Speed hurts quality at Tesla, workers say
After Tesla's Model S sedans and Model X SUVs roll off the company's Fremont, California assembly line, the electric vehicles usually make another stop - for repairs, nine current and former employees have told Reuters.
The luxury cars regularly require fixes before they can leave the factory, according to the workers. Quality checks have routinely revealed defects in more than 90 percent of Model S and Model X vehicles inspected after assembly, these individuals said, citing figures from Tesla's internal tracking system as recently as October. Some of these people told Reuters of seeing problems as far back as 2012.
Tesla Inc (TSLA.O) said
its quality control process is unusually rigorous, designed to flag and correct the tiniest imperfections. It declined to provide post-assembly defect rates to Reuters or comment on those cited by employees.
The world's most efficient automakers, such as Toyota ( 7203. T), average post- manufacturing fixes on fewer than 10 percent of their cars, according to industry experts. Getting quality right during initial assembly is crucial, they said, because repairs waste time and money.
At Tesla "so much goes into rework after the car is done ... that's where their money is being spent," a former Tesla supervisor said.
The Silicon Valley automaker said the majority of its post-assembly defects are minor and resolved in a matter of minutes.
Tesla has enthralled consumers with sleek designs, clean technology and legendary acceleration on its pricey cars. A Consumer Reports survey found 91 percent of Tesla owners would buy again.
Still, the magazine and market researcher J.D. Power have dinged the company on quality, citing troubles such as faulty door handles and body panel gaps. Bernstein analyst A.M. (Toni) Sacconaghi, Jr. testdrove one of the company's new Model 3 sedans earlier this month, writing that the fit and finish were "relatively poor." Tesla owners have complained on web forums of annoying rattles, buggy software and poor seals that allow rainwater to seep into the interior or trunk.
Auto industry experts say the company's survival now depends on its ability to crank out high-quality cars in volume as it begins to build its first mass-market car, the Model 3, which starts at $35,000.
Tesla has never turned an annual profit and is burning through $1 billion a quarter. That is unsustainable without fresh cash or a big increase in sales to mainstream customers who may prove less forgiving of potential defects.
"We've never doubted Tesla's ability to make exciting products with top specifications, but there's a difference between unveiling something and then actually making it perfectly in large volume. Tesla has not perfected the latter yet," Morningstar analyst David Whiston wrote earlier this month.
Musk has vowed Tesla would become "the best manufacturer on Earth," helped by a new, highly automated assembly line and a sim- pler design for the Model 3. However, production woes have slowed deliveries of the much-anticipated sedan.
Snags are normal with any new launch. But chronic defects with Tesla's established Models S and X show a company still struggling to master basic manufacturing, workers said.
Known as "kickbacks" within Tesla, these vehicles have glitches as minor as dents and scratches to more complex troubles such as malfunctioning seats. Easy fixes are made swiftly on the factory floor, workers said.
Trickier cases head to one of Tesla's outdoor parking lots to await repair. The backlog in one of those two lots, dubbed the "yard," has exceeded 2,000 vehicles at times, workers told Reuters.