Tesla employees say automaker produces flawed parts requiring costly rework

https://www.cnbc.com/2018/03/14/tesla-manufacturing-high-volume-of-flawed-parts-employees.html

by ilamont • 8 years ago

133 81 8 years ago

sweden• 8 years ago

Sensanionalist article. So Tesla makes sure to manually fix flaws in the parts of cars that are manufactured before using them. Sounds like every manufacturing line ever.

Is it an efficient manufacturing process? Probably not but I don't see how the end costumer should care about this. The problems in the manufacturing line are already well known and commented by Elon Musk. This is a company that have been mass producing cars for only 5 years, it's normal that they are still catching up with the process.

kazen44• 8 years ago

This is a company that have been mass producing cars for only 5 years, it's normal that they are still catching up with the process.

this, getting a production line optimized can take years, especially if you are relatively new to the field and the company has little instituted knowledge at hand.

I know in Europe for instance, many plants that fabricate parts for the big three have been doing so since the early 50's, and thus have an amazing body of knowledge on what works and what doesn't in terms or producing high quality parts in high numbers. Tesla does not seem to really have this knowledge.

foepys• 8 years ago

Tesla tried to buy that knowledge by aquiring German robotics specialist Grohmann. When the acquisition was complete, Tesla in classic startup fashion tried to pressure employees into overtime and to cut all obligations Grohmann had to other, mostly German, car manufacturers. This resulted in Grohmann's CEO leaving the company in protest and unions threatening strikes. I image quite a few top execs and engineers left with the CEO and went to VW, BMW, and Daimler. Even lower level employees leaving would be hard on Tesla as those people, despite "just" doing blue-collar work, are highly trained specialists.

simion3143• 8 years ago

Is Tesla using fresh people without experience? I imagine they would hire people with experience to setup the factories and the processes, it would be much more expensive to use people fresh from the school without experience.

SteveJS• 8 years ago

How much of this is transferable? Is this institutional manufacturing knowledge a gigantic amount of potential energy for tesla’s competition that will put them in lead for EVs? Or is it a friction keeping a competitive EV from a big car manufacturer eternally around the corner?

Is the rework something that is actually comparable to normal automotive manufacturing lines? Or is it highly specific to EVs? If it’s EV specific it seems reasonable to believe there is no relevant institutional knowledge existing at Tesla’s competitors.

I have no background here .. how would one best decide if this is evidence Tesla is behind on a solved problem it’s competitors know how to solve or ahead on an unsolved problem it’s conpetitors are also struggling with outside of the limelight?

skybrian• 8 years ago

How do you know this happens on every manufacturing line ever? I'm no expert, but it doesn't sound like something Toyota would do.

SteveGerencser• 8 years ago

No, it isn't. Generally, in mass production, there is an acceptable failure rate where x parts are simply binned because they fail a quality check. It's built into the process. I would assume that Tesla does not over the available overhead to simply toss parts that can be fixed to work rather than tossing them out.

swimfar• 8 years ago

I don't have any experience with Toyota. But it definitely happens at the German manufacturing plants I've been to. There is an established process for pulling a vehicle off the line and reworking it. Sometimes there are specific "backup" stations for a process that isn't yet proven to be reliable.

I mostly worked in getting new models and lines up though, so it may be something that nearly never happens after the first 5k-10k cars or so.

serf• 8 years ago

it's extraordinarily common on production lines with very high value items.

aerospace is a good example of such an industry.

lttlrck• 8 years ago

I imagine customers on the reservation list care about this very much. When will get their Model 3? Can they wait that long? If they wait will it have problems? Will it be out of date compared to what else is on offer at that point, with depreciated value?

jotm• 8 years ago

Another 10 years and it will be easy to see a pretty accurate rate of failure for Teslas. People can make up their minds then.

So far it seems to be average - for a mid-class sedan. The price is almost twice as high as it would be for an average ICE car in the same class, because you're paying for early adoption of EVs.

If the above comment on stock shorting and reputation war is true, then you can only trust actual drivers, not the news or even Tesla itself.

mikeash• 8 years ago

Your comment seems to imply that more expensive cars are more reliable, which as far as I know is not true.

Spooky232• 8 years ago

Huh? An Accord or Camry is the benchmark for quality. Fancy cars are usually less reliable.

Teslas are like a Prius circa 2006. Mostly about projecting your eco-consciousness and hipness except it’s a luxury car.

GM and now Honda already beat them to an affordable midsize car, it just looks like a Chevy and is missing the hype. Nissan beat them to an economy EV.

dragontamer4• 8 years ago

Sensanionalist article. So Tesla makes sure to manually fix flaws in the parts of cars that are manufactured before using them. Sounds like every manufacturing line ever.

What should our expectation of Tesla's manufacturing process be when the CEO makes tweets like this: https://twitter.com/elonmusk/status/881757617416056832 ???

kjksf2• 8 years ago

How does Musk's ambitious goals relate to manufacturing quality?

He made similarly over-optimistic predictions about SpaceX. They were several years late with their rockets and yet SpaceX crushes competition today.

If you seek some objective measure of Tesla's engineering capabilities, maybe the fact that Model S was named best overall car 2 years in a row by Consumer Reports should be more pertinent that Musk's tweets (http://time.com/3721049/tesla-model-s-consumer-reports-car/).

objclxt• 8 years ago

It's no more sensationalist than Tesla's own claims about how many Model 3s they could get off their production line, claims they have completely failed to hit.

Someone• 8 years ago

I don’t think this article is about whether Tesla can make its customers happy, but about whether it can make so many customers happy that it can make its investors happy.

Extra work means higher per unit costs and, likely, lower production numbers, both of which would impact what the company is worth.

Spooky232• 8 years ago

The thing to be concerned about is that in going for the full vertical integration play, they have folks worried about things like lock buttons and door handle production.

It’s pretty obvious that the magic of Tesla is the battery and the in-car “avionics” and telemetry. For every $1 worrying about lock buttons, a dollar is lost to batteries and other, material things.

avs733• 8 years ago

and 'disruption' as a goal is why they get lost in those mistakes.

obblekk• 8 years ago

For those catching up on Tesla news - there's a PR war going on between Tesla Inc. and many hedge funds who are short TSLA stock. As a result, it's tough to tell what's truth and what's imaginary.

Tesla wants people to believe in them in order to continue selling cars to customers (who probably wouldn't buy if they thought the company was going bankrupt) and stock/bonds already issued to investors.

Short sellers want to give people doubt to cause a decrease in stock price in order to benefit from their short position.

Both parties are probably acting in good faith - Tesla wants people to see how good they are and short sellers want people to see how risky they are. But as a result the news is crowded and it's generally hard to know the truth.

Just remember, in the US the Supreme Court has ruled that it's legal for news publications to lie to their readers/viewers.

GuiA• 8 years ago

Just remember, in the US the Supreme Court has ruled that it's legal for news publications to lie to their readers/viewers.

Link please?

sschueller• 8 years ago

Isn't that ruling just allowing news stations to segment certain time frames as news and others as entertainment? They still can't make stuff up during news segments.

ceejayoz• 8 years ago

Sounds like a variant on this urban legend:

https://www.snopes.com/fact-check/fox-skews/

http://www.politifact.com/punditfact/statements/2014/sep/10/...

jws• 8 years ago

Frequently this is a reference to a suit between a Fox affiliate station and a pair of their reporters who were terminated amid editorial conflicts and whistleblower actions. It is a complicated suit with a number of claims. There are enough bits which if extracted and held up alone can support the grandparent's claim, but on a whole doesn't really say that.

It is a bit hard to google about because a lot of the people who choose to write about it are partisan, but you can get a feel for the mess in the Snopes article†.

As with lots of law, part of it turns on technical definitions. The Appeals Court (not Supreme) found that the FCC policy against falsification did not meet the legal definition of "law, rule, or regulation" in a particular section of relevant law. Remember, three of those four quoted words probably don't mean what you think they do unless you are a legal scholar. It's like having a variable in a program named "loop_count". Maybe it is a count of the looping, maybe not, unless you read all the referencing code.

The wikipedia article‡ is currently ok too, but who knows by the time you read it.

† https://www.snopes.com/fact-check/fox-skews/

‡ https://en.wikipedia.org/wiki/Jane_Akre

dragontamer4• 8 years ago

You've missed one important group: union forces. Tesla Employees have been fired en-mass in what was allegedly a union-busting attempt. Since Tesla employees are unhappy, a lot of them are demonstrating flaws with Tesla's manufacturing process, potentially in an attempt to strongarm their bosses into getting better pay or unionization prospects.

Anyway, there's more than just "bulls vs bears" going on here.

In any case, Elon Musk's 20,000 Model 3 manufactured per month target for late 2017 is incredibly late (See: https://twitter.com/elonmusk/status/881757617416056832). A lot of Tesla bulls don't seem to care however and continue to throw money at the company.

Tesla isn't even at 2000 cars a month, and we're well into 2018. A lot of people are interested in "why" this is happening. Yes, short-sellers are interested, but I'm sure normal investors are wondering why Musk isn't even hitting 10% of his target months later.

The article suggests that the QA group is finding flaws in the manufacturing process. So... yeah. That makes sense for why the Model 3 is late with very, very low production numbers. There's been a lot of speculation in different groups for the failure, but ultimately, the core is that Tesla is not making enough Model 3.

mephitix• 8 years ago

> Since Tesla employees are unhappy, a lot of them are demonstrating flaws with Tesla's manufacturing process, potentially in an attempt to strongarm their bosses into getting better pay or unionization prospects

This seems like a pretty big/dangerous jump to make with little-to-no evidence.

> In any case, Elon Musk's 20,000 Model 3 manufactured per month target for late 2017 is incredibly late (See: https://twitter.com/elonmusk/status/881757617416056832). A lot of Tesla bulls don't seem to care however and continue to throw money at the company.

I really hate that Musk publicly underestimates the amount of work and deadlines in this process. It's especially annoying for me because I've worked for people who publicly underestimate and it put way more ridiculous work on me and my coworkers.

That said, I also hate this "fraud-boy" FUD. I think Tesla could eventually pull this off. The ramp will obviously be slower than what Musk expects. I, like many bears, take what Elon says with a grain of salt. But cars are rolling off the production line. At this point, the Model 3 is now the best-selling EV in the US. (https://www.bloomberg.com/graphics/2018-tesla-tracker/). Tesla has proven itself with the Model S. People in general love the cars. Tesla will get there, and I think that's why bulls are holding.

andrepd• 8 years ago

You hit the nail in the head, on what's evident to anyone who wants to see. But I expect some people are so intent on Tesla succeeding that they don't want to see...

awalton• 8 years ago

Tesla isn't even at 2000 cars a month

https://www.bloomberg.com/graphics/2018-tesla-tracker/

Current rate of 700 cars/week * ~4 weeks/month = ~2800 cars/month.

rlayton2• 8 years ago

Specifics of this case aside, it must feel great to hold short positions, where you are hoping others fail...

hendzen• 8 years ago

Short sellers, villainized though they may be, provide a valuable service to the market and society as a whole. It’s a good thing that people are incentivized to spot companies that are financially overstretched (or worse) - it keeps companies honest and penalizes bad actors. See the story of Valeant for a good example.

Erlich_Bachman2• 8 years ago

If hypothetically their position is that the thing that will fail is bad (based on a bad technology, bad management, bad presuppositions, etc.) - then what's so bad about shorting it? They are hoping that the bad thing will fail so that more resources (money, news, workers, scientists, mind-space of the public) will go to other projects that better deserve it? If they can make some money at the same time - then why not? Is the same as going long (investing in) some other projects that they predict will succeed. (Not saying Tesla is a "bad" company, the comment was about shorting.)

Lazare2• 8 years ago

Just remember, in the US the Supreme Court has ruled that it's legal for news publications to lie to their readers/viewers.

Citation please. If you're talking about the Jane Akre/Steve Wilson lawsuit, that's factually inaccurate.

empath75• 8 years ago

It’s interesting that Tesla is seen is a technology company and tech companies are almost obsessive about applying Japanese auto manufacturing techniques to software development, but Tesla has managed to get this so wrong. Small batch production, obsessive quality control at all steps of production, etc, it’s all straight out of The Goal or The Phoenix Project.

kryptiskt• 8 years ago

What turned me pessimistic about Tesla was this piece of news from a month ago: "During a conference call following the released of the company’s financial results today, Tesla confirmed that its President of Sales and Services, Jon McNeill, is leaving the company. Home Solar Power Tesla CEO Elon Musk confirmed that Sales and Services will be reporting to him directly without any plan for someone to replace McNeill." https://electrek.co/2018/02/07/tesla-president-sales-service...

If Musk can't let go of the micromanagement, Tesla isn't going to scale.

csours2• 8 years ago

Disclaimer up front: I work for a Tesla competitor.

Tesla is making several very interesting bets on the Model 3.

Bet 1: Model 3 mix - Tesla is betting that the ratio of expensive, high-content Model 3s to cheap, low-content Model 3s will be sufficient to make enough money to offset investments and pay back loans.

It will not be sufficient to make a small profit on each Model 3 sold given the debt load that Tesla has accrued, so they will want to sell a good ratio of expensive Model 3s.

If it takes to long to produce the cheaper Model 3s, Tesla will lose some potential customers. Many investors are looking at that "top line" right now - the number of customers and potential customers. If the top line moves too much, investors may get spooked.

Bet 2: Vertical Integration - Most automakers rely on a web of parts suppliers, who are under enormous pressure to reduce costs, but Tesla produces most of its components in-house. The contract with an external parts suppliers ensures that the supplier is responsible for any re-work or replacement of defective parts. This allows the automaker to concentrate on internal production issues.

Tesla's bet is that internal production of parts will lead to better and cheaper components. This has not worked for any other automaker.

Traditional OEMs shoot for a mix of components where the internally produced components are part of the company's core competence: Body Shells, Engines, Transmissions - and externally produced components may be generic - switches, latches, seats, frames, tires, wheels, etc.

If Tesla spends too much capital on component manufacturing, they will be inefficient and investors pressure them.

Additionally and probably more importantly, if Tesla is not able to spend the time and attention to iterate on cost and quality of these parts, it will also lose this bet.

Personal opinion: I think Tesla has learned the wrong lesson from previous dealings with suppliers. For instance, the original Roadster was designed with a two speed transmission. A supplier claimed they could make it, but it never really worked. Tesla learned the lesson that suppliers are stupid and suck at making new things - I think they should have learned that lesson that it is really really hard to make new things.

Bet 3: Automation - But first a detour - There are 3 main areas of auto assembly, and most manufacturers have already fully or almost fully automated 2 of them: Body Shop (welding and assembly of the body shell) and Paint Shop. The 3rd area is General Assembly.

General Assembly is the bloody, thorny, devilish poster child for multiple single points of failure. A high feature vehicle may have on the order of 1000 assembly stations (aka footprints) in General Assembly. The Model 3 is designed with much lower complexity in mind, and may only have 100 footprints.

If and when any of those 100 footprints has an equipment failure or parts issue, ALL 100 stop running in a short amount of time. Human assembly workers are rather resilient and can figure out a multitude of small issues on each and every operation. This may allow for a hypothetical variation of 5% in non-critical parts.

Automated assembly may only allow for a 1% variation.

Additionally, automated assembly only runs well when EVERYTHING is designed for automation. That is not impossible, but it is expensive and time consuming.

---

Most importantly, these three bets are linked:

If not enough base models are sold, the cost of design and equipment spending will be excessive on a per vehicle basis.

If internally produced parts are too far out of spec, you have strong negative impacts on automation.

If automation fails, you cannot produce enough vehicles at a low enough price to satisfy your low-end customers.

But, if Tesla wins all three bets, they win big time.

chiph• 8 years ago

Additionally, automated assembly only runs well when EVERYTHING is designed for automation. That is not impossible, but it is expensive and time consuming.

Designing for automation can have unexpected benefits. Many years ago IBM sold a dot-matrix printer called the "ProPrinter". It was to be built on a new automated assembly line in Charlotte NC, so all the parts were designed to be easy to snap together, with no screws or fasteners.

Well, the robotic assembly line never really got going, so they hired a bunch of temp workers to sit in front of tables and put them together. And it turned out that the design was excellent for a group of recently-hired humans with no experience to assemble.

This video shows the assembly (you can skip the first bit) in under 3.5 minutes:

https://www.youtube.com/watch?v=spDYSKl3kmo

csours2• 8 years ago

Neat video. Design for Manufacturability is closely related to Design for Automation.

https://en.wikipedia.org/wiki/Design_for_manufacturability

Shivetya• 8 years ago

I am of the opinion they will keep pushing base models off as they do not want to make them. What I do not understand is how they let defective cars get into the hands of some press people. I have seen more than one newspaper review that highlighted all sorts of issues.

do they think they are still immune? 300-400k people money down sounds awesome until your realize the big auto makers usually have more than one line that does that per year.

I still think the really bad bet was not having the in depth prototyping that they openly mocked that other manufacturers have just to prevent such assembly line issues

gutnor• 8 years ago

What I do not understand is how they let defective cars get into the hands of some press people.

That is something that puzzles me too. However, since I have been in the market for a car recently, it seems that it happens regularly to all the brands.

Some reviewer even mention the fact the car is early production model and has some quirks that will be fixed later.

In any case, car reviews before a car reaches general availability are highly biased anyway. There is a press package that comes with the car and you can clearly ear the same words used in every review. And then they fly reviewer over to a special testing location, put them in nice hotel, feed them well and the actual "test" looks like a corporate team building event. (youtuber are now invited too, which lead to a lot a video behind the scene of those events)

Animats2• 8 years ago

Tesla doesn't buy enough units to have real clout with suppliers. Tesla made 737 cars last week. That doesn't get you much clout with the door hinge manufacturer.

ctur• 8 years ago

This rings true to anyone who has owned a Tesla, especially if they purchased it when the model was new. Repeated trips to get minor things fixed is not uncommon.

Nonetheless, they are excellent cars and worth the early adopter frustration (IMO).

exabrial• 8 years ago

Flagged because of the quotes in the article. If hacker news is going to make accusations, can we at least base them on, you know, facts. If we can't do that can we at least base them on statistics?

cerved• 8 years ago

The Machine That Changed the World largely attributes Toyotas success to avoiding costly repair/rework, it's a phenomenal book.

geerlingguy• 8 years ago

And if you’re arguing over things like supplier management, inventory management, rework due to QA issues, European vs US vs Japanese manufacturing philosophies and efficiencies, and haven’t read this book, you should. It’s basically a foundation for modern automotive manufacturing discussion (though slightly dated now, as it was written in the 90s).

ggg9990• 8 years ago

When my friend bought a model S I went over to drive it and found that it’s one of the shittiest feeling cars in that price bracket (buttons doors etc) but as soon as you get your foot on the “gas” pedal it’s the best car I’ve ever experienced.

RivieraKid• 8 years ago

I've been a long time fan, then sceptical fan and now I think Tesla will probably fail in some way (such as being bought by a competitor).

What convinced me was following @TeslaCharts on Twitter. For example, here's a recent series of tweets: https://twitter.com/TeslaCharts/status/974087889997975552

Having followed both the bullish and bearish sides, the bearish one is more convincing.

What is confusing about this company is that they make (in some aspects) a great, unique and innovative product but on the other hand they're in a very bad financial situation, have production and quality issues and their CEO tends to bullshit.

Animats2• 8 years ago

These are the problems Detroit had before Toyota forced them to get their act together.

mdekkers• 8 years ago

Luxury automaker Tesla is manufacturing a surprisingly high ratio of flawed parts and vehicles

I laughed at this opening line of the article. Tesla isn't a "luxury automaker". It is all cheap, badly fitting plastic inside, and sitting down in any Tesla doesn't feel (to me) like any kind of "luxury" experience. Tesla is "expensive", not "luxury". I get that they have to pay for the tech and innovation, but when I drop over 100k EUR for a car, I expect a certain overall experience, not feeling like I am sitting in a collection of the cheapest possible parts.

Tesla employees say automaker produces flawed parts requiring costly rework

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