Guide 06 of 10

Teardown and benchmarking

The best way to find out what a function should cost is to look at a competitor who already does it for less. This guide shows how to take their product apart and learn from it.

By Avinash Bhosale · Updated · 2 min read

What a teardown looks like, in two stages

This is how a teardown team sees a vehicle. First it comes apart into nine main sections, then each of those opens up into parts you can count, weigh and cost. Just scroll: the vehicle comes apart as it reaches the middle of your screen, and goes back together as you scroll on.

1

Buy and record

Buy the competitor’s products, then photograph, weigh and measure everything before you undo a single screw.

2

Take it apart step by step

Take it apart one level at a time and time each step. Reversed, the way it comes apart shows how much it costs them to assemble.

3

Record every part

Log every part: its material, weight, how it was made, supplier markings, clues about the tooling, and how many fasteners it uses.

4

Estimate each part’s cost

Work out what each part should cost the competitor to make. Comparing line by line shows exactly where your costs are higher.

5

Turn findings into ideas

Compare your product and theirs function by function, and feed the results into the creative phase. For each good idea, decide whether to copy it, adapt it or go one better.

Six ways to compare products

Cost benchmarkingCompare what each part should cost with competitors and the best factories.
Functional benchmarkingCompare how much performance you get for the money, such as torque, light output or capacity per pound, rather than the raw figures.
Design benchmarkingCompare how products are put together: the layout, how many parts are combined, the materials used and how parts are fastened.
Process benchmarkingCompare how the best factories make it: how much is automated, cycle times, yield and layout.
Feature benchmarkingCompare which features competitors offer at each price point, to see who gives away too much and who charges too little.
Patent & IP benchmarkingLook through patents for expired ones you’re free to use, and current ones you’ll need to design around.

From current cost to target cost

An example of how savings add up on a benchmarked product

Current cost
100
Design levers
−8
Material levers
−4
Manufacturing levers
−4
Sourcing levers
−5
Logistics & complexity
−2
Target cost
77

This is an illustration of a 23-point saving. In a real programme, each step is built up from checked ideas, each with an owner and a date.

5–10×typical return in the first year from a teardown study
1,000+vehicles in the paid teardown databases carmakers use
±15%typical accuracy of a competitor cost estimate, still close enough to show the gaps
6ways to compare, because price alone tells you very little
Documented case

A teardown that changed what carmakers thought was possible. In 2024, the engineering firm Caresoft took apart BYD’s Seagull, a city car selling for around $12,000. Western carmakers studied the results closely: the car was profitable and used far fewer parts than they expected. In 2020, Munro’s public teardown of the Tesla Model Y did something similar, showing the whole industry Tesla’s large one-piece rear casting. Any product on sale can be studied this way, and the best companies do it.

Learn teardown in depth in Module 10 →

Try it

Teardown BOM Capture Sheet

Learn it properly

Module 10 · Teardown & Benchmarking

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