Their cars work, they met their target, who cares about the details of the manufacturing process? Yes, there is room for improvement, there is always room for improvement, I let the guys at Tesla deal with their priorities.
It is a nice insight on how things are done at Tesla but that's about it.
A high rework rate is a huge red flag for at-scale manufacturing and says that something is wrong.
It seems like this should be obvious. How healthy is a software engineering environment where 80% of the commits fail at the tail end of the development pipeline and require fixes? I’ve never seen an org that bad.
Maybe, maybe not. We can look at the actual quality of the new cars instead of trying to guess.
For instance, mine had body damage from a road hazard - not an issue of quality, but definitely needing repair. It took a few weeks before the parts were available.
As you can imagine, if your car isn't drivable in the interim that's a big pain and rental bill, but if it is drivable then you just have to wait longer.
Model 3 is completely different beast. If they succeed manufacturing it 5000, then 10,000 per week, the quality must be up if they want to make money.
The high rework rate could be because they catch a lot of mistakes. That would clearly be a good thing. But given what we actually observe from their cars it seems more likely that they catch mistakes with an average success rate but produce more mistakes than normal. That means both more rework, and lower quality because of all the uncaught mistakes.
A lot of people have declined their Model 3's at the dealerships due to issues, even knowing that means they go back onto the wait list.
There are tons of threads about this issue on the Tesla Reddit forums. Less so for Tesla's other vehicles.
And you can’t sustain profitability with this level of rework.
Of course it impacts your manufacturing rate, since anything not passing on first pass needs rework and possibly additional parts, making logistics more difficult etc. But all of that just influences manufacturing rate and cost per vehicle.
It seems like you answered your own question? These are really important for a company that's trying to make money.
Especially if the problems are known problems. If a specific step needs a person or 2 to fix a problem on 90% of cars, but afterwords it works 100% of the time, what's the issue? Changing that step to fix that problem might introduce other issues, or cause problems with the supply chain, or could possibly just not work.
Hiring a few extra people to fix the problem that you know about in order to keep moving forward not only gives you the time to really design and think about a "proper" solution, but also keeps the money flowing in.
Not making the mistake in the first place isn't possible at this point... Your options here are "stop everything and fix it at the source, burning piles of cash every second it's down" or "hire some workers to spend 37 minutes per car to fix these known issue while you work on solving them at the root".
And going with option 1 seems like a fast track to bankruptcy.
Who cares if it takes an extra 37 minutes per car, if they can maintain the same throughput, it won't matter a single bit (except possibly someone having to wait an extra 37 minutes to get their car...)
The extra time spent on manufacturing has as much to do with margins as the delivery truck getting stuck in traffic does. As long as it's not holding anything up, then there isn't an issue.
And it sounds to me like this is a temporary solutions while they fix the root cause, which seems like a really goddamn good idea vs just shutting the whole operation down and giving up.
If you need say 100 million in hardware and 1,000$ in manpower to build a car then spending an extra 100$ in manpower is cheap even * (5,000 * 0.14) = 70k per week. Meanwhile you might be paying 70k per hour the line's stopped.
Granted, you don't want to wait a full year to fix a production issue, but you can batch things so you are fixing several parts of the line at the same time. And if one of those batched fixes was not 100% correct but is re-workable then you can wait another few weeks for the next batch of fixes.
Conversely, if you where producing 50,000 cars per week then rework costs go up and shutting things down quickly to make a minor fix is more viable.
But regardless, if you really think a 37 minute fix is costing them enough that it means they are selling the car for a loss, then I can see why people are upset by this news, as it means that shutting down the entire plant would make more financial sense than selling at a loss.
But since we are both working from a guess of a guess of a guess, I'm fairly certain that an extra 37 minutes per car of work isn't eating over 100% of their profits, and that their choice of not stopping production over small fixable issues is a smart choice. And even if it were, i'd argue that keeping your workforce from getting other jobs because they can't get work at your company while you endlessly tinker with the production lines to try and achieve what only a few companies in existence have done before (almost 100% FPY) isn't good business sense either...
But then you want to throw in the cost of tooling changes, and now this conversation isn't against the cost of a car, but the entire cashflow of the business, which if you are curious you can lookup. They aren't turning a profit, and nobody thinks they are yet. But if people are holding them to the ability to get everything right on the very first try and the second there is an issue to shut down again, then they are going to be disappointed regardless.
Multiply that over departments and many processes and the result is great inefficiency. So FPY is the KPI to stop all that. FPY is not really valuable by itself, but hopefully by the culture it supports. Swapping FPY for # delivered is false management and points to cultural issues. In this case: managing by the wrong target (# delivered instead of the "total worth of the value chain").
Nobody would care if Tesla would just deliver growing amounts of cars at falling costs. It's the bootstrapping (in the Baron of M-sense) towards false metrics that gets the poison going and management is totally working within that frame of mind. They should find their own frame, and operational excellence just might be one. (Apologies for the MBA bs-bingo, but in this case I think it's to the point.)
Isn't swapping FPY for # delivered while they determine the root of the issue and fix it a good plan? It keeps the money flowing in, it helps them find other issues in parallel, and keeps cars getting delivered.
I see a lot of people critisizing Tesla here, but my question is what would you do? You are already in a situation where your plant is producing cars with flaws, no pretending that you don't make mistakes or are infallible and would never be there.
Garbage is flying off the line, what is the solution that you would go with that is better than what Tesla is currently doing?
Without that information, it seems kind of silly seeing everyone proclaim how Tesla is done because of this... It's like telling your doctor that you don't want the medicine because the better solution is to just never get sick in the first place... yeah, everyone agrees, but you are sick, so here take this.
I imagine that it's significantly cheaper to fix the problem (and identify a root cause) when the car is still in pieces than to disassemble the finished product to fix the problem.
As for re-tooling, that can be done down the line with a manual fix in place in the short term (after all, they're able to fix it manually after the assembly line is completed).
Much like how in software development it's cheaper and faster to fix a bug caught in development than it is in production.
Now software is different than cars, but I'm gonna say that I'd go for the latter just about every time. Both as a developer, and as a user.
That doesn't really bode well for their future if they consider their current production rates that imminently important to their success.
The question that follows on: What internal process has prevented that experience from being bought? Instead Tesla seems to have opted to gain that experience from scratch at great cost to investors (and consumers).
When Toyota first started creating their own US factories, they took the steps of shipping floor employees in the US to japan a few at a time and working for weeks of training each class. When other auto companies tried to replicate Toyota processes in their own factories, it didn't help yield in the factories in many cases because often the input supplies needed so much rework. And then they had problems changing suppliers configurations because those relationships were contentious, and not of the nature of Toyota to it's suppliers. When you're trying to stand the whole system up at once, it's not just a matter of "don't write bugs" in one part of the final assembly.
When Boeing reworked it's production design process for the 787, they had years of production problems to re-iron out, despite having years of great process experience previously.
They really need to start being a car company rather than an investment factory. Car companies, particularly the BMWs and Hondas Tesla wants to compete with, care more about their reputation than factory output. I cannot imagine a BMW exec ever sacrificing unit completeness in the name of productivity. For Honda, an unfinished car simply isn't a car worth counting. Tesla has a long way to go before winning me over. (also Toyota)
According to the article, it's an average of 37 minutes of extra work per car that has to happen.
Tesla's saying Tesla should sacrifice completeness because Tesla chose to sacrifice completeness. And a car with a bumper that falls off in the rain is in some way one of incomplete or unfinished.
2 years ago I bought an Audi that I was unable to get into after it dropped below freezing for the first time, because the window leaked water internally which froze and the door can't be opened unless the window comes down slightly. That doesn't mean the Audi was unfinished, or that all Audis are awful...
Shit happens, not every car is perfect, and i'm not saying it is, i'm just saying that they aren't selling half-finished cars. Defects are defects, not an incomplete product.
Having this many defects with this few cars made indicates serious production quality control issues, which just gets worse as production scales.
I would assume that defects will go down as they scale up, as things will become less manual and more automated, and they find the common problems and fix them at manufacturing time.
Are there other car companies that started from nothing that went a different direction? Did they start with nearly perfect cars then get progressively worse as they scaled up? Did they plan to mass manufacturer cars?
They don’t state in the article that the quoted facts about other automakers are for cars in their first model year.
Pretend your are Honda and you just found out this is happening, what do you do? Shut down the plant and fix it properly? Who is going to fund that? What happens if it causes other issues? How long can you afford to do this?
Or would you get some people to fix the problem after production manually while you worked on solving the root of the issue? Exactly what Tesla is doing here...
It seems absolutely insane to me that they Honda would stop the world for something like that. It's like what, $15 per car in labor? $30 per car in labor? And you want to stop the whole factory output for potentially weeks to stop that? That seems like a monumental waste of time and money.
Then Elon Musk is incompetent. Because the fact is, if you don't have the experience in running a factory, you hire someone that does. This is literally a problem that you throw money at, and it goes away.
People here seem to be implying that they should entirely shut down the entire factory and not start it up again until all of these flaws are completely fixed, and that's not "wasting a little bit of time and money" that's putting a bullet in the head of the company.
Most companies shut down their lines every quarter, it's a pretty common thing, and implying that Tesla is "failing" to make all the changes when they do so is silly, this is still a moving target, shit is still changing and improving. If they weren't closing down their line every quarter still, then i'd be worried that they can't keep up and aren't even trying to improve things any more.
Yes.
>> Who is going to fund that? What happens if it causes other issues? How long can you afford to do this?
I don't care. I am not an investor. I am a consumer, a potential customer. I don't care whether the Tesla company lives or dies. I care about the quality of the vehicle I might purchase. Seeing this sort of problem at Tesla is a red flag. I don't want to buy a car made in a factory with such problems.
What really worries me isn't so much the problem, but that Tesla isn't in full panic mode about it. The more defensive they and their supporters are, the more rooted the problem seems. A full shutdown and re-tooling would be a signal that they are a serious company. Musk has the money to do this. Instead we read about bandage solutions. The roots of the problem must be very deep.
If you don't want a car that has ever had any production issues at any point in it's life, you don't want a car.
It's like complaining that Intel has low yield numbers for their CPUs, or that some of the apples that your local orchid grows are rotten.
The cars are being manufactured to the correct specs, it's just a different (more manual) way of doing it. If you care about nothing but your car, then you wouldn't give a shit how it's manufactured as long as it's good.
If you have an issue with the end result of these cars, that's another thing. But the FPY has nothing to do with that. A car made to shitty specs and with awful tolerances is going to be awful regardless of whether they made it awful on the first try or the 10th.
"For some unknown reason, Tesla says that it won’t be shipping the Performance Model 3 with the spoiler included in the performance package for the early production of the vehicle.
Owners will be able to have it shipped and installed at their local service center.
The badge was also a question mark for a long time since the first 50,000 Model 3 vehicles that Tesla produced had no badge beyond the Tesla logo."
https://electrek.co/2018/07/19/tesla-model-3-performance-spo...
The factory not installing something that was part of the vehicle means that the car is incomplete.
You're very naive and haven't read the news in the past few years, it seems.
PS: Referring to the emission scandal.
I get that, but isn't it expected that if you create a new car factory, sort of from scratch, your FPY won't be exceptionally high? Unless you really know what you're doing due to previous experience in car manufacturing?
If you hire the right people you will have that expertise.
It seems to me that it would be an entertaining albeit high pressure job/problem sorting that out. You would of course try to engineer as much of the solution ahead of time, but in production scenarios, shit most definitely happens.
How do you expect them to be "world leaders" in manufacturing technology when they have to rework so many cars? Remember, the narrative is that no one can do it as well as they can. Huge margins!
>who cares about the details of the manufacturing process?
Yeah, who cars about the manufacturing process when your whole business is manufacturing...
Investors
buyers worried for assembly quality and overall reliability?
for example a misplaced or improperly installed mounting brakets make panels noisy over time, panel misalignment will affect resale value, badly tightened glasses will opacize etc.
people aren't able to see the car they're going to get beforehand, at most they can refuse upon delivery, se yes knowing assembly line issues is kinda important for a car, not everyone is a valley software engineer pulling 150k+
edit: wow musketeers out in masses I see