No plan that works in theory is too unorthodox for Tesla.
Elon Musk is notorious for being able to bite off more than he can chew and come out on top anyway, adhering to his outlandish promises give or take a few months of tardiness. Musk was banking on using this strategy to get through the struggle of ramping up Model 3 production to annual outputs in the six-figure range, but the “production hell” Tesla is supposedly undergoing to actually pull off this feat is proving to be harder than Musk thought. Tesla now appears to be scrambling for solid ground.
In attempts to at least approach production targets if it can’t meet them outright, Tesla has been burning through cash and attempting new methods to production in order to churn out as many Model 3s as possible and mitigate problems. In order to get a better idea of the situation, Financial Times conducted interviews with Tesla insiders including suppliers and former employees. What it found is a company trying to get on its feet using any means it can think of. Before getting an idea of Tesla’s approach to solving its problems, let’s outline what these problems are in the first place. From a macroscopic point of view, there’s the fact that Tesla aimed to be sending 5,000 Model 3s off the production line per week by the end of this year.
Last quarter, it only delivered 260 of them. The discrepancies are due, according to FT, to various bottlenecks including lower than expected battery production at Tesla’s Gigafactory in Nevada, issues with suppliers, and an assembly line that’s not well synchronized to the arrival of parts. The latter problem has reportedly led some Model 3s to come off of the line with missing parts. These incomplete cars and their needed parts are then sent to Tesla stores for installation prior to customer delivery, a mitigation strategy that seems inefficient at best and shoddy at worst. When it comes to disputes with parts suppliers, one source explained to FT that Tesla seems to misunderstand the fundamentals behind manufacturing parts at the scale the Model 3 requires.
Without a keen understanding of how these delicate supply chains work, Tesla has been asking for last minute changes that require the manufacturing process to begin again. “Tesla kept saying ‘you need to make it faster,’ but anytime you make changes [to the design], you go back to the start of the process,” said one source. All together, the energy under the roof of Tesla’s Fremont factory appears to be chaotic, but there are strategies in place to give it direction. Tesla’s plan of minimizing Model 3 options available to buyers is likely preventing issues from snowballing into a full meltdown, but it’ll take constant self-analysis and a keen and unrelenting eye on improving for the young automaker to endure the steep learning curve.
For Tesla, that means working with parts suppliers rather than taking a demanding stance as FT makes the relationship appear. It would also benefit Tesla to get its factory organized so that the time between parts delivery and installation are reduced while in-store installations are avoided altogether. Step three would be to get bottlenecks with battery production, which stem from problems with automated hardware responsible for building the Model 3 battery packs according to the article, sorted. Winston Churchill famously once said, “If you’re going through hell, keep going.” If Tesla can follow this advice and summon a bit of luck, it’ll emerge to hundreds of thousands of preorder holders ready to buy with cash in hand. But that’s only if…