behind Tesla's manufacturing woes? It could be something as
simple as steel.
on details in a Wall
Street Journal report and
in a video
of the production line posted on
Twitter by Tesla CEO Elon Musk, experts say the electric
vehicle maker appears to be struggling with welding together a
mostly steel vehicle, as opposed to the primarily aluminum
bodies of the Model S and Model X.
company fell short of its third-quarter production target for
the Model 3 — the lower-cost vehicle intended to mark Tesla's
entry into the mass market.
an influx of competitive EVs on the horizon, Tesla must iron
out its manufacturing problems in the next few months or risk
losing its competitive edge before the Model 3 reaches a
there was only Tesla. Now, there's going to be dozens of
alternatives," said Ron Harbour, a manufacturing consultant at
Oliver Wyman. "They're going to have to get really efficient
at manufacturing. They have to be cost competitive and price
competitive to stay in the business."
in the Oct. 6 Wall
Street Journal report suggest
the delay may stem from Tesla's inability to get the Model 3
production line up and running. The report said the Model 3
assembly line was still being built as late as September,
while employees put together cars in a separate area of the
to prevent wrong-way driving and provides a driver
distraction assistant: With its new concept vehicle, ZF
shows how intelligently networked systems can contribute
to a world with zero accidents.
Model 3's aluminum and steel body requires more welding rather
than the adhesive and rivets in aluminum bodies, experts say.
described the difference between the body of the Model 3 and
those of the Model S and Model X as "partly cloudy vs. partly
sunny." The change in materials would require processes new to
a big difference there. They haven't been doing a lot of spot
welding on the first two vehicles because they're all
aluminum," Harbour said. "The learning curve is pretty steep."
the Journal report,
Musk tweeted a of the Model 3 production line, which was
operating at one-tenth of its potential speed. In the video,
sparks fly as two robotic arms assemble parts of the vehicle
frame. He followed with another on Wednesday, Oct. 11, showing
body panel stamping at full speed.
welding should make a little smoke, but when you see stuff
popping out like that, that's called expulsion," automotive
manufacturing consultant Michael Tracy of Agile Group in
Howell, Mich., said of the first video. "It's symptomatic of
weld spots getting too hot because they're poorly planned, or
in this case, the metal not being pulled all the way
welds can increase the damage to a vehicle in an accident, and
can lead to rattling and squeaking as the car ages, Tracy
its third-quarter sales report, Tesla said it built 260 Model
3s, a number "less than anticipated due to production
bottlenecks." The automaker had targeted output of 1,500 cars
in the third quarter, with production of 20,000 vehicles per
month by December. By sometime next year, Tesla expects to
build 10,000 vehicles a week.
are deep in production hell," Musk tweeted after announcing
that the unveiling of a Tesla semitruck would be delayed to
November so the company could focus on the bottlenecks.
spokesman for Tesla issued a statement saying that the Model 3
is being built on a fully installed production line that is
increasing in automation.
we've always acknowledged, it will take time to fine-tune the
line for higher volumes, but as we have also said, there are
no fundamental issues with Model 3 production or its supply
chain, and we are confident in addressing the manufacturing
bottleneck issues in the near-term," the statement read.
"There's a reason it's called production hell."
said slowed assembly lines do little to prove production is
running smoothly because lines perform differently when
running at full speed.
this point, you would only be running it slow if you were
having troubles and you were afraid the welds you were going
to make weren't going to be good," Tracy said. "It has to be
able to run at rate for acceptance testing."
types of problems Tesla is dealing with are normally worked
out long before the assembly line is expected to be working at
capacity, Harbour said.
is something a plant typically goes through four to six months
in advance of a production launch," Harbour said. "This raises
the question: 'Is the expertise there?'"
Platshon, managing director of Icebreaker Ventures, said he
sees the slow production ramp-up as a sign Tesla is ensuring
that everything is working before it hits the mass market.
the number of new parts, the multilevel supply chain and the
new automation at the factory being debugged, I am not
surprised by the slow ramp," wrote Platshon, an early Tesla
investor, in an email. "They are being careful to get it right
before shipping a lot."
matter the cause for the production delays, Tesla has a tight
window to ramp up Model 3 production before luxury competitors
such as BMW, Mercedes-Benz and Volvo Cars introduce more
Model 3 is expected by many industry watchers to bring about
Tesla's "iPhone moment," when a new product is shown to have
revolutionary potential, as Apple's iPhone had in the mobile
phone industry. But the more competitive products become
available, the less revolutionary the affordable EV appears.
Model 3 ramp could be dragged into the second half of 2018 or
even 2019, when the competitive threat will likely become more
imminent," wrote Barclays analyst Brian Johnson in a note to
investors. "And in the face of increased competition, the
'iPhone moment' appears less certain."
July, automakers have been one-upping each other on plans to
electrify their lineups. Volvo said it would introduce only
electrified vehicles starting in 2019. Jaguar Land Rover said
it would offer electrified versions of all of its vehicles by
2020. BMW expects to be able to mass-produce EVs by 2020,
offering 12 models by 2025. Mercedes said it will electrify
its lineup by 2022.
also has been turning its attention to electrification. Ford
Motor Co. plans to introduce 13 electrified vehicles in the
next five years, including a crossover with 300 miles of
range. General Motors introduced the Chevrolet Bolt last year,
with at least 20 all-electric or hydrogen fuel cell vehicles
coming by 2023 — two such vehicles will be introduced in the
next 18 months.
addition to approaching competition, Tesla is close to running
out of federal tax incentives, which can shave $7,500 off the
price of an EV. The credits begin to phase out once an
automaker has sold 200,000 EVs. In July, Edmunds estimated
Tesla had about 79,000 credits left.
the credits run out on sales of the Model S and Model X before
the Model 3 reaches full production, Tesla could lose its
lower-budget buyers to growing competition, Tracy said.
Tesla has succeeded in growing and maintaining a loyal
customer base since its founding nearly 15 years ago — as
shown by the 455,000 Model 3 deposits the company reported in
August. The slow production ramp could be another bump in what
has been a consistently bumpy road for the company.
will solve all these niggling problems," Platshon wrote. "I
suspect very few of the early preorder customers care if their
car is a month or three months later than hoped."