took all these and made a skateboard.
They were able to deliver thei...
Slide 26:Performance – IntegratedSystems
The integrated systems, packaging, and shellall intertwine to create the
safestca...
Slide 29:Performance – Language of Safety
With lots of focus on aerodynamics, Tesla was able to offer a car with 275
miles...
But as you approach the car, it projects, it appears when needed (my wife
would say, ‘sortof like a husband’), and reaches...
Slide 35:Design
Itcontinues with door pulls that happen simply by folding the door panels,
repeated with the latch pull, a...
Slide 37:Design:Summary
1. Rethink on a systems level – adapt technology
2. Optimize packaging
3. Commit to a form languag...
Slide 40:Manufacturing – Highly Adaptable Robotic Assembly
I have been on a factory tour twice, I highly recommend it to a...
Slide 42:Manufacturing – Gigafactory!
By the end of this decade, Tesla expects to be producing and selling
500,000 cars/ye...
Slide 44:Manufacturing:Summary
1. Internalizeprototyping and fabrication
2. Initiate adaptable digital design and fabricat...
Slide 47:Sales and Service –Continual Software Upgrade
Tesla is covered on Wall Street by a number of automobile analysts....
Slide 49:Sales and Service –Autopilot
Uber and Lyft– Driving services weorder fromthe palms of our hands.
Someone else doe...
Slide 51:Sales + Service:Summary
1. Question antiquated delivery methods
2. Continually upgradethe user experience
3. Perp...
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This is the text for the slide deck Tesla Motors: At the Intersection of Innovation and Integration. It looks at Tesla's business model and analyzes how we can apply their thoughts across our practices.

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Text for Tesla Motors: At the Intersection of Innovation and Integration

  1. 1. TeslaMotors – At the Intersectionof Innovation and Integration Slide 1:Title Welcome, thank you for delaying you’reyour trek over to the OneDirection backstagepre-party to talk a little more Tesla. BTW, I took our teenage daughter to a One Direction concert last September – trustme, you’reall in the right spot. I am Greg Papay, cattledog on the forums, an architect by day, and by night a Teslaholic. Today I’ll highlighting the extraordinary, ever-evolving success story of Tesla Motors, and distilling it as a story of innovation and integration, as a way for us all to look at our professions and ask whatwecan learn fromTesla’s approach.
  2. 2. Slide 2:Tesla’s Mission Tesla’s Mission: Do accelerate the adoption of sustainabletransport. Why does this matter to me? I learned of Tesla about 5 years ago, and immediately saw a resonancewith what the car and company was striving for and what we strivefor in our work at our architecture firm. About4 years ago weordered our firstTesla, we got it nearly 3 years ago, got our second one nearly 2 years ago, and sold off our last gas car 1 year ago. Somewherein the last 5 years weordered our Model X, and sortof expected to have it by now, however… As I learned more about Tesla the company, and certainly after driving the cars, I came to a realization they were doing something of exceptional vision and importance. Itmade me wonder how. I wanted to really dive in and analyzethat question. So why does this matter to you, our TMC Connect friends? I think Tesla’s story is an ideal one to examine for anyonewho is in business today. Their highly integrated and innovative approach is essentially unique among auto manufacturers, who areshackled by a tradition-bound industry. So we’d like each of you to think of your business or practice’s approach to projects and look with us at a model from outsideyour industry so we can startto challenge ourselves and startto change our approach.
  3. 3. Slide 3:Tesla Motors –Why a Relevant Model The automotive industry has operated essentially the sameway for the past century. Itwas and is an industry ripe for disruption. Does this sound vaguely familiar? Tesla doesn’tjustmake cool cars – it’s transforming nearly every aspectof the modern mobility experience – for the car, company and most importantly its customers. It’s a company thatsold just33,000 cars last year out of nearly 100 million worldwide. 3/100 of 1%. So with similar odds, any of us can have a similar impact. The question is - are we willing to think boldly and take similar risks? Slide 4:History Firstsome History – Tesla is named after Nikola Tesla, the inventor of the AC induction motor in 1888, around which the car is designed. Tesla Motors was founded in 2003 by a group of engineers in Los Angeles and Silicon Valley who wanted to provethat electric cars could be better than gasoline-powered cars. They revealed their first car, the roadster, in 2006 and produced it in 2008. They IPO’d in 2010, thesame year they acquired a 5Msf factory in Fremont, CA, purchased fromToyota and GM after they mothballed it years earlier. The Model S, Tesla’s first ground up design, began production in mid-2012. Later that year it was named Motor Trend’s Car of the Year, which would be followed shortly thereafter by being ranked as the bestcar ever tested by Consumer Reports. They introduced the world’s firstdualmotor, 4WD car last year and will reveal the Model X, their version of an SUV, in about 3 hours. (Click) All this led to the reported sighting of Teslaman, a mythical creaturewith, as you can read, many desirable attributes.
  4. 4. Slide 5:Secret Master Plan Tesla began with a Secret Master Plan, which they published in a blog post in 2006. Itessentially outlined a path froman expensive sports car (the Roadster), to a mid-priced sedan and SUV (Models S and X), to an affordablemass-consumer car. We’reabouthalf way. Slide 6:Founder – Elon Musk To understand Tesla, you mustunderstand Elon Musk. Buy Ashlee’s book, it’s an illuminating portrait. Musk grew up reading science fiction and dreaming of a world different that the one in which we all lived. This has influenced him through his 43 years. He went to university in Canada and the US, ending up on the west coast. He started a small internet company that he sold and parlayed into the company that would eventually become PayPal, which threw traditional payment systems on their heads. Challenging convention is a common theme for Elon Musk.
  5. 5. Slide 7:History – SpaceX PayPalled to SpaceX. To breach another industry set in its ways, SpaceX needed a model that was profoundly differentand dramatically cheaper. To do that, you had to stop throwing away 99% of each rocket launch. Tesla is the first spacecompany that’s within inches making its firststage reusable, and spacetravel dramatically cheaper. Industry being re- imagined. Slide 8:Solar City Musk is also the Chairman of Solar City – Solar City was the firstand largest company to offer ways to for consumers to integrate solar into their residences via a power purchaseagreement. This has democratized the solar industry and hastened the adoption of renewable energy for hundreds of thousands, soon to be millions. Tesla’s new stationery storage battery product, PowerWalland PowerPack, willaugment this. Slide 9:Hyperloop Finally, a couple years ago Musk proposed the Hyperloop, a pneumatic transportation pod systemthat would be significantly cheaper and radically faster than high-speed rail projects. Again, a fundamental rethinking of how we approach intercity travel. Slide 10:Tesla’s First Principles Which leads us back to Tesla and their mission. Accelerate the adoption of sustainabletransport. Make a car and company unlike any other. How could they get there?
  6. 6. Slide 11:Innovation+ Integration Tesla’s survival, let alone its transformationalapproach to mobility, required ingenuity, entrepreneurship, and that trait that defines the American spirit, innovation. Italso required team-building, collaboration, and an integrated approach to all aspects of their business. This is whatmakes Tesla’s story so compelling – it’s not an isolated stroke of genius. (Click Through) Tesla pulled off this achievement through innovation and integration of approach + process, performance+design, manufacturing, and sales + service. Slide 12:Innovation: Approach+ Process When Tesla’s founders speak about the early years at Tesla, when they were looking to firstprinciples for engineering and design, they say that innovation was the enabler. But innovation in what way? For the sake of being new – no. For the purposeof being better – yes. Slide 13:Reasonfrom First Principles At Tesla they would say the search for something better, for innovations, is spawned by an authentic mode of problem-solving – Reasoning fromFirst Principles. Reasoning from FirstPrinciples is a physics way of looking at the world…whatthat really means is that you boil things down to the most fundamental truths…and then reason up fromthere…that takes a lot more mental energy… (Click) So the this is the first of 20 questions - Do we do this often enough in our search for solutions to our problemsor issues, or even when thinking about our businesses and firms?
  7. 7. Slide 14:Vertically IntegratedTeam It’s hard to imagine Tesla starting at any other time, and in any other place, than the pastdecade and in California. Not impossible, but really hard. Tesla really required a technology discontinuity and expertise fromoutside the auto industry to come to full fruition. Automobile design, engineering and manufacturing needed a fresh approach and somefresh science. They have been innovative because, dramatically morethan any current automaker, but very much like many successfultechnology companies, they have vertically integrated their design, engineering, fabrication and operations, placing mostall in-houseand often under one roof. They had to be innovative and integrated. They had to be nimble to survive. There’s a reason there havebeen no new US car companies in over 90 years. Tesla had to create distinction, separation, meaningfulness. (Click) How many of us ask thatof ourselves and our firm? Slide 15:Top LeadershipInvolvedinDesign + Engineering They were able to do achieve this because of the hands-on leadership of their core founders – a team of engineers and designers that assembled around a shared mission. Elon Musk JB Straubel Franz Von Holzhuasen And back a few years, GeorgeBlankenship Each integral to the design process, each deeply enmeshed in it. (Click) Are we, as leadersof our practices, willing to stay in trenchesto constantly make our firmsand projectsbetter? Unrelentingly?
  8. 8. Slide 16:Culture of Innovation All this supports, really compels and fuels Tesla’s culture of innovation. Tesla recently opened up all of its patents to competitors. Took copies of them all off the wall in their lobby and replaced them with this quote from a cult video game fromthe 1990s. Why? They explained it by saying that technology leadership is not defined by the number of patents on your wall, but – “by the ability of a company to attract and motivate the world’s mosttalented engineers.” (Click) Do we require innovation aspartof our design process? How are we attracting top talent to our firms? Slide 17:MissionMotivates Employees +Customers These core leaders set the tone for another critical aspect to Tesla’s success – their mission motivates their employees and customers. You can’t fakethe enthusiasmcaptured in this photo. Or at this conference. Right? When we received our Model S at the end of 2012, I wrotethe following blog postabout people’s experiences when they had taken a test driveor ride in our car: …in a span of about60 seconds: (approach the car, it’sbeautiful, the handlesextend, THE HANDLES EXTEND, get in, stunning, the touch screen stares back at them, the panoramic roof slidesopen, footon break, speedometer flips over, you rollaway silently, first straightaway - punch it reliving memoriesof first rollercoaster ride, fat-assgrinsall over faces)… ...And then they think, NO WAY, as in NO WAY hasthis freaking out-of- nowhere companykicked sand in the face of 100 yearsof auto-making. NO
  9. 9. WAY have they done it, NO WAYis it American, NOWAY is it 7,000 laptop batteries in the rightkool-aid. NO WAY did I just laugh my head off driving in a loop around your neighborhood! …It’s our Apollo Program. People are proud of it. Of their courage to try it. Of the audacity to pull it off. People we don’teven know are proud of usfor buying it. They feel like they’ve boughtit by seeing it or riding in it. No one is lukewarm aboutit. Is this how Columbusfelt? Slide 18:MissionMotivates Employees +Customers That captured an initial rush of excitement that came with purchasing the car. But it goes deeper. I have first-hand experience of senseof mission when I received a private e- mail froma Tesla engineer. Here’s part of whathe wroteto me: I read the Tesla forumsoften and with greatintensity. In particular, your brilliant and inspiring piece on Tesla and the Apollo program really hithome for me. The choice to come to Tesla Motorsfor me wasdeeply personaland a very high risk to the comfortable lifestyle of a typicalautomotive engineer like myself in Detroit. Like many automotive "Detroitexpats" at Tesla, I hungered for something more than whatthe Detroitmachine wasputting out. I was never really able to put it in wordsfor people who asked why I made the leap, and then I read your Apollo postfrom a few monthsback. As I read each line, the smile on my face grew wider and wider, and then tears actually formed in my eyes. I wasreally moved. I immediately sent out an email with a link to your postto my most trusted friends, family and Tesla colleagueswith the simple title ‘This is why I work at Tesla’. The response I got was incredible. People finally gotit. They got why this company, itsproductsand its people are so different, they gotwhy I made the change.
  10. 10. Working atTesla (as you might imagine) is far harder than anything I have ever done in my life. When I was interviewing for this position, I read a portion of the job description which said: ‘You must have a passion for engineering electric vehicles. Without passion, you would find whatwe are doing too difficult. There are easier jobs. Your wordsstill reverberate in my mind and often provide the extra energy I need to get through a particularly difficultday. (Click) Do our clients feel this passionate aboutwhatwe do for them? Do the people in our firms feel this way? Shouldn’tthey? Slide 19:Approach+ Process: Summary 1. Reason fromfirstprinciples. 2. Champion a vertically integrated team 3. Entrench leadership in design and engineering 4. Create a culture of innovation 5. Articulate a mission that motivates Slide 20:Innovation+ Integration:Performance +Design Now let’s talk about the car, Model S (I was hoping to speak about Model X, too, but I mostly know it as a sculptureof black masking tape at the moment). The car’s performance, too, starts with, whatelse, innovation and integration. For Tesla, it started with the critical decision to go all-in on all-electric – a fundamentally new approach to power and the power train. Tesla’s commitment in the Model S to an electric powertrain, hyper efficient packaging and performanceengineering make for incredible design opportunity.
  11. 11. Slide 21:Performance – LithiumIon, Thermally ManagedBattery Module Itall starts with the batteries. Let’s go back two decades. In 1995, auto battery technology had stagnated, with the prevailing technology being lead-acid batteries. These were defined by these highly enviable attributes: . shortlifespan . heavy in relation to volume . shortrange . but commonplace Tesla looked at the landscapeand decided they needed a fresh approach to auto batteries. But also that they couldn’tgo it alone, they couldn’tinvent a unique battery with limited application – it was simply too expensive. So Tesla to piggy-backed onto the economy of scale of the consumer electronics industry to usethe guts of a lithium ion laptop battery that was already being produced in the billions. Itwas the simple rethinking of an existing technology, put to new use. This little module, the guts of the system, drovethe whole thing. Systems-driven design. (Click) Can’twe think more this way? Whatcan we adaptin our practices? Slide 22:Performance – Thermally ManagedBattery Module So, they accomplished this with consumer electronics cells, 7,104 of them, assembled into 16 modules. Thermally managed and fire protected with intumescent goo.
  12. 12. Slide 23:Performance – Skateboardand Low CoG And they took all these and made a skateboard. They were able to deliver their battery packs for less than half the costof competitors who designed custom batteries. It's almostcounterintuitive to start with the part you can’t see to catalyze the wholedesign. But they did this with Model S. Slide 24:Performance – Skateboardand Low CoG The skateboard has performancebenefits in many ways. Itallows for optimized packaging - great spatial efficiency - for the car’s systems. The motor, inverter and gearbox sit directly on top of the axles, essentially a direct drive. Not only does it optimize their performance, this compact 3D packaging of systems creates spatial opportunity for the car cabin above. (Click) Wouldn’tour industriesoffer better designsif we dedicated our effortssimilarly, towardsoptimally efficient packaging? Slide 25:Performance – OptimizedPackaging So using all that electric power mass as a skateboard, and concentrating other elements to create spatial efficiency, leads to some exceptional outcomes: Model S has the lowest Center of Gravity of any production sedan 17.5” – supercar territory. The heavy battery creates a great dampening element for vibration and road noise – it’s also an exceptionally quiet car. The battery weight is evenly distributed front to rear, leading to stellar handling. Lack of engine allows for spaceframing the frontof the car – a light way to transfer forces and increase safety.
  13. 13. Slide 26:Performance – IntegratedSystems The integrated systems, packaging, and shellall intertwine to create the safestcar on the road. The car achieves 5 stars in all NHTSA crash tests, in fact scoring the highest ever in its occupant safety tests. Despite the sensationalstories froma year ago, Model S is more than 10 times less likely to catch fire than gasoline cars. Slide 27:Performance – Exceptional Envelope When you start adding all this up, you come to the inevitable conclusion – the Model S has a FormLanguage of Performance Tesla’s lead designer Franz Von Holzhausen says of the Model S’ design ‘it’s like an endurance athlete’, everything in balance, expressing purpose, athletic.’ (Click) Rather than chasing style and fashion, shouldn’ta form language of performance be one of our imperatives? Slide 28:Performance – Aerodynamics Perhaps that’s best revealed in the engineering of the car’s envelope and its aerodynamic efficiency. The skateboard allows the exterior shell, the body shape, to laser focus on aerodynamics. Aerodynamically, Model S has the lowestcoefficient of drag of any production car, a CoD of .24. Most significantly, the aerodynamics influence the range performanceof the Model S.
  14. 14. Slide 29:Performance – Language of Safety With lots of focus on aerodynamics, Tesla was able to offer a car with 275 miles in range, roughly 3 times their nearest competitor. As this graph shows, after 50 mph, power consumption is exponentially about aerodynamics. Since range is the typically largest issuefor many when considering the purchaseof an electric car, this focus on the car’s envelopewas key. Slide 30:Design – FormLanguage of Performance So when design is derived fromperformance, and performanceamplified by design, we arriveat a truly transformativespot. It’s design and engineering that are purposeful, meaningful, and memorable. Resonant. Integrated. It’s a spectacular outcome when design and engineering join to makethe whole more compelling. Slide 31:Design – FormLanguage of Performance Would I love this car as much if it was simply a golf cart that went 0-60 in 3 seconds? Itwould novel and interesting, but not compelling. Slide 32:Design – IntegratedDesign A car also must focus on the human body, ergonomics, human-centered design. The design of Model S considers this in highly integrated ways – all its pieces fuse engineering purposes with aesthetic resolution and contribute to an integral whole. The Door Handle – Oh the door handle, my favorite!!!Itsits flush to the body of the car when the car is in motion, improving aerodynamics over a projected handle.
  15. 15. But as you approach the car, it projects, it appears when needed (my wife would say, ‘sortof like a husband’), and reaches out to you, a first introduction. (Click) Shouldn’talldesigns be more abouthuman interaction than composition? Again, if we fully embraced that, whatmightwe achieve? Slide 33:Design – IntegratedDesign The car’s interior continues the design theme of ergonomic, sinuous shapes and continual flows, a spaceat rest yet somehow in visualmotion. Itreally starts with the car’s controls, which are not buttons and dials but essentially all embedded in the 17” Touchscreen – a consumer electronics paradigm, a technological fascia, refreshing design. Slide 34:Spatial Opportunity Overall, the interior is probably best described as opportunity space, created by that skateboard battery pack we discussed earlier. Down low, the flat floor creates opportunity. The rigid car structureallows for a glass cockpit up top, mixing with the silence and acceleration of the electric motor to really feel like you’reflying. Think of this – when I was a kid growing up, we were a family of five, I had two sisters. Guess who gotto sit on the hump in the middle of the back seat all the time? Sorebottom, knees in my chin. No more hump. In fact, the middle seat has the best view of the 17” screen! Just think of that - the worstseat in every other passenger car is now the best seat in the Model S. How cool is that?!?
  16. 16. Slide 35:Design Itcontinues with door pulls that happen simply by folding the door panels, repeated with the latch pull, and providing clever, unexpected storage. The panoramic roof, which allows for light and ventilation while creating a continuous expanse of glass that’s in keeping with the sweeping design gestures of the car. Charge Port– Like door handles, hides when not in use, part of the car’s safety reflector system. The headlights, with a distinctive eyelid profile, another favorite of mine, with LED technology accenting a crisp, linear look. All these, and many other pieces, a marriage of beauty and performance. Slide 36:Design – Holistic And the ethos of Model S extends beyond the car itself, creating a connected universefor the Tesla brand, a holistic ecosystemof holistic design. The Stores The Superchargers (we’llcome back to those) The keyfob Wine glasses (OK, I had those made). The experience of Model S is enhanced by the holistic approach to design and engineering. (Click) Why wouldn’twe all move to reclaim a more holistic approach in our efforts, in our work?
  17. 17. Slide 37:Design:Summary 1. Rethink on a systems level – adapt technology 2. Optimize packaging 3. Commit to a form languageof performance 4. Embrace human-centered design 5. Create a holistic ecosystemof design Slide 38:Innovation – Manufacturing In 2010, Tesla acquired the NUMMI Factory in Fremont, California. Previously jointly operated by GM and Toyota, Tesla was able purchasethe factory for pennies on the dollar. At over 5Msf, they’ll be able to manufacture500,000cars per year there when fully built out, sometime in the 2018-2020 timeframe. Acquiring such a large space and fitting it out allowed Tesla to approach manufacturing in innovative ways as well. Slide 39:Manufacturing – In-House Fabrication The first is Tesla’s ability to insourceapproximately 60% of their parts, with that number set to grow when they bring battery production back to the US next year. Most auto manufacturers basically maketheir engines and that’s it. There’s a reason that they operate on model years, they are ocean liners when it comes to changing directions. Not Tesla, they have literally improved the car’s hardware(physicalparts) dozens of times in the firstthree years. It’s a softwarenotion of upgradeability that they haveapplied to manufacturing. (Click) Shouldn’twe use digital technologiesto test and prototype?
  18. 18. Slide 40:Manufacturing – Highly Adaptable Robotic Assembly I have been on a factory tour twice, I highly recommend it to anyonewho can wranglea spot. The integration of these Kuka robots into production allows for things to be built and tolerances to be observed that justwouldn’tbe possible otherwise– the process of auto manufacturing informing the product. These adaptable robots allow Tesla to alter production as they implement improvements in the car. Not in model years, but as they are able to. And justas significantly, there are literally hundreds of engineers on the floor at the factory, right adjacentto production. An amazing, recursive loop of feedback fromone discipline to the other. (Click) How might we collaborate with othersto imagine a more efficient production process, one thatfeedsback to design? Slide 41:Manufacturing – Internally CodedSoftware Development Much like part manufacturing is dramatically more integrated at Tesla than conventional automakers, so is the softwarethat runs the factory and the car. Rather than buying 3rd party softwareand adapting it, Tesla has written their own, for the robots, for assembly, for diagnostics, etc. (Click) Should more of the value of whatwe do be embedded in writing code for to help us design?
  19. 19. Slide 42:Manufacturing – Gigafactory! By the end of this decade, Tesla expects to be producing and selling 500,000 cars/year. However, to supply batteries for a half million cars/year would require doubling the world’s production of lithium-ion batteries. How do you do that? The answer is Tesla’s Gigafactory, an enormous facility being built outside Reno that will at least double the world’s lithium-ion battery production, manufacturing 50 gWh of batteries per year. They think the economy of scale and in-housing battery production will drop battery costs by at least 30%, and that’s before technological advances are applied, which are on the order of magnitude of 5%-7%/year. (Click) Do we have an equivalent? Whatwill your Gigafactorybe? Slide 43:Manufacturing – Stationary Storage Products When batteries become produced at this scaleand their costs come down, they become very competitive in other applications, such as stationary storagefor residential, commercial, and utility customers. Tesla justannounced their firststationary storageproducts 2 months ago – Powerwalland Powerpack. The automotive useof batteries drovethe technological advances and cost reductions. This is going to dramatically accelerate the adoption of stationary storageand intermittent, renewable energy. It’s a virtuous circle. (Click) What related products or processes would impactyour industry similarly?
  20. 20. Slide 44:Manufacturing:Summary 1. Internalizeprototyping and fabrication 2. Initiate adaptable digital design and fabrication 3. Internally develop and code software 4. Pursuetechnological advances 5. Seek symbiotic opportunities Slide 45:Innovation – Sales and Service Lastly, we get to Tesla’s mostdirect interface with the public, with their clients, through sales and service. With their unique approach to design, engineering, and manufacturing, they could have said, “that’s good, that’s enough”. But to meet their mission, to accelerate the adoption of sustainable transport, Tesla needed to offer a fundamentally different approach to engaging their clients to breed brand loyalty and the best marketing they could hope for – passionateowners. (Some of whom, I understand, might even be here today…) Slide 46:Sales and Service –Direct toConsumer Sales In thosebeautiful stores of theirs, Tesla sells cars direct to consumers. Perhaps many of you have seen them. In someof the highesttrafficked malls in the country. They are really new-customer education centers, demystifying the company, the car, and the ownership experience for a skeptical general public. In thosestores – except in a few states – Tesla sells direct to consumers. There is no auto dealership involved. No added cost. (Click) When we think aboutour sales model, are we serving our clients best with our traditionalways?
  21. 21. Slide 47:Sales and Service –Continual Software Upgrade Tesla is covered on Wall Street by a number of automobile analysts. Recently, one made a dramatic claim – that today, 10% of the value of the automobile is in its software, butin 10 years 60% of its value will be. Guess which Silicon Valley based automobile company is best positioned to be the leader in this space? Many elements of automotive innovation can be migrated to software, wheretechnology accelerates much more rapidly as computing costs fall. So the software-centric Model S is the firstcontinually upgradeable car, and the firstwhereso much data aboutit is constantly being collected and analyzed to improve it. (Click) How can we harnessdata to improve our officesand projects? Slide 48:Sales and Service –Perpetual Product Improvement What exists in softwaresimilarly extends in hardware. Tesla is perpetually improving their product. If something can be improved, after testing, it’s implemented. Not in the next model year, but in the next time production can be reasonably adjusted. Improved seats. Better battery shields. Perhaps the biggest improvementhas been their introduction six months ago of the firstdual-motor, all-wheel drive. They did this not in a model year change, but in October when it was ready. It’s been an instanthit. (Click) How do we create an ability to perpetually improve our projects, post- occupancy?
  22. 22. Slide 49:Sales and Service –Autopilot Uber and Lyft– Driving services weorder fromthe palms of our hands. Someone else does the driving for us. What if that someone was your car? Perhaps the most dramatic hardwareand softwareupgradeto the ownership experience is Tesla’s integration of autopilot sensors into the car – cameras, radar, and sonar – and interpolation softwareto run them. It’s there in cars today, some of it functional but most of it awaiting regulatory approvaland a simple softwareupdate. In doing all of this, they give us back something very precious – time. (Click) Whatcan we put on automate to increase efficiencies? Slide 50:Sales and Service –Supercharging And finally, supercharging, Tesla’s fast, DCcharging stations that dot the country, really the world. It’s their effortto overcome ‘rangeanxiety’ that some people feel with battery electric cars. Charging at their superchargers is free to Tesla owners. It’s likeFord and Exxon got hooked up and you could go into any Exxon and get gas for free. So they took what was perhaps the car’s greatestperceived weakness and made it an amenity – free supercharging. (Click) The question for us is, whatare our perceived weaknesses – and how can we turn them into our strengths?
  23. 23. Slide 51:Sales + Service:Summary 1. Question antiquated delivery methods 2. Continually upgradethe user experience 3. Perpetually improveproducts and service 4. Automate the mundane to open up opportunity 5. Make a perceived weakness a strength Slide 52:What’s Next for Us I come back to a sentence in a letter I received a few years back fromthe Department Head in the College of Architecture at Cal Poly, San Luis Obispo, my alma mater, extolling the virtues of an architectural education. In it he remarked that true architecture resides where the intuitive and the artfulmeet the scientific and the demonstrable. I think of this often when I think of Tesla and Model S, and how they operate at the intersection of innovation and integration. Itwas pretty hard for the automotive industry to see this 10 years ago, but these ideas were crystalizing among a few leaders at Tesla. Slide 53:The Intersectionof Design+Performance:The TeslaMotors Lesson What can’t we see that’s 10 years in front of us? And who among us will see it? Will our professions and industries havesimilar leaders? Fortunefavors the bold – let’s go forth and be brave. Slide 54:Thank you.

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