Tesla produced about 1.84 million vehicles in 2023[1]. The Model Y sells for what plenty of families pay for a new car. Pagani, an Italian luxury sports-car maker, produced roughly 40 cars in 2023[2]. Pagani's prices start in the millions of dollars, with final pricing customized per car[3]. Both are profitable. Both are correct for their market.

The difference lives in the production process: how they actually make cars. It comes from 3 factors every business has to weigh before deciding how to produce.

Factor 1: what customers actually want

A production process is how a business turns raw materials and labor into a finished product. The first input to the choice is what customers prioritize.

  • Tesla buyers prioritize getting an EV at a price they can finance. They want consistent quality, fast delivery, and software updates. They don't expect the car to be unique to them.
  • Pagani buyers prioritize having something unique. They expect customization down to the stitching color, the paint, the materials. They'll wait years for the car if it's exactly what they wanted.

The customer priorities determine the rest. Tesla can't cater to 40 buyers a year, and Pagani can't deliver 1.8 million identical cars.

Factor 2: what the business is actually good at

The second input is core competencies. Tesla's strength is manufacturing engineering at scale, across Gigafactories built to turn out vehicles by the hundreds of thousands. Their competency is volume.

Pagani's strength is precision craftsmanship. Each Huayra is built from thousands of components, many machined or finished by hand instead of assembled by robots. Pagani's competency is detail.

A company can't usually win on both dimensions. Pick the one your team is actually built for.

Factor 3: the competition

The third input is who else is in the market and how they're competing.

In the mass-market EV space, Tesla is fighting Hyundai, Kia, GM, BYD, and Ford on price and capability. Mass production is the only competitive option. A boutique EV maker producing 200 cars a year couldn't fund the R&D that mass production requires, and even if it could, competing on price isn't their brand value.

In the ultra-luxury space, Pagani is fighting Bugatti, Koenigsegg, and other tiny producers on uniqueness and prestige. Mass production would actively destroy the brand. The exclusivity is the product.

Artisan vs. mass production

Most production choices land somewhere on a spectrum between 2 ends:

  • Artisan production uses skilled labor, attention to detail, and individual customization. It produces fewer units at higher price points. Pagani, Le Creuset cookware, hand-stitched leather goods, custom-made furniture.
  • Mass production uses technology, assembly lines, and machinery to make a high quantity of units at lower price points. Tesla, Ford, smartphone manufacturers, McDonald's.

Sometimes a single company runs both. Apple mass-produces millions of iPhones; their custom Apple Watch leather bands are partly hand-stitched. The choice often varies by product line within a company.

Quick recap

  • Production process = how a business turns raw materials and labor into a finished product.
  • 3 factors shape the choice: customer priorities (quality/price/customization), business core competencies, and the competition.
  • Artisan production = skilled labor, fewer units, premium pricing.
  • Mass production = technology and assembly lines, higher volume, lower per-unit price.

Try this week

Pick a product you own (a phone, a pair of shoes, a backpack). Search "[product name] manufacturing" or "[product name] factory." Most products are mass produced. A few are artisan. Then ask: would the artisan version be better, or just slower and more expensive? The answer reveals what you actually value as a customer.

References

  1. Tesla 2023 vehicle production ~1.84M units (1,845,985 produced; 1,808,581 delivered). Data as of FY2023 (Q4 2023 production and deliveries report). Source: Tesla Q4 2023 production and deliveries press release Pg 8. digitalassets.tesla.com/tesla-contents/image/upload/IR/TSLA-Q4-2023-Update.pdf
  2. Horacio Pagani, the company's founder, said in an interview: "We produced around 40 cars in 2023." Data as of March 4, 2025 interview. Source: Evo, "From Zonda to Utopia: Horacio Pagani reveals the secrets to hypercar success." evo.co.uk/pagani/207673/horacio-pagani-on-the-secrets-to-hypercar-success
  3. Pagani's Utopia Roadster starts at €3.1 million, excluding local taxes; final pricing is customized per car. Data as of August 2026. Source: Pagani Automobili official site. pagani.com/utopia-roadster

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