Tesla’s Model 3 ‘Production Hell’ Tests Musk’s Carmaking Model

When Elon Musk talks about the future of factory automation at Tesla, he envisions new breeds of robots and smart machines compressed in dense factories with little room for human operators, guided by self-learning software.

"At the point at which the factory looks like an 'alien dreadnought'" -- a nod to a video game spaceship -- "you know you've won," Musk has told investors.

But so far, the manufacturing of Tesla's new all-electric compact sedan, the Model 3, at its Fremont, Calif., factory is moving at a more earthbound pace.

When Musk launched the car at an elaborate stage show in July, Tesla was anticipating a production rate of 20,000 Model 3s a month by the end of December. Over three months through September, though, Tesla had produced only 260 Model 3s -- about three cars a day. That's well behind a normal auto-industry production pace of about one car per minute.

The company blamed manufacturing "bottlenecks," without saying what they are. It promised a quick fix, and contested a report in the Wall Street Journal that said the assembly line remained incomplete by early September with some body parts normally installed by robots being employee-assembled by hand.

Still, the "production hell" that Musk acknowledged in a tweet raises questions about whether the Silicon Valley model he has followed -- beta testing with early adopters and launching updates via software -- can be adapted for Tesla's first mass-market product.

Musk needs to fix things, fast. Demand for the car appears strong. The company intends to sell about 400,000 Model 3s in 2018 to customers who have placed deposits and depend on the cash flow from those vehicles to keep the thus-far profitless company running.

"This is a critical juncture for Tesla," said David Keith at the MIT Sloan School of Management. "They need to convert 400,000 orders...

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