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Trading  | June 9, 2018

There is one crux that sits at the middle of almost all of Tesla’s promises for the company going forward throughout the rest of 2018. All of the guidance and promises that Elon Musk has made – the profitability and liquidity statements – they will hinge on the company’s ability to efficiently, effectively and consistently produce the Model 3.

Which makes the Model 3 production factory a facility that “all roads” lead through.

(Photo credits: Bloomberg Businessweek)

Lest we also forget Musk’s promise, recently made at the company’s annual general shareholder meeting, that the company would be producing the Model 3 at a clip of 5,000 vehicles per week by the end of June. Obviously, the facility is of importance to that promise.

We know that the Model 3 production hinges upon the company’s ability to fix bottlenecks and streamline its operations. However, we never really have had a good look at the Model 3 facility – that is, at least, until Bloomberg Businessweek published this report early Friday morning detailing some of the processes at Tesla’s production facility.

The Bloomberg report makes some astute observations – namely that the company is going to have to make this “dance“ of factory robots work seamlessly and flawlessly if it wants to reach production targets that have been promised and that are ostensibly necessary for the company to meet its “financial goals”.

So what’s holding up production this very moment? A “galaxy of smaller problems”, according to Bloomberg:

Tesla has consistently missed its production targets since deliveries of the Model 3 began last July. The first major snag was at Tesla’s Gigafactory in Reno, Nevada, where software defects caused robots to fail, meaning that thousands of cells had to be pieced together by hand. Production has steadily improved since then, and Musk told shareholders on Tuesday that the company is on track to meet its goal of 5,000 cars a week by the end of June.

Tesla says there isn’t any single problem slowing production down now. Instead, the heavy reliance on automation and new production methods have created a galaxy of smaller problems that must each be addressed individually. Musk’s claim is that once the process is tuned, the company will set a new standard for speed, precision, and scalability in manufacturing. 

The article shed light on some of the expensive production equipment the company has continued to splurge money on, like stampers:

Tesla uses a high-end Shuler servo stamping press to turn giant rolls of steel into Model 3 body parts. There are only 35 such presses in auto manufacturing worldwide, and Tesla says it is the first in the U.S. The equipment has allowed Tesla to crank out unique parts, like the Model 3 front fender, which engineers say has greater depth in a single piece of stamped steel than any other fender in production. 

Stamping was a production bottleneck on Tesla’s previous two cars—the Model S sedan and Model X SUV—and Musk didn’t want a repeat. The high-volume servo press is a manufacturing splurge—one of many that Tesla hopes to recoup through high volumes and flexibility for its designers.

The report also detailed some of the initial roadblocks that the company hit due to wanting to aggressively automate everything possible, even in areas where it has never been possible for traditional auto makers, like body assembly. Finally, Musk has taken a bit of a mea cupla and replaced a “complex conveyor system” with workers in this area:

Putting together the pieces of the car’s body is an area that all automakers automate to varying degrees. However even state-of-the-art factories tend to rely on people to transport parts and load them onto the machines. Car parts are packed together for storage and shipping, and picking them back up is difficult without human fingers.

This is one area that Tesla may have gone too far, too fast. In April, Musk acknowledged that he had to rip out a complex conveyor system for parts and replace it with workers. Various robots throughout the line met a similar fate or had to be reprogrammed. Even so, Tesla says the Model 3 body line is now 95 percent automated, including the transfer, loading, and welding of parts.   

The article continues to note that Tesla has taken a very different approach to manufacturing almost every portion of the vehicle. Seats, for example, which are often outsourced, are being made in their own separate factory specifically for Tesla:

Car manufactures hate seats. They’re tedious to make and require different skills and materials than the rest of the car. It’s easier to outsource, and no major manufacturer does it all themselves. But relying on suppliers got Tesla into trouble with the Model X, when its engineers designed an extremely difficult-to-make “monopost” seat and an impossible-to-hit timeline. Problems with suppliers set production back by months, and Musk decided he wasn’t going to put up with it again. 

In just a few years, Tesla built its own seat factory to handle all of its seat production. These are the first images published from the new factory, which Tesla says already has more capacity than it needs for its 2018 production goals—with plenty of space for additional expansion. 

In terms of quality control, the company employs robots for this task. Based on some of the Model 3 reviews we have read, pershas this is another area Tesla would be best suited to switch to human workers. Regardless, Bloomberg noted the company’s QC process, as upheld by its machines:

Tesla says it has 47 robots deployed in scanning stations throughout the body line. They measure 1,900 points in every Model 3 to match them to design specs—with a precision of 0.15 millimeters. Torque measurements are also automatically recorded for every bolt that’s fastened. During the final test drives on the track, sound recorders measure squeaks, rattles and wind and road noise that a test driver might miss. All of this data is stored with each car’s unique Vehicle Identification Number, or VIN, so service centers can trace any issue back to a root cause in the factory. The idea is that Tesla will be able to improve its cars, even after they’re in a customer’s driveway. 

The article concludes by stating what most of us already know: this is a this feels like a “win or go home” situation for Elon Musk.

Either he’s going to be able to get production running efficiently and consistently or the robots “dancing” at the “alien dreadnaught”, as Musk refers to the factory, will be the least of his issues.

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