Elon Musk Gave The Geekiest Critique Of 'Vertical Integration' We've Ever Heard

Tesla announced second-quarter earnings yesterday and beat Wall Street’s expectations. After the markets closed, CEO Elon Musk and CFO Deepak Ahuja conducted a call with analysts.

The company’s proposed Gigafactory (or gigafactories — it’s unclear whether Tesla will build just one) was a hot topic of discussion.

UBS analyst Colin Langan asked Musk whether the facility would be “highly vertically integrated” or whether Tesla would “probably outsource more,” Musk slipped into one of the charmingly geeky explanations that he’s prone to:

[T]he thing that would make us really efficient — or for any given technology level, is to say, how far did that molecule move? And if the molecule is taking several round trips around the world, that’s expensive. If it’s just moving from one station to the next, then that’s obviously lower cost. And so the vertical integration just means that the molecule doesn’t move as much and it’s not being put in a box and then put in a truck and then on a boat, and then, you know, going through customs and stuff like that.

You have to admire the mind of an entrepreneur who thinks about how to save money at the molecular level!

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