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Vertically Integrated Supply Chain of Batteries, Electric Vehicles, and Charging Infrastructure: A Review of Three Milestone Projects from Theory of Constraints Perspective

Author

Listed:
  • Michael Naor

    (School of Busines Administration, Hebrew University, Jerusalem 9190501, Israel)

  • Alex Coman

    (School of Computer Science, Academic College of Tel Aviv-Yaffo, Tel Aviv 61000, Israel)

  • Anat Wiznizer

    (School of Busines Administration, Hebrew University, Jerusalem 9190501, Israel)

Abstract

This research utilizes case study methodology based on longitudinal interviews over a decade coupled with secondary data sources to juxtapose Tesla with two high-profile past mega-projects in the electric transportation industry, EV-1 and Better Place. The theory of constraints serves as a lens to identify production and market bottlenecks for the dissemination of electric vehicles. The valuable lessons learned from EV1 failure and Better Place bankruptcy paved the way for Tesla’s operations strategy to build gigafactories which bears a resemblance to Ford T mass production last century. Specifically, EV1 relied on external suppliers to develop batteries, while Better Place was dependent on a single manufacturer to build cars uniquely compatible with its charging infrastructure, whereas Tesla established a closed-loop, green, vertically integrated supply chain consisting of batteries, electric cars and charging infrastructure to meet its customers evolving needs. The analysis unveils several limitations of the Tesla business model which can impede its worldwide expansion, such as utility grid overload and a shortage of raw material, which Tesla strives to address by innovating advanced batteries and further extending its vertically integrated supply chain to the mining industry. The study concludes by sketching fruitful possible avenues for future research.

Suggested Citation

  • Michael Naor & Alex Coman & Anat Wiznizer, 2021. "Vertically Integrated Supply Chain of Batteries, Electric Vehicles, and Charging Infrastructure: A Review of Three Milestone Projects from Theory of Constraints Perspective," Sustainability, MDPI, vol. 13(7), pages 1-21, March.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:7:p:3632-:d:523605
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    References listed on IDEAS

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