"On the Fly" Manufacturing

Scrambling to turn out its first mass-market electric car, the automaker set up multiple assembly lines and is changing production processes on the fly.

The New York Times asks Can Elon Musk and Tesla Reinvent the Way Cars Are Made?

The subtitles in bold below are mine and I reordered a few paragraphs.

Just two years ago, Mr. Musk envisioned 2018 as a breakthrough moment. Having established the brand’s cachet with high-end offerings — the Model S luxury sedan and the Model X sport-utility vehicle — Tesla would begin churning out more affordable Model 3 sedans. With a high-speed, high-tech assembly process, the company’s sales would soar more than fivefold, to half a million vehicles.

It hasn’t turned out that way. Tesla had trouble mass-producing both battery packs and cars. By the end of nearly three months of production after Tesla started assembling the Model 3 last summer, just 260 had rolled off the line, and Mr. Musk said the company faced a prolonged period of “manufacturing hell.” He had hoped to produce 20,000 Model 3s a month by December, but a mere 2,425 were completed in the final three months of 2017.

What the heck is this guy doing with what looks like an iron?

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Established car companies master the process with assembly-line workers, and then find ways for machines to take over some of the work. Tesla did the opposite. It designed a highly automated production line populated by more than a thousand robots and other assembly machines.

In a very tangible sense, Tesla views its production line as a laboratory for untested techniques. In recent weeks, company executives concluded they could produce Model 3 underbodies with fewer spot welds than they had been using. The car is still held together by about 5,000 welds, but engineers concluded that some 300 were unnecessary and reprogrammed robots to assemble the steel underbody without them.

300 welds deemed unnecessary on the fly. No possible problem there.

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“It’s unusual to be doing that at this point in time when the car is already launched,” said Mr. Harbour, a veteran manufacturing expert who has visited most of the world’s major auto plants. “Normally you’d make changes like that in the prototype stage.”

“The first step in auto quality is stability,” Mr. Harbour said. “Once you get a stable process that works, you can go back and make improvements.”

Tesla, by contrast, is tinkering with its production lines on the fly, and the tent is a stark illustration of that approach.

And a third assembly line, outside the walls of a plant? “I’ve never heard anything like this, ever,” Mr. Harbour said.

No Possible Problems Here Either

In another bid to push the limits of technology, Tesla at times pulls robots off the line and tests them operating at speeds greater than specified by the supplier, said Charles Mwangi, Tesla’s director of body engineering.

Quality Workers, Fully Trained, Not

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Untrained Workers - What Can possibly Go Wrong?

Mr. Harbour, the manufacturing expert, says automakers typically give new workers several weeks of training before putting them into production work. Bringing in large numbers of new workers can hurt quality because they may not perform their work properly or fail to notice when problems crop up.

New workers at the Fremont plant get three days of training before going to work on a production line. This includes a day of computerized virtual training on doing their jobs safely, and a day of instruction on the area to which they will be assigned.

How About a Broken Jaw?

Worker safety at the Fremont plant has come under scrutiny after a nonprofit news organization, the Center for Investigative Reporting, cataloged a series of injuries suffered by Tesla factory workers. California’s job safety watchdog is investigating a recent incident that left a worker hospitalized with a broken jaw.

Costs Mounting

Tesla has already spent heavily on the Model 3 assembly process, and modifications mean machinery purchased for hundreds of millions of dollars is likely to be discarded.

Max Warburton, an analyst at Sanford C. Bernstein, estimates that Tesla spent about $2 billion to set up the Model 3 production line. “This is vastly more than we’ve seen any other car company spend on new capacity,” he said, adding, “$2 billion is a mind-blowing amount to spend on a second assembly line at an existing plant.”

Story Stocks

I have no position in Tesla. Shorting story stocks requires perfect timing.

Bonds Deep in Junk Territory

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On March 27, Moody's Downgraded Tesla Debt to B3, fearing liquidity pressure.

The divergence between Tesla's bonds, trading deep in Moody's junk territory, and the equity price is startling.

Believe the bonds.

Delivery Promise

Tesla promised to deliver 5,000 cars per week by the end of June.

Watch the stock reaction, especially if the goal is reached. Tesla can easily plunge badly on supposedly "excellent" news.

Expect an announcement soon.

Mike "Mish" Shedlock