Production on Tesla’s Model 3 having growing pains
SAN FRANCISCO — When Elon Musk talks about the future of factory automation at Tesla, he envisions new breeds of robots and smart machines compressed in dense factories with little room for human operators, guided by self-learning software.
“At the point at which the factory looks like an “alien dreadnought” — a nod to a video game spaceship — “you know you’ve won,” Musk has told investors.
But so far, the manufacturing of Tesla’s new all-electric compact sedan, the Model 3, at its Fremont factory is moving at a more earthbound pace.
When Musk launched the car at an elaborate stage show in July, Tesla was anticipating a production rate of 20,000 Model 3s a month by the end of December. Over three months through September, though, Tesla had produced only 260 Model 3s — about three cars a day. That’s well behind a normal auto-industry production pace of about one car per minute.
The company blamed manufacturing “bottlenecks,” without saying what they are. It promised a quick fix, and contested a report in the Wall Street Journal that said the assembly line remained incomplete by early September with some body parts nor- mally installed by robots being employee-assembled by hand.
Still, the “production hell” that Musk acknowledged in a tweet raises questions about whether the Silicon Valley model he has followed — beta testing with early adopters and launching updates via software — can be adapted for Tesla’s first massmarket product.
Musk needs to fix things, fast. Demand for the car appears strong. The company intends to sell about 400,000 Model 3s in 2018 to customers who have placed deposits and depend on the cash flow from those vehicles to keep the thus-far profitless company running.
“This is a critical juncture for Tesla,” said David Keith at the MIT Sloan School of Management. “They need to convert 400,000 orders into 400,000 happy customers.”
Tesla declined requests to interview Musk or a manufacturing executive.
Silicon Valley is all about disrupting old industries: Uber with the taxi business, Google and Facebook with advertising and journalism, Amazon with retail. Musk, a native South African who earned a fortune in Silicon Valley as a co-founder of PayPal, hasn’t yet disrupted the auto industry. But the success of Tesla’s luxury Model S and Model X automobiles, with their all-electric powertrains, self-drive feature, and over-the-air software updates, has woken up incumbent automakers to the emergence of electric, autonomous and connected transportation.
Yet the Model S and Model X production has yet to exceed 100,000 automobiles a year, combined — a speck in a global market where 88 million passenger cars and trucks are sold.
“Automobile manufacturing is very hard,” said Uday Karmarkar, a specialist in operations and technology at the UCLA Anderson School of Management. “It’s amazing that Tesla has been able to build cars at all.” He meant it as a compliment.
Tesla was founded in 2003. Its first product was an electric roadster, based on a platform from British sports car maker Lotus. It was a hit.
Then came the Model S sedan in 2013, which made Tesla a household name. The full-sized sedan was sleek and powerful. It won high praise from Consumer Reports and other publications. Auto reviewers gushed.
MIT’s Keith owns a Model S and loves it. “It’s quiet, it’s fast, it’s smooth, it’s such a delight to drive,” he said.
Tesla took the Model S from design to full production faster than traditional manufacturers would consider. Tesla’s breakthrough over-the-air technology made software fixes a snap. Code to fix battery management issues, add self-drive features, or simply tweak the music system can be downloaded via the car’s WiFi system.
Still, many owners complained that there were more quality problems than they expected in a $90,000 car. Outside a private school in Oakland earlier this month, a parent waited for his child beside a spotless gray Model S. When asked how he liked the car, he shook his head. “It’s mainly my wife’s car. She loves it. I love the way it drives, it drives better than anything I’ve ever driven. But there are all these rattles and noises.” To cover them up, he plays the music at high volume, said the driver, who declined to give his name.
The Model X sport utility vehicle, launched in 2015, was also considered great fun to drive, with astonishing 2.9-second acceleration from zero to 60 mph. It, too, was fast-tracked to production — and was riddled with quality problems, especially with its exotic gull-wing doors. “They’re still trying to work out the bugs in that vehicle,” said Mike Ramsey, auto industry analyst at Gartner.
Musk copped to the problems and said lessons were learned that would make the Model 3 process better. He told designers to put ease of manufacturing at the top of the requirements list.