Can Tesla Ramp Up Model 3 Production On Time?
These days, when people start talking about the automotive industry, Tesla almost invariably comes up. The California automaker is controversial, to say the least.
Some view it as a knight in shining armor, sent to shake up the stale, backwards industry. Others see it as a passing fad, an automaker that thinks it's a tech startup.
However you frame Tesla, there's no denying that the Model 3 is a make-or-break vehicle. Tesla is looking to transition from a small, luxury automaker to the mainstream market with this little sedan. And you can believe that everyone is watching to see how everything plays out.
History of Being Late
Tesla has a bad history of being late for just about everything. Not only were the launch dates for the Model S and Model X delayed, so were the reveal parties. Admittedly, the Model 3 launch event started on time, to the shock of everyone. But will mass production be on target?
Elon Musk, through his favorite platform of Twitter, made a bold claim that the company will produce 20,000 units by December. While the Model 3 will undoubtedly move sales figures well north of where they've been, Tesla only delivered 76,000 units in 2016. To ramp up mass production that swiftly would be unprecedented in all automotive history. Cars are notoriously difficult to manufacture correctly, and that's why there's no shortage of critics. This plan seems unlikely.
Some point to the first batch of Model 3s, saying they prove Tesla's ready for mass production. But much of the work was performed by hand, reportedly, because the production line machines weren't ready. That doesn't count as mass production in anyone's book.
Obstacles to Ramping Up
To hit those lofty production goals Musk has set, Tesla must overcome some big obstacles. It can't have big interruptions in the process flow, something that recently the company cited as the cause for a shortfall in Model S and Model X sales. The problem was with the new 100 kWh batteries, which swap out much of the graphite usually used in the battery cells for silicon. That move allows for more energy to be stored in the same space, but it jammed up the production line.
Musk has admitted Tesla's supply chain is too global. War, extreme weather, and other events can cause a crimp in the manufacturing process. He didn't expound on if that's precisely the reason for delays on the 100 kWh batteries.
Past Quality Control Issues
Tesla needs good cashflow to keep churning out mass amounts of Model 3s. For that to happen, customers must be happy with the cars – that's been a huge advantage for the company up until now. In many vehicle owner surveys, Tesla has come out well on top of every other brand.
What's amazing is that Tesla owners love their vehicles, despite quite a few documented quality issues. The Model X was loaded with them, from the falcon wing doors that didn't want to open or close, to the automatic front doors that repeatedly would hit people. Musk has even admitted the company made quite a few mistakes on the Model X.
So why do Tesla owners love their cars flaws and all? It's the type of people they are, according to J.D. Power. Up to this point, Tesla owners have largely fallen into the early adopter camp. Tesla owners geek out so much about the cutting-edge nature of the cars, plus fun Easter eggs loaded into them, that they look past things like doors that don't open. That might sound ridiculous to you, but that might only be because you're more mainstream.
And there's the problem: as Tesla pushes the Model 3, it will inevitably land in the hands of many mainstream drivers. It will likely be the only vehicle these people own, so if there's a big problem, that will irk them more. These less-forgiving customers won't be amused as doors don't operate, or other big issues crop up. If word spreads quickly enough, not only will the company lose revenue from decreasing sales, it will lose capital from investors as they flee, too.
Skimping on Testing
Tesla most certainly is tempting fate with how it's rolling out the Model 3. The biggest risk is the lack of prototype testing.
Traditionally, automakers make a small fleet of prototypes using relatively cheaper tools. If there are issues with quality, the company can make adjustments to get things right, like excessively large gaps between body panels, crooked doors, etc.
Then, the automaker takes those prototypes and drives them through all kinds of extreme environments for millions of miles, seeing what breaks. Tesla's not doing any of that, presumably relying on computer simulations and modeling instead. That could backfire in a huge way, leading to big quality issues.
Despite all these obstacles, Tesla might have a few aces up its sleeves. The company knows it's facing huge odds, and that some don't want to see it succeed. Playing things close to the vest at first could be a smart strategy.
We do know that Tesla designed and engineered the Model 3 to be easy to make quickly. One example is that panoramic glass roof. It not only looks cool, but allows robot arms to access the cabin and perform work humans normally do. Robots are quicker, so it speeds up the production process.
The speculation is that Musk is betting in general on two advantages. One is production hardware that's more flexible than traditional setups. He's talked before about the production machines being just as important as the cars, but he won't divulge details. The second item is software automation. Acting more like a tech firm definitely gives Tesla an advantage in that area, which can boost manufacturing efficiencies considerably.
Tesla needs a hit with the Model 3. It'll have some competition starting next year. The electric version of the BMW 3 Series should arrive then. On top of that, the Jaguar I-Pace and Audi E-Tron Sportback launch in 2018. Consumers love SUVs right now, and that could hurt the Model 3, making quality even more critical.
Regardless of the outcome, the next several months should be an interesting time both for the future of Tesla and the auto industry as a whole, and well worth watching.
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About the author: (Steven Symes)
Steven lives, eats, and breathes the automotive industry. While the vehicles fascinate him, how they're designed, engineered, and manufactured are just as compelling. Steven also has expertise with heavy trucks, equipment, etc. He's an avid off-roader and outdoorsman, when he gets away from the computer.
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