Some Auto Industry Suppliers Push Back Against Tesla’s Aggressive Model 3 Production Plans

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A number of automotive industry supplier execs were recently quoted by Reuters as saying that Tesla’s new Model 3 production timeline — 100,000 Model 3s in 2017 and 400,000 in 2018 — would be hard to achieve and “potentially costly.”

Tesla Model 3 greyTo reiterate an oft-stated point here though, the Model 3 has reportedly been designed from the beginning to be simple to manufacture — ease of manufacture apparently being one of the guiding principles during the development period. So, conventional industry expectations may not hold true in this case. And previous experiences during the launches of the highly complex Model X and Model S may not be particularly relevant.

Musk has previously revealed that Tesla expects suppliers to be ready for Model 3 production in July 2017. While these goals may be “unrealistic” for some, according to Musk, the idea is that aggressive deadlines are a necessity for a rapid ramp up. Suppliers that can’t meet deadlines will reportedly be dropped — with in-house production covering for potential supplier problems. Musk made a very important comment on that point, noting that to avoid issues with (possibly) late suppliers, the company would be working to ensure the capability of producing most components internally.

“It’s very important for us to have the ability to produce almost any part on the car at will because it alleviates risk with suppliers,” Musk commented.

Reuters provides more:

One complication is that Tesla has not finalized the Model 3 design and specifications, said automaking consultants and supply executives who asked not to be identified because Tesla prohibits them from disclosing contract details. Musk has said the Model 3 design and engineering would be complete in June, 13 months ahead of the planned production startup. Under ideal conditions, automakers have launched new assembly lines in 18 months, but they typically take two to three years after the first tooling and supply contracts are signed, several manufacturing consultants said.

Fiat Chrysler Automobiles, for example, is converting a Sterling Heights, Michigan sedan plant to make 300,000 Ram 1500 pickups a year, a 50% increase in capacity.

“FCA already has the talent and the money, and the underlying machinery is already installed in the plant,” said one longtime supply sales executive. “They’re aiming to be up and running in 2018, so they have two years — and suppliers are wondering if they’ll make that deadline.”

Automaking consultant Ron Harbour of Oliver Wyman said increasing production at the Fremont plant to 500,000 vehicles in 2018 would require more stamping, welding and assembly machinery that “could take up to 18 months to order and install.”

Other suppliers and consultants were quoted as mentioning: currently high demand for machinery and tooling (surge in product launches approaching); the fact that the Gigafactory isn’t yet complete; and materials shortages (aluminum, lithium, etc); as reasons that the goals were “implausible.”

Notably, many of these quoted sources are based out of Detroit, so it’s a bit hard to tell how much credence to give them. Ulterior motives are of course everywhere in the world.

Notably, Tesla CEO Elon Musk recently commented that he thought there was currently substantial room for innovation in the manufacturing process itself — rather than simply in product design.

It’ll be interesting to see if the company can pull its new production timeline off — if so, it’ll serve as yet another example of how decrepit and ossified the auto industry has seemingly become.

Interestingly, a Detroit-based auto-manufacturing consultant by the name of Frank Faga was quoted as saying: “I’d be really surprised if he can launch production by next July. But this is a guy who says he’s going to Mars. Who am I to say he can’t do this?”

Photo by Kyle Field | CleanTechnica

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James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

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63 thoughts on “Some Auto Industry Suppliers Push Back Against Tesla’s Aggressive Model 3 Production Plans

  • “I’d be really surprised if he can launch production by next July.”
    Who said production will launch by next July? That’s the deadline for part suppliers to be ready and Elon already said they can’t meet that.

    • One would hope that Tesla is planning on a couple rounds of “validation builds” before actual customer production starts. (Particularly after how some early-build X’s turned out.) Suppliers will need to be ready for that with limited parts volumes, and maybe that is scheduled for July ’17.

      • First produced units go to Tesla employees. That means that any bugs should be discovered before the 3 reaches ordinary customer hands.

        • Let’s hope those first Model 3’s don’t have any fatal flaws. Tesla will need all its employees to build the balance of Model 3 production.

          • They’ll have some spares. Sick leave and vacation coverage requires some level of backup…..

          • ROFL..Don’t worry. The model X seats seven. Maybe somebody can pick them up. 😉

      • Chevy will have been driving the Bolt for nearly a year before it launches. They really want to have some time to work the bugs out.

        • Ya because unlike Tesla they can’t do updates.

          • Tesla’s problems haven’t been software updates.

  • I don’t think they quoted the supplier execs that will supply Tesla, but the others.
    And you know how that one goes.. stuff isn’t possible until someone else does it.

  • We will see how fast and big production becomes. On the other hand, it doesn’t seem like their competitors are in a hurry to step up to that kind of volumes ? The Model 3 will probably be a better car than the Bolts etc anyway, Tesla has their Supercharger network – and that magic Apple-like brand recognition…

  • “…ease of manufacture apparently being one of the guiding principles during the development period. So, conventional industry expectations may not hold true in this case.”
    Right, because nobody else in the auto industry is trying to make vehicles more manufacturable or their processes more efficient (i.e. make more money). We’re not just talking about GM, Ford, FCA…look at Toyota and what they’re doing and what their pre-production timelines are. What Musk has proposed is completely unrealistic.

    “Notably, many of these quoted sources are based out of Detroit, so it’s a bit hard to tell how much credence to give them. Ulterior motives are of course everywhere in the world.”
    Again, why listen to experts in a region with more manufacturing experience than anybody else in the world?

    It’s sad that this is turning into a Silicon Valley vs. Detroit thing. They both have different core areas of expertise, understanding that there are increasing areas of overlap. There may be some new ideas that come from cross-pollination but I’m doubtful that the whole industry will be turned upside down.

    Many don’t seem to appreciate that the established OEMs have the challenge of satisfying existing customers (many with very traditional vehicle preferences) while simultaneously trying to keep abreast of new technology and implement it in a way that keep them competitive with companies like Tesla.

    • You hit the nail on the head — it absolutely is a Silicon Valley vs. “Detroit” thing. And it’s not likely to end well for Detroit.

      I had a longer post about this elsewhere, but the short of it is this —

      Apple will soon be making electric cars because they’ve recognized (as Tesla has already demonstrated) that EVs are a essentially piece-parts (battery, motors, wheels, sensors, etc) with the real intelligence being the software that controls it all. Car IP is in the process of completely transitioning from hardware to software. That’s one of the reasons that Tesla open-sourced all its hardware patents. Big Auto’s IP is mostly in their engine design. As such, they’re reluctant to disrupt their own market.

      By 2018-2020 desirable EVs will be selling as many as can be manufactured, and then there’ll be a mad scramble in Detroit to “do something”.

      By then, Google will be selling a full software suite, lets call it “Android Auto”, comprised of OTA updates/(full) autopilot/connected traffic management/phone integration/etc that manufacturers can plug into their generic sensor/control suites. Big Auto will become the exterior designers and assemblers for these cars, not the real intellectual property holders.

      That’s the direction things are headed. The mobile phone wars are headed to auto — only the incumbents still haven’t gotten the message.

      • Yep, the IP is on the move.

        For a future car the differentiating features between makes will be how it entertains you, how automatic it brings you from A to B and how much it costs to do that.
        That’s where the bulk of the market is headed. Car-aficionados will still want to drive the hand shifted, low riding XYZ that roars and squeals when guided along some track/road, sure, but the majority of people for their daily commutes want to get from A to B as cheap and comfortable as possible.
        A BEV with lots of software and IP will be doing exactly that.

        Car driving will be automated like everything else and the dudes who do this kind of thing for a living sit in Silicon Valley and not Detroit.
        It’s like typewriters vs computers.

      • Your major statement is really not true at all; there’s massive amounts of value in the hardware design. Tesla managed to get large portions of that design exactly right… but they got a bunch of other stuff wrong, which is resulting in high warranty costs for early Model Ss, as Tesla replaces badly-designed parts with replacement, better-designed parts. In particular a lot of parts were not properly protected against corrosion; there’s a lot of know-how involved in making a durable car.

        It’s generally a fantasy to think that the value is in software. Software is lovely but has essentially no IP value. I realize this isn’t a popular opinion, but it is in fact the case. Software is way too easy to copy; hardware is much harder to copy.

        Big Auto, however, as you say, put most of its IP in the *ENGINE* design, and that is a complete write-off. Body design? Still valuable (Tesla’s is better). Frame design? Still valuable. Suspension design? Still valuable (Tesla’s is not better). Interior layout design? Still valuable (Tesla’s is better). Motor design? Valuable (Tesla’s is better.)

        • Software has no IP value? Tell that to Google. 🙂

          • I have no problems with linux on a dell m6800 laptop. Beats anything Apple has.

          • One could argue that Google’s real value comes from data. Our data.

          • Remember that OS X is just a flavor of Linux though…

          • The real value of OS X is the proprietary graphical interface that Apple built on top of BSD. Now-a-days the BSD kernel used by OS X is far behind the Linux kernel, but Macs are so limited by what Apple allows, that the ordinary user would never notice. I have used GNOME on Linux for the last ten years (because I support the free software movement), but it still isn’t as attractive as OS X for the average user. However, it wouldn’t be that hard to make a decent Mac clone running Linux, but then you also need the millions of dollars of marketing and you also need to polish up a dozen free software apps to compete with OS X. It’s harder than you think, but one of the major computer companies could have done it if they had the vision, but all of them decided to play it safe and stick with Windows.

        • electrical wiring IP?
          heating/cooling IP?
          I admit that they can put some IP into interior/exterior design (but who cares, tastes are vastly different anyway) and accumulate some knowledge on safety features (Tesla’s safety ratings are exceeding what was there before).. but anything else is commodity really.
          And one purchases commodities from suppliers (which add/deliver their know-how as part of the deal) – unless you’re Tesla and the suppliers didn’t take you seriously at first (or tried to screw with you), then you have to roll some of it yourself – but that will vane.

          The fabric that will hold it all together in the future is software mostly.
          How the car manages to get you from A to B.
          How the car manages it’s energy.
          How the car entertains you while you’re sitting in it.
          How the car get’s better at doing this.

          You can easily ask a couple of grand for upgrades/unlocking of features.
          This is where the cash cow will be waiting for the consumer.
          Want more range?
          Want faster acceleration?
          Want better autopilot?
          Etc. pp.

        • “Interior layout design (Tesla’s is better)”, after 6 months with a Model S I’m not so sure. All the revues raved about the intuitive nature of the touch screen so I assumed I’d soon get to regard the discrete switches employed on other cars as inferior. Well to some extent that is true but not to the degree that Tesla have implemented things. With air-suspension when you are confronted with a new challenge to the ground clearance you really need a discrete dashboard button to hit to give maximum height immediately, you should not need to go through a couple of menus and select a screen button, all of which require taking your eyes off the road. The radio volume control is a knob (scroll wheel) usually so at least that is fine but things like fan speed and cabin temperature are not.
          Still, doing it the Tesla way should be cheaper and the Model 3 needs cost savings when it can get them, for a $100,000 car a few discrete switches would be welcome though.

          • A few switches – would a few voice commands do the job?

            “Tesla. Up. Up, big boy. Rocks ahead.”

          • Ah ha. Someone agrees with my 2 big gripes. I heard/read somewhere that Elon did not like grab handles, so they were excluded. DUMB IMO.

        • Better interior layout design? I beg to differ. After test driving a model S I noticed a distinct lack of thoughtful design… No grab handles above the doors, no door pockets with cup holders just to name 2…

      • There’s one big difference between Android phones and iPhones:

        Everyone with an iPhone gets nagged to update to new operating system. So it’s common for iPhone owners to be up to date; it’s common for Android phone owners to be out of date (recent article somewhere). I’m fairly sure you can actually buy a brand new Android phone and it won’t have the latest. And over the air updates for phones has been around for many years.

        And there really is much more to a car than the engine: seats, handling, braking, suspension geometry to name a few. I love my Prius but drove my daughter’s Volkswagen Jetta today and the Jetta is a far more pleasurable driving experience.

        The other guy’s job is always easier than yours – because you’re ignorant of the details of his job.

      • I think the point that many are missing is that BUILDING the car is the hard part. If anyone is in a mad scramble right now, it’s Tesla as they try to quickly ramp production and reinvent a more efficient manufacturing process as they go.

        Blame Detroit management, if you want, for not making something like the Model S but be aware that that is a business decision. This is an EASY engineering task for the experienced OEMs.

        • After someone pulls off a major accomplishment there are a lot of people who attempt to minimize what has been done by saying “Oh, we could have done that….”.

    • “Again, why listen to experts in a region with more manufacturing experience than anybody else in the world?”

      ” There may be some new ideas that come from cross-pollination but I’m doubtful that the whole industry will be turned upside down.”

      I have no way to know whether Tesla will “turn the whole industry upside down”, but companies do tend to get locked into “This is how we do it. Change would be disruptive.” type thinking.

      Look at what Tesla is doing with battery manufacturing. With the Gigafactory they’re greatly changing the process of making some stuff here, some stuff there, and shipping unfinished product around the world before it’s finally ready to be shipped around the world to the final consumer.
      What I’ve seen happening (what little info is public) is hiring on people with good ideas. Paying them handsomely to come work inside the company and do their magic. Tesla seems to be searching for better ideas. Anyone who has worked in a traditional corporation knows how it is often the case that new ideas have to fight their way again, bucking management resistance.

      • “Again, why listen to experts in a region with more manufacturing experience than anybody else in the world?”
        Let’s talk rockets. You could say the same thing: Lockheed, Boeing, Russia, France. Musk sat down and used first principles and said “Why are rockets so expensive?” And proceeded to build rockets much cheaper.

        • Yes, but unlike rockets, car manufacturing has undergone continual optimization of manufacturing/design processes for the last 100+ years. Vehicle manufacturers survive by selling cars to regular people, not buy winning gigantic government contracts.

          • Tesla is selling cars to customers who want them.

            SpaceX is selling space delivery to customers who want it.

            Different companies. Different products. Different customers. Different sales methods.

            Same result. Shaking up their industries.

          • Musk’s fundamental approach of starting from first principles nevertheless guarantees he’s always thinking “outside of the box”. Look at where Tesla put batteries – now widely copied. And as you said, car manufacturing is highly optimized which means Tesla has many samples to examine and ask: Why did they do it this way? He also can hire or consult with people having experience in a desired area as he did in the rocket business. He uses existing wheels when it makes sense and reinvents wheels when it makes more sense.

            Let’s revisit this near end of 2018.

          • It’s not about who first had the idea.

            It’s about who took the best ideas and put them together into the best package. And built the product.

            I imagined the Hyperloop in the 1950s. I didn’t do anything with that idea. No credit to me. Credit goes to the people who take an idea several people may have had and turn it into something functional.

          • My comment was simply to counter the assumption that other manufacturers are copying Tesla.

          • The 2002 Motor article you linked to shows GM allegedly having taken out 24 patents on these ideas based around the skateboard approach. That was 14 years ago (the lifetime of a design patent) so if some of those were utility (typical lifetime 20 years) patents maybe you have just highlighted the next area GM can set its lawyers to work on suing TeslaMotors.

          • Clever engineering can usually find a way around patents, but yes, GM has a history of great ideas that never got put into play. I was recently surprised to learn that GM actually invented the automated (foot activated) lift-gate feature that Ford so heavily advertises. In full disclosure I work at GM, ironically in the cranktrain side of the company (not EVs). Lots of great IP around here but for many years bean-counting and a company run by non-engineers stagnated the implementation of much of that innovation. Things are very different now. GM is run by engineers and we’re being a lot more aggressive with the implementation of technology. Stay tuned.

          • The infinity of my ignorance now reduced by 1 item. Thanks.

            I’d not be surprised if Musk/Tesla didn’t “borrow” the GM idea; others now using. Curious that GM uses T shape.

          • It’s OK. What’s old is new again. Sometimes ideas come too early.

    • While I’m sure you are correct in suggesting big-auto has strived to reduce the cost of manufacturing by designing ease of manufacturing into their vehicles at the outset; I just wish they would spend a little more time and effort on ease of repair. Having to remove an engine just to access a starter motor and similar insanities does not impress me a lot.

      • The existing automakers have spent all their time and money doing just the opposite.

      • When was the last time you replaced a started on a modern car? I think you’re probably referencing designs from the 80’s or 90’s. Things like starters are designed to last the life of the car, which is 150,000 miles (design target for mechanical systems and components subject to corrosion). If you own a car longer than that, you’re kind of on your own. The only things you really need to worry about on a modern car are tires, oil, and coolant changes. Even spark plugs are designed to last at least 100K, belts about the same. At those intervals, I just pay for the service work (though I used to do all that stuff myself).

        With my Volt, I needed new tires before I was due for my first oil change.

        • You know, that’s a good point. Last time I replaced a starter motor on a car was back in 1967 on a mini, a car where access to the starter motor was very good. However the starter motor was just to illustrate the way cars do not seem to have been designed with serviceability in mind. I’ve had to replace an induction manifold gasket on my Ford (it would have been about 14 years old at the time) and that was painful, far too much unrelated stuff having to be taken off just to get the job done and subsequently fitted back again. Likewise the power steering pressure switch that needs the steering rack removed simply because there is no way to get a spanner on that switch without first removing the rack.
          But that Ford is by far the most reliable car I’ve ever owned. The thing runs like new (shame it does not look like new any more) after 16 years and 100,000 plus miles and I’ve never touched the engine or transmission (other than the afore mentioned gasket and several sets of spark plug leads and plugs) in that time, just tyres, 12V batteries, a set of brake discs and a few pads, some engine oil, wiper blades and window switches.

    • Seems to me that fundamentally, an EV is less complicated, has fewer parts, especially moving parts, and fewer systems. It’s only the battery that’s holding the price up and we can easily project that that barrier will quickly fall away with scale. The model 3 will be relatively easy to manufacture, because it’s inherently less complex. Tesla would only get bad advice from Detroit.
      Existing manufacturers have perfected assembling thousands of parts into working machines; well done them, they kept the wheels moving for 100 years. But now there’s a better way. They either need to adapt fast, or become the buggy whip makers of the 21st century.

  • It takes from 2 to 4 years to go from prototype to production at least that is what I have read. So the car itself should be ready. Now how fast can they get their needed parts and get there assembly line up and running at the volume level they want.

    They have 3 different issues.

    1) Will the car be ready? Maybe Tesla isn’t know for meeting it deadlines.
    2) Will they have their needed parts? Unsure. If the car is ready and they work it hard maybe.
    3) Will they have their plant ready to assemble that many cars? No idea suggests they likely wont be but I am not expert by any strength. So I am guessing like many it will be more like 2018 to 2019 before the get up to volume. However that is still faster then their 2020 number before the huge number of Reservations hit.

    • What’s not properly appreciated by a lot of commenters is the degree to which Tesla has been setting up their plant for assembly of Model 3 *already*. They’ve been making investments into this assembly line for *years* already (which is one reason for the enormous R&D and capital costs in the last few years). I am quite sure the construction of the production lines is much further along than the average Wall Street analyst or the average Detroit automaker assumes it is.

      • Tesla has been working on the manufacturing/assembling needed for 50,000 or 100,000 Mod3s per year for some time. Two to five assembly lines? It looks like two lines to produce about 80,000 ModS/X per year.

        Moving from 100,000 to 500,000 doesn’t mean having to start all over and design new assembly lines. Only ordering “more of the same” and setting it up in exactly the same sequence. Given that the robots are all the same model for each task the software that runs the first line will run the 100th line.

        Moving from 100k to 500k with such short notice is going to involve some scrambling among suppliers. A few balls will be dropped as the juggle ramps up. And some people will home in on those missteps with laser like vision. But I suspect Tesla will get ‘er done in the end.

        • Are they currently running three shifts?

        • Some scrambling among suppliers? LOL. The supply base will almost certainly be the limiting factor in ramping up.

  • The same pile of industry sources told us over and over that Tesla would never make it, that the demand wasn’t there for electric cars, that the gigafactory couldn’t be built, self-driving cars were an expensive fantasy, and that you can’t just treat the driving experience like software and alter it with a download?

    • I think the naysayers are probably doing a pretty good job pointing out the problems and difficulties. We should appreciate how difficult a task this is. But Elon is all about finding good problem solvers, and a high work rate. Where the naysayers were wrong in the past, is assuming he couldn’t overcome the difficulties.

      • At this particular economic and environmental point in history, pointing out problems and difficulties without suggestion or expressing a desire to overcome those is merely an argument in favor of economic incumbents because inertia. I like me some dialectic process to achieve the best outcome as much as anyone, but we need to $!@# or get off the pot here.

        The pointing out of problems by the current auto-industry is a self-serving delay tactic. They’re protecting current-state market share by any means necessary. They aren’t adapting fast enough to overcome the weight of their past liabilities, so they concern troll the competition to try to slow them down.

        • They can delay their own actions, but not Tesla’s. Tesla doesn’t compete in every car catagory yet, and they are still small, but the race is on. Are other makers going to change direction faster than Tesla grows?

          • I’d say the biggest single factor in electric cars, and alternative energy NOT gaining traction is this myth that market incumbents have an advantage based on substance. Changing the way we produce and consume energy is a massive undertaking, and will leave huge swaths of the old economy in ruins. It will create massive new opportunities as well, however. This simple fact biases people toward accepting that the incumbents have things under control, that this turmoil will not happen. That the incumbents are necessarily in this position, not because of political connections, acumen, etc.

            THAT is what incumbents will attempt to leverage to delay Tesla’s (and companies like Tesla) charge into the mainstream. the ICE is in its Kodak moment. If Kodak were destroying the planet and the viability of the future of civilized society.

          • Tesla is very focused on the efficient manufacturing of both cars and batteries. If they succeed, then their already desireable products will become more attainable. If they can get costs down to where they don’t need a subsidy to compete in the mass market, I don’t know what can stop them. Electricity is everywhere.

  • Best part of this is that we can look back at it in 2019 and figure out whether they were full of wisdom or full of shit. Let’s remember to revisit this subject please 🙂

    • Yes! Note to Zack: Put a reminder to yourself to re-run this WITH comments 3 years from now. Would be a hoot. Or several of your choice. Call it “Blast from the Past”.

  • Well, it is how Musk and his companies work: set aggressive timelines to achieve the impossible and then miss it by some margin but still be better than everyone else.

  • 18 moving parts ? Sounds like way too few to me. Wheels = 4. Suspension At least 4, probably more. Steering wheel, shaft, gearbox, shaft to wheels ? Already more than 18. Door handles, motors to drive them, close the rear hatch… the list goes on and on. 18 is pure BS. Someone somewhere probably has a genuine number, way more than 18 IMO… Motor bearings, buttons on the steering wheel, anyone care to add more ?

  • I guess Tesla will accomplish these deadlines as well as it has all other deadlines it set itself before.

    • No more trolling.

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