Tesla's Dirty Secret: It Was Banging Out Parts Of The Model 3 By Hand

Tyler Durden's picture

As it turns out, Elon Musk’s warning earlier this year that the Tesla Model 3 roll out would be production hell was an understatement.

In a damning – if unsurprising – report, the Wall Street Journal revealed Friday that Tesla managed to produce only a tiny fraction of the 1,500 Model 3 sedans that it promised customers because key parts of the cars are still being assembled by hand, far away from the assembly line at the company’s Fremont factory. As of a few weeks ago, the advanced assembly line that Tesla has long boasted about - and which it had spent billions upon billions in capex to build -  wasn’t ready and the company was working frantically to try and finish it, while keeping the arrangement a secret from purchasers and investors.

More apropos, the report strongly suggests that Tesla’s Monday warning about “production bottlenecks” might not be its last as Elon Musk’s dream of building millions of the "everyman’s electric car" melts before his eyes. 

Unknown to analysts, investors and the hundreds of thousands of customers who signed up to buy it, as recently as early September major portions of the Model 3 were still being banged out by hand, away from the automated production line, according to people familiar with the matter.

 

While the car’s production began in early July, the advanced assembly line Tesla has boasted of building still wasn’t fully ready as of a few weeks ago, the people said. Tesla’s factory workers had been piecing together parts of the cars in a special area while the company feverishly worked to finish the machinery designed to produce Model 3’s at a rate of thousands a week, the people said.

As one analyst quoted by WSJ snydely pointed out, “that’s not how mass production vehicles are made.”

Automotive experts say it is unusual to be building large parts of a car by hand during production. “That’s not how mass production vehicles are made,” said Dennis Virag, a manufacturing consultant who has worked in the automotive industry for 40 years. “That’s horse-and-carriage type manufacturing. That’s not today’s automotive world.”

When called for comment by WSJ, an angry Tesla spokesperson delivered a statement that could have been taken right out of Trump's playbook, slamming what Tesla described as a "decade-long campaign of misleading reporting" by the WSJ.

In a statement, a Tesla spokeswoman declined to answer questions for this article and said, “For over a decade, the WSJ has relentlessly attacked Tesla with misleading articles that, with few exceptions, push or exceed the boundaries of journalistic integrity.

 

While it is possible that this article could be an exception, that is extremely unlikely.” The Journal disagrees with the company’s categorization of its journalism.Musk has staked Tesla’s future (not to mention the company’s massively inflated valuation) on the success of the Model 3, which was intended to be Tesla’s first attempt at building an electric vehicle for “mass market” consumers, priced at a relatively affordable $35,000 a car.

As WSJ pointed out, a memorable statement made by Musk during the July launch event for the Model 3 has proven unusually prophetic. Given Musk’s warnings about “production hell”, it’s surprising that the company’s investors are only now learning about the primitive methods employed by the company.

Tesla introduced the Model 3 at an event outside the company’s factory in July, when Chief Executive Elon Musk drove a shiny red Model 3 onstage as hundreds of his employees cheered the first sedans rolling off the production line.

 

Within minutes of stepping out of the new vehicle, Tesla’s leader warned his engineers and designers the coming months would be challenging. “Frankly, we’re going to be in production hell. Welcome, welcome!” he said to laughter. Behind the scenes, Tesla had fallen weeks behind in finishing the manufacturing systems to build the vehicle.

Or, as the philosopher said, hell is other people, not other conveyors.

Last Monday, Tesla announced it had produced only 260 of the promised 1,500 sedans, an average of only three cars per day. Musk blamed unspecified “production bottlenecks” for the shortfall. That unconscionably charitable characterization of the company’s production problems has now been exposed as totally misleading.

“Although the vast majority of manufacturing subsystems at...our California car plant...are able to operate at high rate, a handful have taken longer to activate than expected,” the company said at the time.

Then on Friday, Musk came up with another excuse, when in the late afternoon, he tweeted that Tesla was ramping up production of its solar-powered Powerwall home batteries, ostensibly to deliver them to Puerto Ricans in need – which is now the reason for both the Model 3 delay and the delay in the unveiling of the Tesla Semi; furthermore it is also an attempt by Musk to cynically use the tragedy in Puerto Rico as cover for his company's production failure.

Worse, as the WSJ points out, although Tesla has struggled with production issues in the past – most notably during the rollout of its 2015 sports-utility vehicle – the obstacles facing the Model 3 are far more threatening to the company’s long-term financial health.

Tesla’s rollout of the Model X sport-utility vehicle in 2015 also was plagued by quality and design issues that left suppliers scrambling and hourly workers having to rush to meet lofty goals. And with employees at the company’s Fremont factory telling WSJ that it could be another month before the assembly line is ready, the production problems plaguing the Model 3 could pose a much bigger threat to the company’s long-term financial health.

Painting a comical scene of primitive, ad hoc production methods more appropriate for some Lada factory deep in the bowels of Russia and certainly not the pinnacle of modern production, the WSJ described a factory where workers struggled to perform tasks typically reserved for heavy machinery as they strained to piece the cars together.

One worker who spent time in the Model 3 shop—dubbed by some as Area 51 because of the limited access and secretive nature—described watching young workers in September struggling to move large pieces of steel to weld together instead of using robots as is traditionally the case.

 

“In place of the robots…you’ve got two associates lining up with a big, old spot welder hanging from the ceiling by a chain, and you’ve got one associate kind of like balancing it and trying to get the welder in position, and you’ve got another welder with his arm guiding it,” this worker recalled seeing. “Sparks go flying.”

It almost makes one wonder where all those billions in capex spending are going?

Finally, the report also contradicts a claim Musk made while speaking to analysts in August that the Model 3s would be “full production cars.”

In August, Mr. Musk told analysts that the Model 3s coming out of the factory were “not engineering validation units.”

 

“They’re fully certified, fully DOT-approved, EPA-approved production cars,” Mr. Musk said, referring to the Department of Transportation and the Environmental Protection Agency. “These are not prototypes in any way. They’re not validation anything. They are full production cars.”

The bottom line is that as much as we’re sure Musk would "love" to help the good people of Puerto Rico rebuild their devastated energy grid - especially if it involves billions in US taxpayer subsidies - he’s not the savior that the Isle of Enchantment needs right now. And while we are confident that Tesla shareholders will soon get what they deserve, we look forward to what the next inevitable "mule with a spinning wheel" product will be...

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roadhazard's picture

fake news, how do I know, it's always time on ZH to bash Musk.

Juggernaut x2's picture

II wouldn't care about Tesla if we, the taxpayer, weren't subsidizing it all 

knukles's picture

He should go sleep next to the assembly line again.

MEFOBILLS's picture

  Large scale manufacturing is hard.

 

Airbus A380 is $2bn over budget

The Airbus A380 superjumbo project is running 1.45bn euros (£1bn; $1.9bn) over budget, the company's majority owner EADS has admitted.

"That is indeed a lot, that is indeed hefty," EADS co-chief executive Rainer Hertrich told journalists in Munich.

Total costs for the double-decker aircraft are now estimated to be more than 12bn euros, the company said.

jcaz's picture

So.... He has the technology ready for self-driving cars, but can't figure out to program a machine to bang out a bumper?

Yeah, I'm gonna double down on my puts Monday.....

Laowei Gweilo's picture

when things are mass produced

OMG NO ONE MAKES ANYTHING WITH CARE ANYMORE

when something is made by hand

OMG WHAT IS THIS STONE AGE CRAP

bad news to investors but otherwise who cares. i wish my shitty british car was made by hand still.

lasvegaspersona's picture

Vat Boris say??? Lada no so badski?

spdrdr's picture

Years ago I had a Lada Niva.  Worked a treat as a small SUV, constant 4WD, light weight, coil springs, strong body panels, 1 metre water clearance.

Unfortunately, you couldn't drive it at night, because the headlights would turn off when you used a left or right indicator.  You had to push in the headlight switch and pull it out again to regain lighting, whilst not indicating.  The instrument panel lighting would cease for no apparent reason, and it usually would not reactivate until the car had been stopped for some time.

I investigated.  I got wiring diagrams to sort the mess out.  Every single goddamn wire had faded to a light pink colour, even those within plastic conduits.  You could occasionally identify an earth wire that used to be black because it was a darker pink shade.  There was no possible means to identify what each wire was supposed to do.

Oh, those Russians!

 

highly debtful's picture

Oh, those Russians! I hear you. I have a Lada Samara which had issues with the simultaneous use of brake lights/indicators/head lights. The thing lighted up like a christmas tree when I had to slow down to turn during the night. That for a car with, at the time, less than 6.000 km on it from new. Turns out the problems were due to ground issues, a simple cleaning and sanding of contacts solved the problem. That's the advantage of older Russian cars: regular problems, but easy to solve with basic tools most of the time.

Oh, and do not ever get involved in a serious car crash whilst driving a Samara, because these things fold up like paper planes. I feel more protected on my Goldwing than I do behind the steering wheel of my Lada. 

kellys_eye's picture

Avid supporters of the future electric vehicles always seem to overlook the important word - ELECTRIC.  Just where do you think that electricity is going to come from in the first place?  Currently the majority of it comes from coal and gas, then nuclear and hydro and lastly from the 'renewables' of solar and wind.

When have you heard of a mass construction campaign for coal, gas or nuclear power stations?  And how many wind turbines or solar fields do you think would be necessary to feed the electric vehicle demand in lieu of the usual obstructinal campaigns for coal, gas and nuclear power station building?  Do you think the climate change advocates (of which there are many delusional members) will ALLOW coal, gas or nuclear stations to be built?  Good luck with that.

It would be a practical impossibility for wind and solar to make up the 'need' - conventional equivalent output MUST be made to cover the no-wind, no-solar occasions.  I refer you back to the previous paragraph.

WAKE UP.  If they haven't got the 'fuel' (electricity) they won't be able to USE the electric vehicles they so clearly wish they could sell.

You're all being conned.

not dead yet's picture

When apprised of the large decline of C02 emissions in the US due to less coal and more gas being used for electric generation the Sierra Club and others said "we're going after gas next." There have been some proposals in Britain to replace gas heat with electric even though currently in winter they are on the verge of blackouts. Expect those proposals to hit the US. Thorium reactors are a long way off, if ever, and good luck trying to construct a nuke plant in the USA. Many of the current nuke plants are old and creaky and operating long past their original design limit. The abundance of gas in the US is about to shrink and prices go higher as there are major pipelines going into Mexico and the US government trying to force countries into taking US LNG. If the enviros have their way you shouldn't have to make a choice as to whether you heat the house or charge the car when it's butt freezing cold outside. You won't be able to to do either. Or when the meters start going wild at night when all the electrics are being charged and the generating plants are at capacity they will go to time of day pricing with their smart meters with every hour of the day costing top dollar. Or we could do like the Brits and cut down all the forests in the US and turn them into pellets, which pollute worse than coal, to be burned in biomass power stations. Currently in Britain they are heating empty buildings with pellets from forests in the southern US as the subsidy to burn them is much higher than the cost. Yep, the wacko doodles promote cutting trees that takes C02 out of the air and then want to spend huge money filtering C02 out of the air and burying it.

Grandad Grumps's picture

So do military equipment manufacturers. What's the point?

Bigly's picture

The Anti-Henry Ford

 

 

Against all lean methodologies. The variability on reliability will be great.

curbjob's picture

Maserati production line at Toyota price line.

What could go wrong  ?

Juggernaut x2's picture

Teslas all look like 2010 Infinitis

peippe's picture

yep, & the newer mercedes suv is looking like the last GM trailblazer.

what the hell is going on? 

where are our hovercars?

RagaMuffin's picture

Paid $15 an hour?

Eyes Opened's picture

Rolls Royce made a pretty penny & a good reputation building cars by hand... 

And as for it not being how mass production is done... well duh ... he AIN'T producing ( & selling) Hondas....

ultrasonic's picture

Somehow I doubt this is the death of Tesla, no matter how much ZHers pray for it.  M3 is a much simpler car than either the S or X.  They will certainly fix the assembly line problems.

PrivetHedge's picture

If they could fix them they'd have done it years ago.

Oliver Klozoff's picture

The best solutions to manufacturing problems come during the design process.

It can take years to develop a team of design, modeling and engineering talent that can successfully deliver parts to the line that fit on a bell curve.

My experience in this field can be measured in decades and I can say with certainty it's a continually evolving process and you always play catch up.

Look at any modern headlight parabola for example and compare to the old square, rectangular or even older round designs of the past.

Freaking jewelry.

peippe's picture

first, 33 early adopters have to die while trying out the technology.

not dead yet's picture

Musk didn't even have finished prototypes at the beginning of 2017 yet promised he would have a viable product by July. In the usual way of making cars when a new one comes out they use the first units for testing to work the bugs out. Musk was going to skip that insinuating Tesla stuff was so good it could go from drawing board to your driveway bug free. Guess reality bit Musk in the ass.

Musk also claimed he had huge orders for his Powerwalls when they were first announced. If that was for real Tesla wouldn't have any to spare for Puerto Rico. His proposal to electrify PR with solar and batteries is ridiculous as it would take decades for his company to do it. More bullshit PR to cover the release of bad news. That huge battery farm he's building in South Australia if it gets fully charged by solar and wind will supply electricty for less than an hour. Won't prevent blackouts. Plus he won the contract over 50 others so unless he bribed the Aussies he put in the low bid and like his cars is doing it below cost.

DennisR's picture

Part of the NWO, thus why it's worth $356/share for a company that doesn't make a real product or real money and just spends cash.

ultrasonic's picture

Funny, it seemed very real to the Porsche 911 and BMW M class drivers who I out-accelerated yesterday in a Tesla product.

Fucking moron.

hxc's picture

I seriously doubt your homosexual hipster of a car can outrace my porsche. Dickhead

Bigly's picture

Car people just must not get it ;)

Nobody dares show up in a Tesla at Limerock. Ferraris, Bentleys, R-8s, and speedster 911s are like water.    A Tesla? <snicker>

 

not dead yet's picture

The bragging rights for Tesla are limited to the quarter mile because to run them flat out for anything but a short time the computer will limit the power to avoid damage to the battery. The little boys in mens bodies, the auto writers, over at Motor Trend had their 12 best drivers cars issue where they beat the hell out of them at the track. Tesla was not among them. Yet when it came to the quarter mile they took out the Mazda Miata and used a Tesla. On a 2.2 mile track a $35 grand Miata was a better car than a $160 grand Tesla that wasn't included in the test because it couldn't compete.

de3de8's picture

Has anyone else noticed how no one ever talks about how heavy electric cars are? Precisely why Richard Hammonds flew off the road driving one, thought it would handle like a traditional performance car. Can't change physics. As for the DB who brags about beating a traditional sports car with his Testical, that's until the first corner.

Identify as Ferengi's picture

Electric motors are all torque. You can climb a tree.

sheikurbootie's picture

Fake news. 

Telsa will dominate the world.  My extremely skeptical wife absolutely loves the idea of the Tesla 3.  I wouldn't have guess it in a million years. 

I own no stock, in anything.  Musk is not just a dreamer, he's a visionary.  I'm still dumbfounded by the haters.  What's to hate?  Listen to the guy, he's not doing this for fame nor fortune.  He's already rich.  Musk wants to change the world. 

An UK reporter asked how Musk wanted to be remembered.  He gave her a puzzling look and said "I don't want to be remembered".  He's not doing this for fame.

sheikurbootie's picture

Says the guy with a CNN symbol.  WTF

Mr. Universe's picture

When a guy says he wants to change the world, make sure it's one you want to live in. Elon's version is pretty myopic to my way of seeing things. So no I would not support it, but alas as a taxpayer I have no choice.

kbohip's picture

No fanboys like Tesla fanboys!

sheikurbootie's picture

I'm an old man. 

No fanboys like bitcoin mental midgets.

I've noticed the anti-Telsa crowd is the same as the bitcoin worshipers. 

Some people never learn.   Others continue to learn.

jaxville's picture

  A few years ago I got to test drive a Tesla roadster.  I was thoroughly impressed but never bought one due primarily to the short range.  There were two charging stations back then but both were over 100 miles away.  There were some other issues but that experience left me with an appreciation of the company and it's product.

  That did not blind me to what a corrupt asshole the owner of the company turned out to be.  Just look into Solar City. Musk did not invent Tesla.  After he bought it the other legitimate companies involved were prescient enough to make for the exits

    Until the range is doubled of current electric cars, it would never be anything more than a second car.  Why piss my money away on a second car when I can put it into something important like my motorcycle.

   By the way ....There may be a future for an internet based currency, bitcoin ain't gonna be it.

knukles's picture

Maybe maybe, just fucking maybe, some of us don't want to partake in Elon's version of the Brave New World.

Here's the deal.
When I was a kid we slept with the doors unlocked.
Does Elon's dream reflect a return to a civil and safe society?

No?

Then it has no fundamental purpose.

One Progressive, when I said that to him; about sleeping with doors unlocked, simply looked at me and said good luck, never gonna happen.
I asked why.
He could not explain why.
Could not explain

The sickness is moral and ethical; it's a problem of Character.

I always end a conversation about that with a comment that for a progressive visionary, they paint a miserable dystopian future.
They been running this shit for 50 yearts and all's done's going to Hell.
Why do I want anybody to lead me to Hell on Earth?
I'm quite capable of getting there myself

So get the fuck off my lawn.

 

Oldwood's picture

No, no, no.

Morality nor ethics has any place in this world.

The only things that matter are convenience and entertainment.

We will happily sell our souls, liberty and freedom for a good time come easy.

An electric car....ooohhh! I just can't wait!!

knukles's picture

 

Older guys get it.
Thank you.

hxc's picture

I'm 26 and i've gotten it since i was born...

sheikurbootie's picture

knuckles, you're just too fucking weird. 

Keep your horse and buggy and be happy. 

What the fuck does leaving your door unlocked have to do with the price of tea in China.  You make no fucking sense.  Are you smoking weed or crack?

knukles's picture

The ability of an individual to leave their doors unlocked is an indica of the general morality and civility of a society.

I know it might be a bit of a deep thought, but most buds understand exactly what I'm speaking to.
It's not whether you got a horse and buggy or a Tesla. 
Got nothing to do with it.

Those things are merely items usually viewed as material wealth.  Like the tea in China. 
Nothing to do with character, morality, ethics and the like, which are the qualities upon which one decides whether it is safe to leave doors open or has a thousand padlocks and thus thinks of one's safe.

One's material crap that owns you.  The other is the quality of men.

Mr. Universe's picture

We lived for years with our doors open. Now we have a security screen door and people steal peaches and lemons off my trees. Today we looked at a wireless security camera system. Many neighbors now have window bars as well reminding me of most of our neighbors South of the border. There, business considers you a threat before they consider you a customer.

EINSILVERGUY's picture

My bet is that you are under 40

 

 

Oliver Klozoff's picture

Damn knuks, you have me crying for a past I never knew.

Grew up in Dee-troit.

We ALWAYS locked our doors.

peddling-fiction's picture

In Finland we used to leave the door open, even in a suburb of Helsinki back in the 80's.

Some small town folks still keep this tradition, even though an ax or a shotgun will be handy, if fists aren't enough.

Immigration and liberal politics changed this in the bigger cities and vacationing spots.