Tesla’s Next Broken Promise: 500.000 Cars By 2018

  • Date: 21/09/16
  • Doron Levin, MIT Technology Review

Elon Musk has promised to ramp up production to 500,000 cars by 2018. He may yet come up with some new surprise to keep his company in the game, but this deadline is destined to be missed.

Image result for Tesla car factory

Tesla Motors and its chief executive, Elon Musk, have made an indelible mark on the global automotive industry with their celebrated battery-powered cars, purchased by consumers whose passion for Tesla appears boundless. If that feat just a few years ago seemed unlikely, the youthful company’s next exploit looks even more so: to prove that vehicles in the digital age can be manufactured at great speed and high quality with minimal human manual labor.

Since it started making cars in 2008, Tesla has delivered more than 140,000 electric vehicles globally, most of them its luxury Model S sedan and the Model X crossover with gullwing doors. Earlier this year, 400,000 people each sent Tesla $1,000 deposits toward its next car, the Model 3, scheduled to begin production next July in Tesla’s factory in Fremont, California. Aimed at domination of the mass market for electric vehicles, the Model 3 is a popularly priced, battery-powered sedan that will sell for as little as $35,000. (Nissan has sold 350,000 of the current market leader, the Leaf.)

With the Model 3, Tesla is blazing toward uncharted territory and doing so with characteristic brashness. To build cars for middle-class consumers, in far greater volume and more quickly, Tesla is designing a new type of factory. If it works, it would embody revolutionary innovation in mass manufacturing.

Alien dreadnought

Tesla’s plans have not been spelled out in detail. The company didn’t furnish interviews for this story, but did answer questions via e-mail. Musk has previously declared his intent to “build a machine that builds the machine,” a highly automated vehicle factory that will stun conventional automotive manufacturers, one in which human workers will all but vanish, replaced by highly automated software-directed machinery and robots that will build Model 3s, and perhaps other Tesla models, at speeds greater than any accomplished in assembly plants operated by General Motors, Ford, Toyota, or any other global automaker. During the company’s second-quarter earnings call with financial analysts, Musk nicknamed his proposed factory “alien dreadnought”—a Star Wars battle cruiser from another galaxy.

“The point at which that’s what the factory looks like, that’s when you know you’ve won,” Musk said this summer. The futuristic assembly plant will unfold in three stages, while the number of people needed for assembly work will diminish, he said.  “You can’t have people in the production line itself, otherwise you drop to people speed,” Musk said. Remaining workers will be in charge of maintaining and upgrading machines, as well as “fixing anomalies.”

Musk faces new competition from automakers from Shanghai to Detroit, who have responded to Tesla’s success by accelerating electric vehicle ambitions of their own. GM is the farthest along and will begin production of the Chevrolet Bolt (to be sold as the Opel Ampera in Europe), its competitor to Tesla’s Model 3, later this year.

The way the GM cars will be built contrasts in important ways with Tesla’s method. Though crammed with modern tools, GM’s manufacturing system is stress-tested, the culmination of decades of incremental improvement designed to ensure high quality while meeting consumer demand—with little risk that the flow of vehicles to retailers and consumers will be interrupted or delayed.

By contrast, Tesla has consistently failed to live up to production forecasts. Now Musk, assuming that Tesla will be able to develop and debug a factory production system that operates unlike any the world has seen, has promised a jaw-dropper: that Tesla will deliver 500,000 vehicles in 2018, two years more quickly than an earlier forecast. Once that goal is achieved, Tesla’s output will grow by 50 percent annually, Musk says, reaching about a million vehicles delivered annually by 2020.  Although that output would constitute roughly a tenth of the number of vehicles currently manufactured annually by GM, Volkswagen, or Toyota, it would elevate Tesla from a plucky niche producer to a serious industry player. […]

State-of-the-art car factories rely on assembly-line workers as well as programmable machines. With a typical assembly line producing around 60 vehicles an hour or roughly 1,000 a day on two eight-hour work shifts, a line might, at the outside, be able to manufacture more than 250,000 vehicles a year. (Several North American automotive assembly plants operate on three shifts of six-and-a-half hours. The biggest produce more than 500,000 vehicles a year.) The two-shift total assumes production goes flawlessly. Factor in supplier parts shortages, machinery breakdowns, quality problems, labor issues and changes to vehicle design, and annual production drops to the more typical 100,000 to 150,000 vehicles per assembly line per year.

Those numbers show how hard a task Musk set for his company when he promised to ramp up production to 500,000 cars two years from now. The CEO may yet come up with some new surprise to keep his company in the game, but this deadline is destined to be missed.

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