They already do chip design.

You could s/chip/battery/ and make the same incredulous statement 5 years ago

Or upholstery, or charging infrastructure, or casting equipment, etc.

Tesla had the capital to go as vertical as they want.

Tesla doesn't makes their own casting equipment (yet?). They do custom order the largest presses built by Idra Group in Italy (owned by a Chinese company) though [1].

[1] https://en.wikipedia.org/wiki/Giga_Press

No - I mean manufacturing. At a certain level of demand it could make sense, especially if the classes of devices you seek to produce are heterogeneous in their engineering - aerospace vs phone vs car.

The other advantage with vertical integration through the manufacturing piece is turn around time on new designs. It is a lot faster/easier to spin new test lots for speculative designs when everyone works for the same org.

They're apparently already in chip design, so surely he means manufacturing as the potential new business line?