Elon Musk on Basic Economics

Elon Musk explains the basics of economics from a perspective of a passionate space lover and a rocket maker. Seems hard to understand? Keep on reading to get more information as this story is a story that succeeded in bringing future so is in understanding of basics of economics.

Elon Musk on Basic Economics

Elon Musk on Economic Fundamentals

 When it comes to creating a business, Elon Musk uses some of the most basic economic ideas. You aren't necessarily attempting something novel. You're making an effort to do the right thing. Musk made the most of his first wealth in 1999 when he invested in PayPal.


 He essentially intended to take all of the money and invest it in a large publicity effort for SpaceX. He did, however, have a problem. It was far too costly. The launch was extremely expensive, and he couldn't figure out how to carry it out when he sought to buy Russian ICBMs with a dismantled mask. But he made a discovery. The space launch industry was bracing for a shake-up, to give the company the basic and early ingredients for manufacturing, rocket parts had to be obtained externally from other companies in the same area.


However, each component provider had its own component, which was the manufacturer of the product. Vendors were responsible for development and manufacturing costs. To make a profit, they needed to sell parts at a profit margin. This means that by the time the components arrive at the corporation, the rocket is already constructed. Not only that, but the assembly company must compensate the workers in order for them to comprehend how all of the many parts interact.


We can make cheaper parts because we manufacture 85 percent of the parts we use in-house. If SpaceX buys a radio remotely, for example, it will spend $ 50,000 to $100,000 per unit. However, because they are designed in-house, a significant update costs only $ 5,000 per unit. Tesla's business strategy is remarkably similar to SpaceX's. Tesla accounts for nearly 80% of the 5,300 parts used in Tesla automobiles. However, in the vast majority of cases, it does not result in the creation of a battery. Batteries are extremely difficult to produce and sell at a reasonable price. Few firms produce the three big manufacturers of Panasonic Sonic BYD and LG, which together account for 63 percent of all Tesla batteries in the world. In the past, you could buy a battery from Panasonic for around $ 200 per kilowatt-hour. However, this necessitates a 50kWh version of Tesla's smallest battery. Only the components are worth $10,000. When trying to sell a $ 35,000 automobile for a profit. This is a significant expenditure that can be cut. However, cutting the battery price to less than $ 100 per kilowatt-hour doubles the range or doubles the cost of the battery pack at 50-kilowatt hours, but Tesla and SpaceX's vertical integration isn't flawless.


Family-Based Company

Basically, a company needs to learn and complete every step of the manufacturing process, and if one step does not work, for example, a car will not be manufactured. Like the modified S and x models, the affordable Tesla Model 3 was made of steel instead of aluminum. Manufacturers find it difficult to weld the body properly. While the entire production line has slowed significantly, Xspace has something more unique, and Tesla now has a production line in the United States.




Conclusion

SpaceX makes 85% of its components in-house, allowing it to take a bite out of costs. But it’s reusable rockets that will really redefine the economics of space travel. Once SpaceX is recycling rockets for commercial launches on a regular basis, it expects to be able to launch payloads at a price that’s 10 times cheaper than anything the While taking control of its supply chain enables Tesla to squeeze out some costs, the truly dramatic cost reductions that the company is counting on will have to come from the component that’s unique to an electric vehicle: the battery. This method of production encourages recycling and re-usage of components. It can be used in any company, not just the one mentioned in the article. That way one can ensure to lower the costs of new material and achieve bigger and greater results in the production area. 


References

WEB: Youtube - Elon Musk's Basic Economics, 1 ... https://www.youtube.com/watch?v=h97fXhDN5qE

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