By on November 3, 2017

tesla model 3

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.

Tesla Model 3

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]

Get the latest TTAC e-Newsletter!

43 Comments on “Tesla’s Feverish Production Drive Sometimes Means Partial Assembly at Stores: Report...”


  • avatar

    At this point it’s kind of a shame. I like the S and I think Tesla can do great things but I think the Hubris of their leader may be biting them in the Ass.

  • avatar
    dukeisduke

    I don’t get why they don’t just farm out some of the assembly, to someone like Valmet Automotive. When it comes to assembling cars, Tesla is clearly in over its head.

    • 0 avatar
      JimZ

      it’s not even just their ineptitude at final assembly, it’s all of the churn they’re putting suppliers through with the constant tooling changes the article mentions.

      Car companies don’t change stuff frequently because once you’ve built the hard tooling, it’s incredibly disruptive and expensive to change it.

      I know a couple of people who work for companies supplying Tesla. They’ve constantly said how unbelievably unrealistic and borderline clueless Tesla’s demands have been.

      • 0 avatar
        carlisimo

        “I know a couple of people who work for companies supplying Tesla. They’ve constantly said how unbelievably unrealistic and borderline clueless Tesla’s demands have been.”

        I know people at the Tesla plant in Fremont and they feel the same way. They were struggling even before the Model 3 started production.

      • 0 avatar
        APaGttH

        …I know a couple of people who work for companies supplying Tesla. They’ve constantly said how unbelievably unrealistic and borderline clueless Tesla’s demands have been…

        You mean retooling for manufacturing production isn’t as simple as changing a few lines of code in a program? Who’d a thunk!

    • 0 avatar
      montecarl

      Good idea or a Company like Magna

    • 0 avatar
      stuki

      If they’re in over their head, it’s because of unrealistic expectations. IOW, noone can currently do what they are attempting, on time and on budget.

      It’s not as if Tesla employees are some undifferentiated bunch of incompetents, doomed to fail at something Valmet et al could do just for the asking. But rather that the reason none of the other automakers are attempting what Tesla is attempting, is because what Tesla is attempting is akin to landing Musk on Mars on a shoestring budget. It just MAY be possible, but noone knows for sure yet, and noone else view the risk/reward of attempting it worth pursuing.

      • 0 avatar
        anomaly149

        @Stuki, there’s almost nothing Tesla is doing that the other automakers can’t. Everyone’s had a turn with electronic door latches, everyone can play with thousands of laptop batteries, everyone can make a standard metal body and stuff it with a standard interior/seats, everyone knows what a touchscreen is, etc.

        The big difference is other automakers demand that every single vehicle sits on one of three categories: 1. be independently profitable (e.g. the Impala), 2. bolster the overall brand quantifiably to increase profitability of all products (e.g. the Ford GT, Chevy Bolt), or 3. serve in a regulatory capacity that enables other parts of the business to continue operating (e.g. Fiat 500e)

        Tesla is currently losing its shirt on every single vehicle it builds, and the Model 3’s profitability is far from a sure thing. That ain’t a cash burn most other automakers are currently interested in. (Though with the price of batteries dropping, more and more are getting interested)

  • avatar
    JimZ

    from a similar article elsewhere:

    “In a statement, a Tesla spokesperson said that, ‘Unlike other car companies, which do not change their cars for at least a year at a time, Tesla is constantly improving its cars with over-the-air updates and often design and hardware improvements.\'”

    they’re actually trying to spin this as a *good* thing.

    Wow.

    of course their fan base will eat it up.

    • 0 avatar
      FreedMike

      Well…

      OK, it’s bad that they’re basically redoing the design as they go, but at least they’re redoing it.

    • 0 avatar
      jalop1991

      So now we’re back to the 1700s and early 1800s, where each gun was handmade and parts were not interchangeable.

      Yeah, I can’t wait to see how this parts change process gets tracked and managed as time goes on, for repair purposes. “Why won’t this widget go in there? Oh, wait–this unit uses widget 1.0a3. All we have on hand is 1.0a5. I think they used 1.0a3 on only 13 cars before they changed it…”

    • 0 avatar
      jpolicke

      That concurrent design/production technique has done wonders for the F-35 program’s costs and progress.

    • 0 avatar
      Art Vandelay

      Ironic because if the model S wore any other badge on the front reviews would be starting to refer to the design as “long in the tooth”

    • 0 avatar
      anomaly149

      “Continuous Improvement” is a great thing, but it’s a process that’s built in a very structured way. It’s not shooting from the hip. Tesla is doing this very poorly by any standard.

  • avatar
    cdotson

    The more I hear about Model 3 production the more convinced I become that this episode is a master class in How Not To Build Cars.

    • 0 avatar
      JimZ

      I know, right? Anywhere I’ve been, if even one set of seats was unavailable for a vehicle going down the line, that was an automatic stop build. It’s fairly rare that incomplete vehicles are sent down the line*, and if it gets to that point everyone responsible gets dragged into the “war room” for a royal a$$-chewing and don’t get let out without a recovery plan. Yes, even if it’s 11 p.m. on a Saturday.

      (*exceptions would be low-volume specialty vehicles where it’s better to install the unique components off-line or at a contracted upfitter than to spend the money putting new stations on the line. but still, incomplete cars don’t get sent to the dealer to finish assembly.)

      • 0 avatar
        mcs

        Didn’t Ford do that with the first 97 Expeditions when Lear (or somebody) went on strike? I think they parked them in the yard, then put the seats in when the strike was over. they didn’t ship them to dealers as far as I remember. Then again, I could be remembering it wrong.

      • 0 avatar
        tekdemon

        Has nothing to do with the production line being bad, the reason Tesla shipped seats to the store was mostly that they were going from one generation of seats to a new one, and so there no seats at all on the assembly line since they wanted to only sell cars with the new seat. So someone decided to take JIT to the extreme and have their service centers put the seats in. They’re more vertically oriented since they’re not using a dealership model so the mechanics at their service centers are their own employees. I actually think this was a smart move early on when they had more manpower that they could tap at service centers but these days they’re behind as it is so this sort of thing is kind of questionable.

        Still, time is Tesla’s worst enemy so I get why they’re rushing.

    • 0 avatar
      FreedMike

      In a very real sense, Tesla *doesn’t* know how to build cars, at least in the “classic” way a company like Ford would.

      But then again, they’re not trying to be like Ford.

      On the one hand, I admire their balls. On the other hand, this “try everything a new way for the sake of trying something a new way” approach is going to produce a LOT of problems.

      I bet Musk wishes he had a few old Detroit-Three production hands on board right about now.

      • 0 avatar
        jalop1991

        “I bet Musk wishes he had a few old Detroit-Three production hands on board right about now.”

        The cigar-chomping kind, with hard calluses on their hands and about 300 years of experience among them.

        The kind that would push Musk aside and go do what needs to be done, the right way, because they have A Graduate Education in How This Works.

        • 0 avatar
          mcs

          @jalop1991: The cigar-chomping kind, with hard calluses on their hands and about 300 years of experience among them.

          Yeah, I remember those guys. There the ones that when I tried to report that several jobs had been screwed up due to an equipment problem, they said forget about it kid, let the dealer take care of it. That was years ago, but it was their attitude. I experienced it first hand.

          Actually, there’s another group that succeeded them. Those are the guys you want/

      • 0 avatar
        sirwired

        @FreedMike: In the end, I fully expect that Fremont will end up very much looking and working like any other auto plant, except they will have simply wasted many $M, and burnt-out countless employees, learning that maybe the major automakers have, after about a century, kind of had the whole “how to build cars by the thousands” thing down pat.

        Little things like:
        – “You can release a car any time of year if that’s what you need to do; there’s nothing sacred about the fall.”
        – “It takes a while to ramp up an assembly line, and there’s nothing wrong with that. What is wrong is trying to force a new model down the line while you are in the middle of making tons of changes to it.”
        – “You cannot, by force of will alone, program robots, re-do dies, overhaul assembly processes, etc. These things take a certain amount of time, and rushing them doesn’t actually make things go faster.”
        – “You should expect Job 1 to head down the line ridiculously slower than 1,000 or 10,000. You should be prepared for Job 1 (and 2, and 3, etc.) to sit in storage lots for a while before you are ready to formally announce your car is actually available; just pretend they don’t exist. The public doesn’t understand this process and will have no patience for cars trickling out at the beginning.”
        – “It’s true Wall Street doesn’t like production delays. What they like even less is a rollout that’s entirely botched. (Ask FCA about the Dart if you wonder what that looks like.)”

    • 0 avatar
      jalop1991

      The more I hear about Model 3 production, the louder the Benny Hill music plays in my head.

  • avatar
    redmondjp

    Yup. The decision to skip the soft-tooling pre-production on the Model 3 could well be the final nail in the coffin for this company.

    Having worked in manufacturing for most of my career, the arrogance and smugness of both Musk and his supporters really annoys me. Say what you want about GM, but they knew how to build things – it was one of their core competencies. Sure, it may have been a 1989 Cavalier, but they could pump out several hundred thousand of them a year without breaking a sweat.

    I worked in Industrial Engineering at a GM parts manufacturer for a short time. They had individual internal part numbers for each sub-assembly at every step of the process, so they knew what the parts and labor cost adders were for everything that they did.

    The whole notion that you can ignore more than a century’s worth of manufacturing experience, thinking that there is some better way out there, is pure fiction.

    • 0 avatar
      Lorenzo

      “The whole notion that you can ignore more than a century’s worth of manufacturing experience, thinking that there is some better way out there, is pure fiction.”

      You’re absolutely right, but try telling that to Silicon Valley. They’re creating a new paradigm. The ‘old’ way of doing things is dead. We’re the Next Big Thing.

      • 0 avatar
        jalop1991

        But…but…it’s useless to go into business nowadays–especially in Silicon Valley–if you’re not DISRUPTING the established business!!!!

        I”m sure Musk still believes that his way will in the end turn out to be The Right Way, if only those hundred years of experienced “old fart” automakers would just shut the F up and go away…

    • 0 avatar
      Car Guy

      “the arrogance and smugness of both Musk and his supporters really annoys me.”

      Well put. 100% agree. Even worse than the Apple lemmings………

    • 0 avatar
      jalop1991

      “Say what you want about GM, but they knew how to build things – it was one of their core competencies. Sure, it may have been a 1989 Cavalier, but they could pump out several hundred thousand of them a year without breaking a sweat.”

      “Competency” might be an overstatement*, but I get what you’re saying.

      (*The Micheal Keaton movie Gung Ho didn’t come out of thin air…)

  • avatar
    sirwired

    The more I read about the production problems, the more I’m convinced they should have just swallowed their pride and said: “We are delaying the launch by [X] months to make the production process the best it can be.”

    Because this half-assed “Frantically finish setting up the assembly line while all these cars and workers are in the way” isn’t doing anybody any favors. Sure, it’s common for assembly lines to start out slow, but I think most car companies have more realistic schedules for ramping things up, and generally have things much more sorted-out prior to Job 1.

    And flying in seats, screens, etc.? While it’s not unheard of for minor parts to be installed by dealers because of hiccups at minor supply houses, but major assemblies like this? Damn, that’s expensive (and is begging for quality issues.) Either they have completely incompetent supply chain folks, or Elon simply fires anybody that tells him something can’t be done on the schedule he’s got his mind set on.

    • 0 avatar
      healthy skeptic

      As a Model 3 res holder, I agree. I’d have been much more okay with “we’re pushing the deadline six months to ensure awesome cars” than “we made it!” followed by the really half-assed nature of this rollout. Even though I’m generally a Tesla fan, I will be the first one to say this was basically a glorified public beta test, trying to be passed off as a release. Tesla has the same issues they would have had with a six-month delay anyway, but with eroded credibility to boot.

      Not cool.

      • 0 avatar
        Lex

        That’s the thing, this *was* a Beta test. They literally skipped Beta validation and people kept giving them money. The engineering incompetence in not understanding the risks associated with such a decision is appalling, considering what we have known over a decade of Automotive Engineering

  • avatar
    DJM

    RIP Tesla.

    Cause of death: Hubris and Conceit.

  • avatar
    APaGttH

    Musk said yesterday no Chinese factory for at least 3 years.

    Musk also said that production rate of 5K a week won’t happen until at least March 2018.

    You don’t need to be a math major to connect the dots and conclude that Tesla, even under the best of conditions, won’t be able to build 250K units combined in 2018 even if everything goes to plan.

    If the 5K a week slips past March, 250K combined production becomes generous.

  • avatar
    APaGttH

    …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…

    Once again, the movie Gung Ho comes to mind.

    https:// www youtube com / watch?v=V_gLOUbQZgk

  • avatar
    I_like_stuff

    Meh, we’ll add another $5 to the stock price.
    – Wall St, Today

    I know this sounds cliche, but Tesla isn’t a car company. It’s a status symbol company. The product can be a complete POS but people will buy it because driving one has status. And that’s why the same rules that apply to Ford or GM don’t apply to Tesla.

    It was kind of dumb for Musk to throw out that 250K number, but in the end if it’s 250K or 25K won’t matter. The sycophants will still be there, ready to hand him their money.

    See also Apple selling a $1200 iphone whose main selling point is a moving emoji.

    • 0 avatar
      sirwired

      I think it remains to be seen how tolerant their customers will be. The S and X customers put up with a lot for the same reason owners of Italian exotics don’t seem to mind that maintenance costs are ridiculous and reliability would put the crappiest Chevy to shame: Because you can’t get what they are selling from GM.

      But the 3 customers? Things are very different in the mass-market; will they be like Jeep customers, very tolerant of all sorts of mediocrity because of “Jeepness”, or are they going to be like Toyota customers, who’d be furious at this kind of mess.

      • 0 avatar
        I_like_stuff

        I think that even though the 3 is more mass-market it’s still a niche market, on a massive scale. And yeah I realize that sounds contradictory, but it’s kind of what the 3 is. And it will be in the $50K range when optioned out, so it’s not a typical Accord or Camry price point. People will shell out $50K to drive a Tesla. Not a car, but a Tesla. Compare that to people buying a Camry who are paying $30K to drive an appliance that they know will go 100K miles without any worries. They’re buying Toyota for the quality, vs buying Tesla for the name. Different markets, with different expectations.

        Short of the battery exploding within 100 miles, I think the buyers will put up with crappy quality and still have a smile on their face as they virtue signal to their friends and family.

        • 0 avatar
          APaGttH

          Almost any CUV today that seats 5 and is midsize or above can be optioned out to tickle $50K. Camry/Accord isn’t the competition because buyers are fleeing sedans (another potential issue with the 3). ATP is already around $35K and $50K doesn’t get you a whole lot of vehicle anymore.

          • 0 avatar
            Lex

            “ATP is already around $35K and $50K doesn’t get you a whole lot of vehicle anymore.”

            I know is only one datapoint, but I just got a new 2017 CX-9 for under $35K+Tax and fees with very little haggling. Class 2 Autonomy (Radar Cruise control, automatic braking, Lane departure) a fabulous interior and most importantly seats 7. If automakers are charging 50K for mediocre cars, it’s because the buyers are enabling them to pull this crap, IMHO

        • 0 avatar
          krhodes1

          I think that is extremely true of the Model S and Model X – but those buyers tend to have a number of other cars, and the service experience with them is absolutely platinum plated. But even at 1/2 the price, the Model 3 I expect to be a different kettle of fish. There may be 100K people a year willing to put up with Model S levels of quality in their daily driver, but I really don’t believe there are that many people willing to stump up that much cash for something that is likely to be pretty half-baked.

          It’s going to be fun to watch, I have plenty of popcorn stocked up.

  • avatar
    conundrum

    Gee, I thought from reading Fortune that this week Elon was down at the Gigafactory sorting out production problems on Model 3 battery packs. I imagine that Panasonic, who actually run the place because they know how to make things, are so happy that despite a severe head-cold, Musk took time out of his hectic schedule to give them the benefit of his otherwordly genius wherein he’s the leading expert on everything. “Move that wiring lead over here Yamamoto, that’ll clear it up!” quoth the genius after a solid two minutes of deep concentration.

    Let me see: battery build problems in Nevada, assembly line problems back in Fremont due to frequent brainstorms of a “better way to do it” which need to be implemented by next Tuesday 3 pm, upset workers who somehow don’t share The Vision but just want to be paid an honest wage for an honest day’s work, but unwilling to be slaves get fired via “performance reviews”.

    The life of a Visionary who can’t be bothered to build on the shoulders of existing production technology, and thus design and hire accordingly, but needs re-invent it at prototype level circa 1922, is hard. Then St Elon has to also juggle the expectations of the know-nothings on Wall Street, people with the engineering experience of Big Al from Oz, the man who informed us the Ford 2.7 V6 twin turbo was a dud, along with F150 aluminum beds. The world is full of people who just don’t understand what they don’t understand, but are more than willing to inform everyone else of their revelations. Some even impress sheeple.

    Meanwhile, perhaps Musk needs a course on delegation of responsibility. Nah, sorry, I forgot. That’s old school and not like an overpriced iPhone 10 at all, not segment busting, well segment-busting if you believe the PR and don’t mind standing in lineups at 3:30 am, so divorced from reality you do stupid things.

Read all comments

Recent Comments

  • bullnuke: From the commentary on fires resulting from liquid fuels vs electrical fires it is fairly obvious that many...
  • SPPPP: Well, it was an electrical relay that started the fire. Obviously, all those electrical parts are in cahoots,...
  • mcs: @dukeisduke: “it probably doesn’t take 50,000 gallons of water, and several hours, to extinguish.”...
  • AnalogMan: It’s still only available with an automatic transmission, which is disgraceful for a Corvette. Even...
  • golden2husky: Yeah, all the shortages are clearly Biden’s fault…./s. There’s plenty of things to...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber