Tesla's Big Gamble With Model 3 Production

[William Maley]

The Model 3 is Tesla's most anticipated vehicle and biggest gamble the company has undertaken. But this gamble has become more risky thanks to a decision concerning the production line.

Reuters reports that Tesla is skipping a step most automakers undertake when producing a new vehicle. Prototype tools are bought in on the production line to help determine issues in terms of fit and finish. Once these issues are worked out, the prototype tools are scrapped and automakers place orders for permanent and expensive tools. But Musk told investors last month, Tesla was jumping into the permanent and expensive part first so they can meet their self-imposed volume production deadline of September.

"He's pushing the envelope to see how much time and cost he can take out of the process," said Ron Harbour, a manufacturing consultant at Oliver Wyman.

According to a source, this 'soft tooling' caused problems for Model X. Due to a tight timeline to get the vehicle into production, Tesla was unable to take any of the lessons learned from this before ordering the final production tooling.

"Soft tooling did very little for the program and arguably hurt things," said the source.

Musk said computer simulations has helped with skipping the prototype tooling stage.

This move fits Elon Musk's tendency to take big gambles and do things a bit different than what is expected in the industry. Most of the time, it has paid off. 

The problem is if this equipment proves to be flawed in some way, it could cost Tesla millions to fix the issue and introduce production delays. 

"It's an experiment, certainly," said Jake Fisher from Consumer Reports. Tesla could possibly fix these errors quickly, "or it could be they have unsuspected problems they'll have a hard time dealing with."

Source: Reuters

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[G. David Felt]

OUCH, FAILURE! One only has to look at Boeing and the Dream liner to learn that simulations only and direct to production equipment fails. Cost to Boeing was billions to fix the problems of having parts built all over the world and not connecting up fit n finish.

Tesla could be killing themselves with this error. I truly hope not, but have yet to see simulations that could actually make perfections of moving from prototype to production with no alpha or beta. Yes you could say they did a merge of those two to hit their self imposed deadlines. Be interesting to see how the first few auto's come out.

[Drew Dowdell]

I guess he's lucky he's rich and this can be a pet project for him.... just keep dumping money into it until it works. 

[smk4565]

This could pay off for them.  In theory if the tooling is right from the start then all should be fine and allow them to ramp up production volume.  Tesla needs volume to get some money rolling in.

15 minutes ago, Drew Dowdell said:

I guess he's lucky he's rich and this can be a pet project for him.... just keep dumping money into it until it works. 

I knew he was a billionaire, but I didn't realize til last weekend that is worth 14.5 billion.

[G. David Felt]

4 minutes ago, smk4565 said:

This could pay off for them.  In theory if the tooling is right from the start then all should be fine and allow them to ramp up production volume.  Tesla needs volume to get some money rolling in.

I knew he was a billionaire, but I didn't realize til last weekend that is worth 14.5 billion.

Most of that is in Tesla stock. He will be on the low end of extreme rich if he does not watch it.

[Drew Dowdell]

4 minutes ago, smk4565 said:

This could pay off for them.  In theory if the tooling is right from the start then all should be fine and allow them to ramp up production volume.  Tesla needs volume to get some money rolling in.

I knew he was a billionaire, but I didn't realize til last weekend that is worth 14.5 billion.

And that's net worth, no? (I haven't looked in a while) That means he has some leverage too.

I know Solar City is doing well at building a customer base

 

[smk4565]

Net worth I assume, it is whatever Forbes or one of those lists had him at.  His salary is $1 a year.

Edited April 26, 2017 by smk4565

[A Horse With No Name]

2 hours ago, Drew Dowdell said:

I guess he's lucky he's rich and this can be a pet project for him.... just keep dumping money into it until it works. 

Problematically his cash flow cannot stand a major hit of any kind...

2 hours ago, Drew Dowdell said:

And that's net worth, no? (I haven't looked in a while) That means he has some leverage too.

I know Solar City is doing well at building a customer base

 

That is good news on solar City.

[Drew Dowdell]

He might still make a lot from PayPal.

[A Horse With No Name]

Just now, Drew Dowdell said:

He might still make a lot from PayPal.

I hope so, I want Tesla to be around awhile.

[oldshurst442]

I too want Tesla to stick around.

My partner's Model S is problem free so far, he had a couple of recalls, but my wife's Fusion is on 3 going on 4 recalls so....that is not a problem for Ford, why would a recall be viewed as a problem for Tesla?

Therefore, when my 2012 Acura's time is up in 4-5-6-7 years time, a Model 3 is what Im looking at!

[daves87rs]

He's ramping up....not matter what.......

[A Horse With No Name]

11 hours ago, oldshurst442 said:

I too want Tesla to stick around.

My partner's Model S is problem free so far, he had a couple of recalls, but my wife's Fusion is on 3 going on 4 recalls so....that is not a problem for Ford, why would a recall be viewed as a problem for Tesla?

Therefore, when my 2012 Acura's time is up in 4-5-6-7 years time, a Model 3 is what Im looking at!

Agree on the three. I think it might make a nice replacement for the 2003 Cooper S I am currently driving.

Tesla 3 and a GTI might make for a very nice garage indeed....

[Robert Hall]

I want to see Tesla succeed, I look at them as a tech company first and car maker second, and I root for American tech companies...weird factoid--Musk and I share a birthday, though I'm a year older.   He's an interesting Silicon Valley guy, a bit crazy and out there, as they tend to be.  Running 3-4 companies, I wonder if he ever sleeps...total workaholic it sounds like..

[G. David Felt]

48 minutes ago, Cubical-aka-Moltar said:

I want to see Tesla succeed, I look at them as a tech company first and car maker second, and I root for American tech companies...weird factoid--Musk and I share a birthday, though I'm a year older.   He's an interesting Silicon Valley guy, a bit crazy and out there, as they tend to be.  Running 3-4 companies, I wonder if he ever sleeps...total workaholic it sounds like..

Could be why he is not married yet.

[Robert Hall]

57 minutes ago, dfelt said:

Could be why he is not married yet.

He's been married and divorced 2-3 times and has 5 kids. 

[G. David Felt]

2 minutes ago, Cubical-aka-Moltar said:

He's been married and divorced 2-3 times and has 5 kids. 

wow, did not know this and had not heard this. Amazing, guess his Alpha type personality does not mesh with others well.

[riviera74]

I do hope it works out but I have my doubts.  Tesla needs to nail everything down and the Model 3 may need another six months to be fully baked.  It would be better to push back the self-imposed deadline and Get It Right than push out an inferior product into the marketplace.

[G. David Felt]

39 minutes ago, riviera74 said:

I do hope it works out but I have my doubts.  Tesla needs to nail everything down and the Model 3 may need another six months to be fully baked.  It would be better to push back the self-imposed deadline and Get It Right than push out an inferior product into the marketplace.

Agree, with 400K reservations, if they role out a piss poor product that has issues, I am not so sure the public will be as forgiving as the buyers of their Model X were with the problems. As stated in many articles, the buyers of the Model S and Model X expect things to not be perfect due to being more concept or alpha / beta stage of auto but still do expect it to be fixed down the road.

Tesla 3 could hurt them more than help if they do not have it solidly baked before selling.

[A Horse With No Name]

2 hours ago, dfelt said:

wow, did not know this and had not heard this. Amazing, guess his Alpha type personality does not mesh with others well.

Very common for Alpha type males not to be good husbands...what woman want in romance novels and what they can actually live with on a day to day basis are two entirely different things.

1 hour ago, dfelt said:

Agree, with 400K reservations, if they role out a piss poor product that has issues, I am not so sure the public will be as forgiving as the buyers of their Model X were with the problems. As stated in many articles, the buyers of the Model S and Model X expect things to not be perfect due to being more concept or alpha / beta stage of auto but still do expect it to be fixed down the road.

Tesla 3 could hurt them more than help if they do not have it solidly baked before selling.

I think if they can stay in Business another 5 years they will pretty much have it made, as they will be able to sell a lot of 3's at some point.  We are still a good 5 years plus away from when things really start to turn to electric IMHO.

Edited April 27, 2017 by A Horse With No Name
spelling

[Robert Hall]

2 hours ago, dfelt said:

wow, did not know this and had not heard this. Amazing, guess his Alpha type personality does not mesh with others well.

I read an interview w his first wife that he would tell her that if she were an employee, he would have fired her. She said he treated her and the kids like employees. 

[A Horse With No Name]

8 minutes ago, Cubical-aka-Moltar said:

I read an interview w his first wife that he would tell her that if she were an employee, he would have fired her. She said he treated her and the kids like employees. 

That seems about right from some of the things I have heard and read...