Wednesday, November 1, 2017

Pushback: Tesla Provides Details on Model 3 Production Delays and “Bottlenecks”

Model-3-Blue-Driving-626x383
-Tesla CEO Elon Musk, at various times, has pointed to the adoption of an unprecedented level of assembly automation—an alien dreadnought, he called it—as one of the reasons his company continues to claim it can ramp up its production of its more affordable sedan, the Model 3, so quickly and how it intends to produce more vehicles at its Fremont, California, factory than the facility’s previous owners, General Motors and Toyota, ever could. But it’s this tangle of automation that has also brought Musk to what he has called production hell.

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Musk has cited “production bottlenecks” for the Model 3 delays, and it has now been clarified that automation is at least partly to blame. In a quarterly earnings call today with financial analysts, Musk pointed to a subcontractor that he said “dropped the ball” on a project involving automation to assemble the Model 3’s battery pack, which uses a new cell format as well as a new pack architecture. He also noted that a team of Tesla engineers has had to rewrite all the software for module production from scratch due to supplier negligence.

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Tesla claims that it has achieved a rate of about 500 units per week for battery-pack assembly, body-shop welding, and final assembly for “burst builds of short duration”—which we’ll assume are demonstrated in the video clips the company also just released [below]. Tesla chief technical officer JB Straubel reiterated that the Model 3 is “much easier to build, but also intensely automated,” and the company’s update provided other areas, like paint, in which production can now reach 1000 cars per week. It’s now instead targeting 5000 vehicles per week by late in the first quarter of 2018.
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Those numbers, of course, are still far below the 5000-per-week figure that Tesla had aimed to achieve by the end of this calendar year. Musk called the production delay a “relatively small shift” and said that ramping up to that target is “going to take a few months longer than we expected” but assured that total deliveries will be “in the thousands by the end of the year.”

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The Robots!

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Apparently not deterred by this round of ambitious-automation-related hiccups, he noted that weekly production might be increased up to 7000 within the existing footprint with changes like more automation and adding additional robots at choke points. “If you can see the robot moving, it’s too slow,” he quipped, saying that the company was planning to continue to design many of its robotics internally. Tesla already bucked modern automotive-assembly convention earlier this year in not doing an offsite “cold run” of its tooling and automation with a contractor before installing and assembling it for live production.

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At several different points, Musk has targeted an annual production rate of 500,000 vehicles in 2018, but today’s call included some tempering of that goal. Musk also said that a planned production facility in China, which won’t be finished until at least 2019, will be able to produce at least 200,000 vehicles per year.

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Tesla Model 3 interior

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With these delays, it’s highly likely that Tesla will face a massive backlog of orders and deliveries even in 2019. There’s no word on whether Tesla is contemplating sourcing cars from China to satisfy U.S. or European demand.

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Record sales of the Model S sedan and Model X crossover, continued growth of the brand’s retail and service arms, and its Supercharger DC fast-charging network were points made to counter the Model 3 information. The reveal for the company’s semi truck is coming up soon, scheduled for November 16, when Tesla says that it will “demonstrate just how compelling electric drive will be for the trucking industry.” Based on the hurdles that Musk detailed, it’s unlikely that the company will have devised solutions to all of its various Model 3 bottlenecks by that date.

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In the meantime, Tesla has taken more than 500,000 refundable money-down reservations for the Model 3, and the folks behind those reservations might grow impatient as they see long-range electric vehicles launched by Volvo, Jaguar, Ford, Audi, and others. If large numbers of people tire of waiting and cancel their reservations, Tesla will have missed a huge opportunity to establish the Model 3 as the cool and trendy car to have—as well as to counter perceptions that the company can’t meet its own deadlines.

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