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Here’s a story from left field that we didn’t see coming! Tesla has jumped ahead of the auto industry in vehicle production time and costs in the past few years through the use of larger and larger castings for vehicle bodies. The Tesla Cybertruck is supposed to be a pinnacle of “gigacasting” — that’s the idea, anyway. Tesla may have just hit a setback on this path, though, or maybe it’s just a small speed bump. We’ll see.
Reportedly, there are four companies Tesla has been leaning on for casting. Tooling & Equipment International (TEI) is one of those top suppliers, and it started working with Tesla in 2017 to develop and produce the Model Y. In case you missed it, this vehicle model has been a whopping success globally, proving so popular that it is on track to being the highest selling vehicle model (of any powertrain) in 2023. How much of that has come down to TEI’s efficient, cheap (if we can call it that) casting process. Errr, I guess we should now say GM’s efficient, cheap casting process.
The good news for Tesla is that it has three more casting suppliers. But that probably also means less competition and higher prices.
“By snapping up a specialist in sand casting techniques that accelerated the development of Tesla’s gigacasting molds and allowed it to cast more complex components, GM has jump-started its own push to make cars more cheaply and efficiently at a time when Tesla is racing to roll out a $25,000 EV, [four individuals familiar with the deal] said,” Reuters reports.
GM seems to be taking a page out of Tesla’s book not just in terms of large castings, but also in terms of vertical integration. That is something Tesla has been famous for bringing back into fashion, in OG Henry Ford style. One has to wonder why Tesla didn’t buy TEI or another casting supplier before GM, but perhaps the company leadership just felt they were getting a good enough deal and didn’t want to get involved in another aspect of the vehicle production process.
Whether or not Tesla was blindsided by this acquisition is also not clear. Does this throw a wrench into Tesla’s production plans, whether they be with the Model Y, the coming Cybertruck, or the next-gen affordable (~$25,000) EV? We don’t have confirmation of that, but there are hints of it. “Tesla is scrambling to find another sand casting specialist to fill the role TEI performed, or even develop such crucial expertise in-house to cut its reliance on outside suppliers, the people said.” Furthermore, “According to all four sources, TEI began helping Tesla around 2017 to develop the Model Y and is considered in the industry to be one of the world’s top sand casting specialists.”
The three remaining casting specialists Tesla has been using are in the UK, Japan, and Germany.
I can’t see this as good news for Tesla, while GM seems to have played the game like a boss. However, like I said at the top, it’s not clear if this presents a huge problem for the gigacasting pioneer or simply a speed bump. Stay tuned.
As far as GM goes, it has worked with TEI at least since 2021, when it tapped the casting specialist to build a part for the company’s $340,000 Cadillac Celestiq EV, a not-so-cheap electric vehicle soon to be produced in Michigan. “TEI won the 2023 Casting of the Year award from the American Foundry Society for those Celestiq castings.”
This is an impressive move from GM. Like a boss.
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