The Future of Tesla Hinges on This Gigantic Tent

The Tesla story has effectively become a manufacturing story.<p>Can they meet production targets?<p>Can they maintain product quality while they scale?<p>Will they run out of money before they solve the CapEx intensive, low margin problem of automobile manufacturing!!!?<p>Despite the scrapiness of the &quot;build a gigantic tent&quot; story it&#x27;s a bizarre risk.<p>Musk&#x27;s desire for full vertical integration obviously mirror&#x27;s that of Steve Jobs - who ALWAYS claimed a core apple advantage was total vertical integration.<p>But at Apple with the iPhone Job&#x27;s knew he was outgunned by manufacturers and OEMs by a long shot.<p>And calculated that building fabs, plants, etc required a different set of skill sets and capitalization than he had at the time.<p>Where Jobs was a genius was that he maintained control over core manufacturing innovations (machining) and IP, while actually taking on very little manufacturing risk.<p>There&#x27;s a really fascinating overview of this, published in 2011 and key quote<p>&quot;China made Steve Jobs&#x27; revenge possible. Chinese OEMs could produce plenty of iPods, iPhones and iPads to meet demand, leaving Apple free not only to design as it wished, but to control what it designed.&quot;(1)<p>I wish for Tesla&#x27;s sake that they&#x27;d taken a similar path, and I think a likely outcome on the downside of the Tesla story is a restructuring around a model like the above.<p>In the meantime I&#x27;m still rooting for them!<p>(1) <a href="https:&#x2F;&#x2F;www.thestreet.com&#x2F;story&#x2F;11737628&#x2F;1&#x2F;apple-and-the-vertical-integration-dance.html" rel="nofollow">https:&#x2F;&#x2F;www.thestreet.com&#x2F;story&#x2F;11737628&#x2F;1&#x2F;apple-and-the-ver...</a>

The previous word from Musk was that they just had some minor problems with their production line and were on track to ramp up to the normal production rate for the line. Starting up a new line for a new model sometimes takes quite a while, and Tesla had a much more optimistic schedule than is normal in the auto industry. But they seemed to be getting that under control.<p>Now they&#x27;re operating a temporary manual assembly line in a tent? This indicates much bigger problems. And a coverup of them.

&gt; &quot;I don’t think anyone’s seen anything like this outside of the military trying to service vehicles in a war zone. I pity any customer taking delivery of one of these cars. The quality will be shocking&quot;<p>Ouch, that is scathing, proof will be in the pudding though. If there are a lot of QA issues (which it seems reasonable to assume) then the recall rate + bad press might sink them. It&#x27;s a scrappy (maybe desperate?) move, one which you would expect from an underdog, so good luck to them.

Here is better article that actually goes into explaining that it’s just part of the assembly line in order to fix a bottleneck (as in `in addition to`). <a href="https:&#x2F;&#x2F;electrek.co&#x2F;2018&#x2F;06&#x2F;25&#x2F;tesla-model-3-battery-production-5000-unit-per-week-says-gigafactory-employee&#x2F;" rel="nofollow">https:&#x2F;&#x2F;electrek.co&#x2F;2018&#x2F;06&#x2F;25&#x2F;tesla-model-3-battery-product...</a><p>Seriously this Bloomberg article seems just as a scare write up to drop the share prices...

According to recent press coverage, Tesla will both be bankrupt within the year, while killing every driver that attempts to use Autopilot; and at the same time be the savior&#x2F;catalyst of the automobile industry, bringing electric and self-driving vehicles to the masses.<p>Can we ratchet down the Tesla hysteria a few notches?

&gt;&quot;The tent doesn’t have air conditioning, according to the city documents.&quot;<p>This is absolutely insane. The thought of making workers assemble cars in a tent in Fremont with no AC in the middle of summer is just mind-blowing. That thing is going to get over 100 degrees every single day. I think Elon finally lost me on this one.

&gt; What gives manufacturing experts pause about Tesla’s tent is that it was pitched to shelter an assembly line cobbled together with scraps lying around the brick-and-mortar plant. It smacks of a Hail Mary move after months of stopping and starting production to make on-the-fly fixes to automated equipment, which Musk himself has said was a mistake.<p>&gt; “The existing line isn’t functional, it can’t build cars as planned and there isn’t room to get people into work stations to replace the non-functioning robots,” Warburton said in an email. “So here we have it—build cars manually in the parking lot.”<p>When the journalist abandons fact checking and simply goes with publishing this kind of tripe, the reader has no other option but to disregard everything the journalist, their editor or the publication touches.

I&#x27;m still rooting for him. It looks bad, but honestly isn&#x27;t that different than any other assembly line.<p>Once upon a time I worked as an &#x27;aircraft mechanic&#x27; for both L3 communications (US Navy contract) and Boeing (US Airforce contract) out in Texas. Both jobs required the removal of the wings of larger aircraft (P3 orion, 737).<p>Some times we had a hanger and sometimes not. It was pretty brutal, but back then in my youth I&#x27;d take the 110* heat over the cold winter. You were miserable and sun burnt in the heat, but the cold low humidity winter was PAIN. Skin on your hands would start cracking open, along with the skin on your mouth and you&#x27;d be getting blood everywhere. A lot of our time was spent inside the wings. Hard enough with just a t-shirt on, but really difficult with large down jacket on... Usually I&#x27;d have to just leave the jacket off and bare it out. Even worse was inside the wing was considered a &#x27;confined space&#x27; by OSHA so that mean you were supposed to have a duct in there with you blowing fresh air. But in the winter I&#x27;d take breathing in fumes and sanding dust over cold air blowing on me...<p>All in all, we&#x27;d pull the wings, disassemble large portions of them depending on the contract and then reassemble with replacement spars, ribs, etc. We did it, and the planes are still flying (I guess) so I don&#x27;t see why something similar can&#x27;t be done in the auto world. Of course I guess the difference is the government was paying the company about $180&#x2F;hr and the company gave us $22&#x2F;hr, so they had money coming in..

&quot;I pity any customer taking delivery of one of these cars. The quality will be shocking&quot;. I&#x27;m wondering what could affect the quality of the cars if they work under that structure. To me all these critics come from business analysts without imagination and pragmatism. I praise people that push boundaries of what&#x27;s possible, go Tesla.

I used to work for Chrysler &amp; Mercedes. Imo, the tent is a really smart way to increase production throughput. Here&#x27;s why I think so:<p>My guess is that Tesla is pushing the cars through the body shop, paint shop and then partially pushing them through whatever their analog would be to the chassis line in a standard factory. That line would be far simpler in an EV. Together those comprise three fifths of the assembly line, with only Trim + Final car left, which are the two fifths of the assembly line that would be easy to relocate to the tent, since most of the stations are human operators using hand tools. That&#x27;s where most of the material and parts handling is and sounds like where their conveyor belt problems were.<p>The first two lines are totally automated and have been in all factories for 20+ years. As far as I&#x27;m concerned if they can run the first three fifths of the line at 5000&#x2F;week then they will have made it.<p>Elon is a hell of a leader. If I was a short, I&#x27;d have covered weeks ago.

I think Tesla could have taken an alternative, if very non-Elon-Musky approach. Their stock was sky-high based on the assumption that they could dominate EV production and sell huge volume for several years. Instead of building an entire new assembly line from scratch with debt financing, Tesla could have gone big. They could have done an <i>equity</i> deal to buy an entire car company with a flexible assembly line. They could have continued producing the legacy cars <i>and</i> produced Teslas. And they could have taken advantage of the acquired expertise and supply lines to get NUMI up and running much more efficiently.<p>Subaru, for example, would have been a bargain.

Tesla at least has a tent in a benign climate, the Russians setup their manufacturing base in Siberia right out in the open and were able to match and then exceed German production. Meanwhile, German industrial production made good its losses and increased even while having their factories bombed out by strategic bombing.

I recall that Saturn went down a similar path (<a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=FNrfqHaEeYg" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=FNrfqHaEeYg</a>), where they manufactured a lot of the components in house. I wonder how they managed to pull it off.

Well executed automation is extremely space efficient. Poorly executed automation pretends to be space efficient. Rip out all the conveyor belts and add in room for Work In Progress and for people to execute their processes and I can see why you need an extra assembly hall.

Why was this flagged?

“The existing line isn’t functional, it can’t build cars as planned and there isn’t room to get people into work stations to replace the non-functioning robots,” Warburton said in an email. “So here we have it—build cars manually in the parking lot.”<p>This theory makes sense to me. Changing a over-automated line to one that is safe to use by humans must be way more expensive and time consuming then just rebuilding the whole thing in the parking lot. I imagine this line will have a pretty hefty defect rate though.

On the list of &quot;most ambitious humans&quot;, Elon Musk is probably near the top of the list. (Of course it would have to be some kind of blend of ambition and accomplishment, the most ambitious person on the planet could well be living in his mom&#x27;s basement eating pizza right now).<p>I wouldn&#x27;t want to work for him (I hear he&#x27;s a nightmare), but he sure makes for a nice counterpoint to the rest of the daily news!