Tesla's Feverish Production Drive Sometimes Means Partial Assembly at Stores: Report

Never has the air of breathless futurism surrounding Tesla taken such a hit. Following a revealing earning report and numerous reports of continuing production bottlenecks, this week wasn’t a good one for either Tesla shareholders or Model 3 reservation holders.

The electric automaker pushed back its 5,000-vehicle-per-week goal to the end of the first-quarter of 2018, rather than the end of this year. Its 10,000-vehicles-per-week goal remains a question mark. Tesla also announced a decrease in Model S and X production to bolster resources for Model 3 builds. In reporting a quarterly loss of $619 million, Tesla made it clear it’s burning through piles of cash in an attempt to smooth out production line hurdles.

Now, a new report sheds light on the frenetic activity occurring inside its Fremont, California factory. One of the claims certainly won’t soothe those worried about a long-standing Tesla concern: build quality.

In a report published by Britain’s Financial Times (subscription required), several people with knowledge of Tesla’s inner workings paint a picture of an all-hands-on-deck operation. The activity isn’t relegated to the company’s Fremont plant, either.

After visiting Fremont in recent weeks, two sources report seeing workers manually operating state-of-the-art automated Kuka robots purchased by Tesla to speed up assembly. Recent job postings point to Tesla’s need for robot programmers, long after Model 3 production actually kicked off.

“I have never seen so much manual labour on a line,” said a source with extensive plant inspection experience.

Other sources report after-the-fact design changes to certain components — something that jibes with a claim we heard recently. One person involved in the supply chain (of which Tesla CEO Elon Musk says there’s no problem) told FT that Tesla requested speedier production of a part, only to change the design once the supplier was in the midst of installing the necessary tooling.

“Tesla kept saying ‘you need to make it faster’,” the source said. “But any time you make changes [to the design], you go back to the start of the process.”

There’s no doubt that a quick and efficient assembly line, maybe even an industry-leading one, can emerge from the right amount of technology and expenditure. This is Tesla’s goal. However, it’s a better idea to have everything in place before production begins, especially on a vehicle viewed as a make-or-break product. Initial quality isn’t a minor thing, especially for a product that stands on a mountain of hype.

That brings us to the most glaring element of FT’s report — the claim, corroborated by a former regional executive, that Tesla ships unfinished some vehicles to Tesla stores for final assembly. Outside the confines of Fremont, seats, computer modules and media screens are installed via parts shipped to those locales, the sources claim.

“This goes back years,” said the unnamed executive. “It was common, common in every market — the seats, the displays were being flown in.”

Early examples of the Model S, and especially the Model X (plagued with door demons from the outset), led to quality concerns about Tesla products. It’s still common to see photos on social media of misaligned trim and doors. Such issues can’t occur on the mass-market Model 3, regardless of what brand diehards say on Reddit, as bad word of mouth and recalls can sink a company’s fortunes. Tesla’s already operating in the red — the Model 3 is meant to be its ticket to profitability.

The practice stems from some vehicles coming off the assembly line incomplete due to supply issues, two sources claim. By installing major components outside the factory, even via Tesla-certified personnel, the vehicles lose that quality control link to the assembly line.

During this week’s earnings call, Musk claimed the company is moving as fast as it can to build Model 3s. Certainly, this week’s revelations expose the danger of making share price-boosting promises that aren’t likely to fly in the real world. However, the FT report (and others) suggest the production process surrounding the car, as well as the vehicle itself (until recently, at least), is still an unbaked cake.

“Tesla can bring in the smartest people, but then if they are told to do what the boss wants it’s just wasted expertise,” a former Tesla senior director remarked.

[Images: Tesla]