Tesla has never made cars the normal way
- Reports have emerged suggesting that Tesla isn't yet mass-producing its Model 3.
- But CEO Elon Musk has countered with evidence that the company is using robots to execute body welds.
- Regardless of what's really going on, Tesla isn't trying to emulate accepted manufacturing practices.
Tesla is struggling to hit its production goals for the Model 3, the company's first mass-market car.
CEO Elon Musk predicted that Tesla would build 1,500 Model 3's in September, but the company managed only 260 for the third quarter, falling well short.
This set off rounds of speculation about what's going on inside Tesla's Fremont, CA factory. The Daily Kanban, an auto-industry news-and-analysis site, reported the Model 3's body line is still being completed, and the Wall Street Journal added to the fire with its own report about elements of the Model 3 being hand built.
Musk countered these reports by posting on Twitter and Instagram a video of the Model 3 body line in action, with multi-million-dollar robots executing precise welds.
So it's actually rather difficult to figure out exactly what's going on with Tesla Model 3 production process. By the numbers, the company is well behind its objective, citing "bottlenecks." And while there do not appear to be any major problems with the supply chain, Musk's target of 20,000 units rolling off the assembly line by December now looks unlikely.
That said, the CEO did declare at a Model 3 handover event in July that the carmaker would be entering "production hell" for the Model 3, just as it endured manufacturing Hades for the Model X SUV in 2016.
It is unusual for a major automaker to launch a much-touted car - and in Tesla's case, one that has something like 500,000 pre-orders, an unprecedented figure - and immediately struggle to build it. For the Model 3, production is all-new, but as Musk has repeatedly said, the vehicle was designed for volume manufacturing. It's supposed to be easier to build than the Model S sedan and the Model X.
The Wall Street Journal's Tim Higgins got some insight from Doug Betts, an auto-industry veteran who most recently worked on Apple's mysterious car program, Project Titan, before it was reorganized. Betts reiterated that a big car company would run a new production line for half a year to make sure it has been engineering properly.
But Tesla skipped this stage so that official deliveries of production Model 3's - as opposed to pre-production vehicles - could commence in 2017 and reach mass-market volumes by 2018, when Musk wants the company to be building 500,000 vehicles annually.
At this point, it looks like Tesla is able to stamp body panels - the company owns huge stamping machines - and put them on the body line to weld, using robots. It's possible that some other, more highly automated assembly line technology has been slow to arrive and could represent the bottlenecks the company has blamed. Importantly, Tesla should be able to build 100,000 Model S and Model X vehicles in 2017, so it's not as if the company has no idea what it's doing.
I suspect Tesla is running its Model 3 line in roughly the same manner than Ferrari builds almost all its cars. I toured the Ferrari factory in Maranello, Italy earlier this year and saw the exotic sports cars moving along the assembly line at a relatively stately pace, snaking from section to section.
Welded bodies arrive on the line from a separate location and are then completed: wheels, drivetrains, dashboards, and various other systems are installed, almost entirely by hand, and the pace isn't torrid. But Ferrari is aiming to produce less than 10,000 cars a year. And with vehicles starting out at $200,000 apiece, this bespoke approach adds value.
But Ferrari isn't experimenting with production, whereas Tesla is striving to automate as much of it as it can. In fact, the company's next vehicle, the Model Y compact SUV, could further that objective. For now, Tesla appears to be running a sort of ongoing beta-test with the Model 3, counting on investor and customer patience.
And patient they are. Tesla stock has been sliding a bit, but at $350 per share, it's still up 63% for the year. So if you're betting on Tesla, you're wagering that the company can continue to get away with doing nothing the normal, accepted way.