By on March 15, 2018

Tesla keeps insisting it’s going to show the automotive industry how to do things differently. The company’s make-or-break Model 3 was put into production without any pilot assembly or validation prototypes. Tesla is also more vertically integrated than traditional automakers these days. It owns its own stores and it makes many of its own parts. So far, with the EV maker as of yet unable to really get mass production underway on the new sedan, the jury is out on Tesla’s strategies.

CNBC now reports current and former Tesla workers saying almost half of the parts made at or produced for the EV startup’s Fremont, California assembly plant don’t meet production standards, forcing rework and end-of-line repairs, as well as impairing morale in the facility.

This raises the question of whether Tesla will be able to mass-produce vehicles in the quantities associated with automotive mass production: hundreds of thousands of vehicles per year. Tesla needs to be able to build and sell its Model 3 at those numbers to be a viable firm.

One Tesla engineer estimated 40 percent of the components used to build Teslas require rework of some kind. Another current employer said that defect rate makes it very difficult to meet production goals. Tesla keeps insisting it will reach a Model 3 production rate of 2,500 a week by the end of March, with that figure doubling by the end of the 2nd quarter of 2018.

Matt Girvan, who advises companies on lean manufacturing at MAG Consulting, told CNBC, “Even during what is considered ‘launch’ mode, if a company is selling its cars to customers, it should not be experiencing large amounts of rework. This speaks to an internal quality issue that is on a magnitude that is not normal for most car manufacturers.”

CNBC also says that to address the problem, Tesla shifted teams of employees from its service centers and remanufacturing lines to assist with repairs and rework at the Fremont factory. It also reportedly sent some defective parts for rework at the company’s remanufacturing plant in Lathrop, California, where used Tesla parts are refurbished.

Tesla categorically denied that its remanufacturing employees were doing any rework on production cars. A spokesman told CNBC, “Our remanufacturing team does not ‘rework’ cars,” and suggested the whistleblowers could be confusing rework and remanufacturing.

Remanufacturing is the refurbishing of used parts like conventional starters, alternators, and presumably, in the case of EVs, traction motors and battery packs. Rework is taking a production part that doesn’t meet specification and processing it so that it becomes identical to a first run component.

Both of those processes, as well as end-of-line repair, are standard practice in the auto industry, though most automakers outsource remanufacturing and rework. For example, I once saw a few thousand brand new GM V6 engines at a Roush facility waiting to be disassembled because of a defective part. Once taken apart, the still-good components were going to be shipped back to the engine assembly plant for reassembly.

Tesla prides itself in being vertically integrated so it can make a lot of its own parts. Along with other EV makers, they also have to deal with the fact that fewer companies make EV-specific components, compared to those making parts for combustion driven cars, reducing the number of firms capable of remanufacturing or rework.

While Tesla denies it is using its remanufacturing group to alleviate new car production issues, an analysis of job descriptions at the firm shows that the automaker more broadly defines remanufacturing than other industrial companies.

A recent job posting said applicants should have the “ability to identify and analyze new failures [sic] modes from both the field and manufacturing lines,” and a listing for a team process leader in Tesla’s “Vehicle Reman Center” at the Fremont facility said that position would “lead the Value delivery system created to repair and remanufacture Tesla electric vehicles,” and “lead daily operations…on large volume, electric vehicle repair and reconditioning value streams.” Note the use of the word “vehicle,” not “component.”

Tesla says the language in those job posting reflects the fact the company uses information from remanufacturing to improve new car production.

CNBC hired Mag Consulting to analyze Tesla’s remanufacturing job descriptions on its Careers webpage, as well as Tesla listings at LinkedIn and Glassdoor.

Mag Consulting’s Matt Girvan said, “Problems are unavoidable in any factory. ‘Rework’ does happen…These listings speak to what is probably a large amount of product that has either not been built to specification or that has been built to an incorrect specification where the error wasn’t found until later.” Girvan pointed out that, in general, the auto industry’s practice of getting things right the first time avoids the high costs of rework and scrapped parts.

In response to Girvan’s study, Tesla told CNBC, “Remanufacturing is not unique to Tesla, it is something that other manufacturers do too. Remanufacturing involves taking older parts and reconditioning them so they can be used for cars when they eventually come in for service. Rather than making new parts from scratch, this is good for the environment and if done well, is equally good for the customer. Any ‘expert’ claiming there is something unusual about this or that it has something to do with the quality of cars that come off a production line is either very confused or just completely wrong.”

[Image: Tesla]

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47 Comments on “Tesla Workers Say Almost Half of Model 3 Parts Need Rework...”

  • avatar

    Fifty percent? Does Tesla even have ISO certification? Holy cow.

  • avatar

    I’m not a huge Tesla news junkie, and know very little about their cars, but could an established auto manufacturer (for example, Toyota or Honda) partner with them to help iron out the quality and production issues? Or would that be too large a pill for Elon to swallow?

  • avatar

    Maybe only half of Model 3 parts need rework, but ALL of Tesla’s models, past and present, need rework. In fact, they should never have left the factory at all before Tesla had fixed the defect causing the vehicles to take more than 5 minutes to fully recharge. It’s a disgrace that Tesla has allowed, and still allows, cars to be launched on the market with this defect unaddressed.

  • avatar

    “current and former Tesla workers saying almost half of the parts made at or produced for the EV startup’s Fremont, California assembly plant don’t meet production standards, forcing rework and end-of-line repairs, as well as impairing morale in the facility.”

    Sounds like some of the home improvement/repair projects I undertake.

    I do have a serious question

    If I buy a new toyota does it contain any refurbished or remanufactured parts?

    I understand that all auto brands will use reman parts for repairs or warranty work but do they actually use them on the new assembly line?

    To me the article was unclear whether Tesla was identifying non spec parts, refurbishing them to spec and then putting those parts back on the new car assembly line or if those refurb parts were just used for repair in the field.

    If I buy a discounted tech device the seller pretty much identifies it as New or Refurbished to new standards. Is it the same with cars?

    • 0 avatar

      I think Tesla is re-defining “rework” to mean things like taking an angle grinder or prybar to the frame to clean things up, and using the term “re-manufacturing” to describe what they do to parts that just happen to need swapping out on cars fresh off the line. (Maybe they install them once on the line, then they go to a service bay (at the factory or the dealer) to replace all the bad parts?) Replacing bad parts on the line would grind the factory to a halt. Re-installing them as an immediate service action is labor-intensive, but you can “fix” the problem by throwing bodies at it.

      It’s certainly not unusual for car factories to have service bays for problems found on the test stand, but certainly the 40% figure is crazy.

      • 0 avatar

        Did Musk install solar powered die grinders at the Gigafactory?

      • 0 avatar

        @sirwired: If I was going to guess, I’d say it was the circuitry involved in controlling and applying power to the motors. In my experience with robotics, those are the components I’ve had the most trouble with. They handle a lot of power and if the supplier cheaps out on the components, they’ll fail under testing.

        I actually think it’s a good thing that they’re actually taking the time to check the quality of the parts before they go onto the cars. How well did the other automakers test Takata airbags or how well did GM test ignition switches? What would have been the failure rate on those components? What about automakers that can’t even properly bolt a steering wheel onto their cars?

        • 0 avatar

          Every automaker bench-tests cars before they leave the factory; this is not unique to Tesla.

          And the other problems you mention don’t have a damn thing to do with this issue; they aren’t even vaguely similar. Long-term parts quality issues aren’t going to be caught during a short factory test.

  • avatar

    I don’t believe this “remanufacturing” excuse for a second. This might make sense if this were a car several years into it’s production run and some used parts needed a refubish before going out into the field as service parts.

    But the car’s not even been out a year; how many service parts can they be producing? (If it’s enough to keep the remanufacturing lines THAT busy, that’s not a strong vote of confidence in the durability of the vehicles after they leave the factory.)

  • avatar

    Awaiting SEC to turn this into something positive.

    A company making vehicles for 15 years and the end result is no profit and 50% of the parts are below standards.

    Tesla is a joke. Elon is a snake.

    • 0 avatar
      SCE to AUX

      If you think I have something positive to say about such news, you haven’t been paying attention to my concerns about Tesla.

      The consultant cited in the story is correct: “These listings speak to what is probably a large amount of product that has either not been built to specification or that has been built to an incorrect specification where the error wasn’t found until later.”

      I suspect it’s the latter. Making parts to a spec is not that hard. But it’s been clear for a few years that the Model 3 development was rushed, and therefore, the design is flawed in several key areas.

      We also know that Mr Musk likes to meddle/micromanage. Consequently, I believe the smart automotive engineers he hired aren’t really allowed to do their jobs correctly or with sufficient diligence.

      There are numerous reports of Model 3s in the field with misaligned parts and functional failures like bad displays. These are design issues, and Tesla’s claims that they ship only high-quality cars is demonstrably not true. You don’t use a QC filter to prevent design flaws from shipping, and the days of manually aligning parts during assembly are long gone.

      Sweating the details can be the difference between failure and greatness. I believe Tesla forced their people to skip some details in favor of innovation (like the terrible central display concept), when innovation wasn’t really necessary.

      Tesla fails to realize that the typical Model 3 buyer is *not* a first adopter. This will be most customers’ first electric car, but they only signed up because they expect that Tesla’s 10 years of electric car manufacturing means they’ll have a seamless ownership experience. That had been my hope as well, but the misgivings I had about the rushed development are turning out to be true.

      The next shoe to drop will be bottlenecks in servicing all these cars, even those which need routine maintenance.

      I wish that the diligence used over at SpaceX would be applied at Tesla. SpaceX’s customers are no-BS people who want their payload delivered safely, on time, and in the right place, and rigorous reviews are in place to make it so. NASA doesn’t let just any bozo try and dock with the International Space Station. If Tesla took its customers more seriously, we’d be getting better product from Tesla.

      • 0 avatar

        “If Tesla took its customers more seriously, we’d be getting better product from Tesla.”

        I would imagine it’s hard for Musk to take Tesla customers seriously when they happily accept any excuse for delays, quality problems and deflections he offers.

        The fanboyism displayed by Tesla customers is self defeating. By not acknowledging problems exist and by not holding Tesla accountable for unacceptable quality gaffs, how will their products improve? That’s the job of early adopters/beta testers.

        • 0 avatar

          Great comments. For those who argue that Tesla is like Apple – I’d say it’s like “bad Apple” in the late 80s-1996, just before they were hours from bankruptcy: For a while, the fans can keep the ship afloat, but as the competition catches up, your value proposition gets eliminated.

          I know I sound like I’m beating a dead horse, but the 2018/2019 Porsche & Audi sports cars and SUVs are going to take a big bite out of Tesla’s Model S and X models. This should be keeping Musk awake at night: established, premium players with a strong service network.

          And while mass market pure EVs are on the horizon, I still firmly believe that so long as steady improvements to emissions and fuel economy are made, combined with hybridization, we’re going to see ICE based cars continue to be the predominant powertrain option for quite some time to come.

  • avatar
    John Horner

    How can vehicles which have only been on the market for a few years and which supposedly have far greater inherent reliability than the old-tech ICE cars be causing large demand for re-manufactured service replacement parts? That doesn’t make any sense.

    It takes years for re-manufactured repair parts to become available in any quantity for all-new conventional vehicles because there is low demand for said parts.

    Tesla seems to be blowing PR smoke, still.

  • avatar
    John Horner

    On a related note, I toured Tesla’s Fremont factory about two years ago and couldn’t help but notice how the tour leader went on and on about Tesla running a smarter, better, more efficient factory than any of the old guard knew how to do. What Mr. Talking Head didn’t know is that I had toured the same building several times in the past when it was under Toyota management. Toyota’s team was cranking out over one completed vehicle per minute with outstanding reliability and durability. Tesla was using the same amount of space to make a few cars a day. Silicon Valley bravado does not readily translate into high quality, high volume, high priced goods manufacturing. The traditional Silicon Valley companies long ago turned that sort of work over to specialized contract manufacturers, mostly in Asia.

    I wouldn’t be surprised to see Tesla go the Chinese contract manufacturer route sometime over the next 5-10 years. Musk will likely either be talked into that strategy or replaced with someone who will do it. Cue PR team talking about “core competencies”, “intellectual property value” and the “service economy”.

    • 0 avatar

      Great points, I don’t seeing that happening during this Administration because of the obvious backlash. I can’t even imagine how the shareholder heavyweights would take it, esp since the whole thing is already a house of cards.

    • 0 avatar

      I also went on the NUMMI tour (haven’t had a trip to tour it on subsequent visits under Tesla ownership.) That was a very nice factory tour! At the time, one line was making the Tacoma (though that was scheduled to be moved to TX), the Corolla, and the Vibe. (Curiously, the Matrix was made in Canada.)

      I know tours only show the “good stuff”, but everything looked to be running like a well-oiled machine.

      I was amazed at their claims that at any given time, the factory only had a maximum of 24 hours of any given part on-hand. I think the workers also appreciated small touches like putting the cars on their sides to do things like install fuel lines and other under-car parts, so workers didn’t have to work overhead so much.

    • 0 avatar

      Toyota is certainly not perfect, but the Toyota Production System is the gold standard for mass producing vehicles and components. That’s the stuff that Shewhart and Deming taught, and the cool kids in Silicon Valley have no interest in.

      I suspect the warranty work on Model 3s is gonna make things quite busy at Tesla when they get real volumes out there.

      • 0 avatar

        Warranty work…where, exactly? Their distribution and support network is pretty narrow, compared to the big players. This is what is going to bite them hard once the cars are in the hands of “regular buyers” who are faaaaaar less forgiving than the true believers.

  • avatar

    It seems the SV motto of ‘move fast and break things’ applies to the product as well.

  • avatar

    Can all of Tesla’s problems map back to Musk’s ego? The inability to admit mistakes, ask for help, his rage tantrums, perpetual lying about deliverables and financials, etc.

    It’s incredible that despite all that that Tesla has produced actual cars.

    • 0 avatar

      Maybe it’s the workforce he’s using.

      We’ve seen this before. At GM, the engineers blamed labor, and the union guys blamed management.

      In this case parts are not properly made in-house.

      Maybe Musk’s ego is directly tied to having had better experiences with a previous workforce; a workforce that was instrumental in the research and development of earlier models, instead of this bunch of new-hires.

      • 0 avatar

        The product Tesla is turning out just may make the junk GM turned out in the late 70’s at Fremont to look pretty good. There’s a comparison. A while back I wrote about the horrid body panel and door alignment on a brand new Tesla I saw at SJC while loading luggage into out rented car at Avis. The hate I received was crazy. I knew I was on something.

      • 0 avatar
        John Horner

        The workforce isn’t the problem. When Toyota took over the then-closed Fremont,CA GM owned factory and managed NUMMI they rehired primarily from the pool of laid off ex-GM employees and showed that a highly productive factory building excellent quality products was primarily a function of the quality of management and not a “workforce” issue.

        • 0 avatar

          My understanding is that Toyota took all the keepers with them when they departed CA, and left all the not-keepers for CA welfare and unemployment rolls.

          Both Mitsubishi and Hyundai had workforce issues in the past and were condemned for making public comments about them.

          When I visited the Montgomery plant decades ago, it appeared to me that there were more Asian faces providing supervision and QC than there were American laborers.

  • avatar

    Well, this was the straw that broke the camel’s back, or death by a thousand news stories, or whatever..

    Much as I’m cheering for the home team (we live in the same town), I just put my money where my mouth has been and canceled my Model 3 reservation. Never liked the single console layout, and $50k for the RWD premium model (meaning the AWD is probably closer to $60k) is more than I want to pay for a compact.

    Next time I’m buying a new car, maybe..

    • 0 avatar
      SCE to AUX

      Agreed on all your points.

      I just cancelled mine, too.

      • 0 avatar


        I’ve been following your adventure with Tesla on these pages and I’m sorry it came to an end, though entirely justified. I’m curious, what’s next for you (and you too Turbo_AWD), now that Tesla is out?

        • 0 avatar
          SCE to AUX

          Well, I don’t really need a car, so it’s hard to say.

          I’ve mentioned my interest in the Kia Niro EV, allegedly arriving late this year. As a baseline, the regular hybrid Niro is pretty nice.

          The Bolt is a bit small in the back seats, and people regularly complain about the front seats, so that’s probably out.

  • avatar

    The Media is obsessed with Tesla and they are probably not even a viable going concern company; Fake News.

  • avatar
    Big Al from Oz

    Believe it or not in aviation not all is new on aircraft when a new aircraft is built.

    Engines, hydraulic actuators and all in some cases have been overhauled, painted to look fresh and put in the aircraft.

    It comes down to standards and tolerances. If the part meets all of the OEMs specifications, why not?

    • 0 avatar
      Tree Trunk

      Unused part removed, improved reinstalled, really that should not be a problem other than if they deny it.

    • 0 avatar

      But I’m pretty sure the supply of overhauled parts in most planes is pretty much non-existent when the model’s only a few months old.

      There shouldn’t be THAT many parts that require remanufacturing on a car this new.

    • 0 avatar

      I am not knowledgeable about scheduled commercial aircraft but on general aviation aircraft pretty much any part on the aircraft has a documented history and must be approved for use. This documentation “yellow tag” must be kept with the aircraft logbooks.

      On a single engine piston aircraft replacement engines are classified as factory new (actually new), factory remanufactured (to new tolerances but who really knows about metal fatigue). Both of these are considered zero time engines.

      Field overhauled engines are said to be new factory specs but many parts may be reused and these engines are not given a zero time classification.

      As long as there is good transparency and a discounted price I wouldn’t have a problem with factory remanufactured parts in a new car but I doubt that a 2018 Toyota Corolla you buy new off the showroom floor had any factory reman parts in it. I think those parts go to the dealer as stock when repairs or warranty work is needed.

  • avatar

    Speaks to the hubris inside the company, thinking that skipping key development phases is optional. This has been thoroughly hashed out by major automakers over the last 100 years. Musk doesn’t have a better answer.

  • avatar

    Every time there is a quality crisis at Tesla, Musk puts on his spacesuit and heads to Mars. This diversion will only work for so long. The sooner Tesla realizes it is a niche car makers the better things will be. They will never be able to produce 500,000 cars a year. I think Tesla should shoot for 70,000 to 100,000 vehicles a year.

    • 0 avatar

      Agreed. A fair chunk of the value of a Tesla is snob appeal, and a fair bit of that comes from rarity. Plus, the company’s profit potential is in higher-margin cars like the ones they actually build, not in loss-leader cars like the ones they keep promising to build. Yet right now, the Model 3’s low production numbers and limitation to high-spec trim are seen as a bug, a failure. Why not make the bug a feature? Aston-Martin drivers don’t consider it a downside that some sap off the street can’t walk into a showroom and drive out in a $35,000 car. And, bonus, such buyers accept that a hand-built car can be a bit, er, hand-built. Why not spin the artisanal angle as if it’s deliberate? Even if the medium-term goal isn’t to be a boutique manufacturer but a highly automated and integrated high-volume manufacturer, they could keep that under their hat until they’re in a position to execute on it.

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