He Said, She Said. What’s Going On With Tesla Model 3 Battery Production?

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Tesla has reacted angrily to a report by CNBC claiming that delays in getting Model 3 production up to speed are the result of shoddy practices at the Gigafactory in Nevada. CNBC reports several employees at that facility have told it the battery packs destined for new Model 3 electric cars are being built by hand by inexperienced workers, leading to delays and waste. Those employees suggest the battery packs that are being made contain defects that could potentially lead to hazardous conditions in the cars.

One engineer at the Gigafactory involved in Model 3 battery pack production told CNBC that the process of building battery packs by hand — or partly by hand, as the case may be — has negative implications for accuracy in the production process going forward. “There’s no redundancy, so when one thing goes wrong, everything shuts down. And what’s really concerning are the quality issues.” Tesla has issued an unusually strongly worded statement in response to the CNBC article, which is reproduced in its entirely below.

Statement By Tesla

This is an extremely misinformed and misleading article. To be absolutely clear, we are on track with the previous projections for achieving increased Model 3 production rates that we provided earlier this month. As has been well documented, until we reach full production, by definition some elements of the production process will be more manual. This is something Elon and JB discussed extensively on our Q3 earnings call, and it has no impact on the quality or safety of the batteries we’re producing. As noted in our Q4 deliveries release, during the fourth quarter, “we made major progress addressing Model 3 production bottlenecks, with our production rate increasing significantly towards the end of the quarter.”

Furthermore, as is often the case in manufacturing, some parts of the production process require the expertise of employees with engineering or manufacturing experience, and others don’t. We’ve created thousands of new high-quality jobs in Nevada in recent years. As we continue to expand Gigafactory 1 and ramp Model 3 production, we’ve been able to teach new skills to thousands of new employees, many of whom had no manufacturing experience prior to joining Tesla. New hires on the module line receive extensive training, including safety training, and learn about the importance of proper cell-to-cell spacing so they can identify such issues in the production process. More broadly, battery production – and the module line in particular – is overseen by our top engineering talent, and many of Tesla’s most senior leadership.

Finally, the implication that Tesla would ever deliver a car with a hazardous battery is absolutely inaccurate, contrary to all evidence, and detached from reality. It is irresponsible to suggest as much based on unnamed, anonymous sources who have provided no such evidence and who obviously do not have a complete understanding of the extensive testing that all batteries in Tesla vehicles are subjected to. As with Model S and Model X, which have well demonstrated safety records, we maintain a rigorous approach to quality and process control for the Model 3 battery. Even more importantly, to our knowledge, there has not been a single safety concern in the field related to Model 3 batteries at any point over the six months of Model 3 production.

As for the assertion about cells touching in Model 3 batteries, this is extremely misleading and displays a complete lack of basic knowledge about how our batteries work. Every battery in a Tesla vehicle has thousands of cells, the vast majority of which are at the same voltage potential as neighboring cells. Hypothetically, even if two cells of the same voltage potential were touching, there would be absolutely zero impact, safety or otherwise – it would be as if two neutral pieces of metal touched.

Despite this fact, all Model 3 battery modules’ cell positions are measured twice in manufacturing to verify process control and quality of outgoing parts. Conversely, if at any point in the production process cells are touching at different voltage potentials, they cannot be electrically interconnected. Over the course of the production process, we conduct three different tests to ensure the right number of cells are electrically connected in Model 3 modules. Additionally, the long term reliability of cell position is something validated through testing, including shock and vibration, and high temperature and humidity testing, as well as thermal cycling endurance testing throughout design and via sampling in production.

All of this testing is designed to prevent touching cells from being installed in any of our vehicles, including Model 3. Finally, the safety aspects of our module design would continue to function even in the presence of touching cells, so the concerns raised are further unfounded.

These false claims are being made even though we have a proven history of making the safest vehicles on the road, with Model S and Model X receiving 5-star safety ratings not only overall but in every subcategory. Although not yet tested by NHTSA, Model 3 has been designed and internally tested to have the same result. Data from NHTSA’s testing shows that Model S and Model X have the two lowest probability of injury scores in the history of NHTSA testing.

Furthermore, over billions of miles of actual driving, Tesla’s vehicles have been roughly five times less likely to experience a fire than a conventional gasoline vehicle. In light of these facts, it’s preposterous to suggest that a company as committed to safety as Tesla would allow untested or unsafe batteries to go in our vehicles.

So there you have it. A few people on the inside are claiming — anonymously — that Tesla is screwing up the battery making process, while Tesla vehemently denies those claims and ridicules some aspects of them as completely ill informed and lacking in understanding. It should be noted that some of those people are former employees. Who knows whether they are disgruntled with Tesla and looking for a way to take out their frustrations by taking shots at their former employer? (Note: is anyone ever gruntled?)

An Alternate Opinion

A CleanTechnica reader sent me an email overnight with his thoughts on this matter. He is an engineer with some experience in getting a new production line up and running in the tech world. In his opinion, management often ignores the suggestions made by the engineering staff about how long they need to make the process work correctly. The time allotted is cut short in order to get products into the hands of end users as soon as possible for reasons that have more to do with marketing than engineering.

My source suggests this is normal, typical, and predictable. He also suggests it invariably leads to glitches down the line. Instead of putting out a quality product right from the start, the company is forced to spend more time fixing the mistakes than it would have taken to do it right in the first place. Elon Musk is known for setting impossibly high goals for himself and the companies he manages. I can imagine the pressure to reach those goals must be intense on all concerned. That said, we are well aware that failures in mass-scale production of the Model 3 could take down Tesla, it seems leadership would be well incentivized to get things right the first time. (Full disclosure: I am not a Tesla employee nor have I ever played one on television.)

The Long Knives Are Out

Whatever the truth of the allegations, the news is roiling the investment community, which is still trying to absorb the news about Elon Musk’s new compensation package and the Tesla board’s assertion that Tesla could be worth $650 billion in 10 years.

One person who has spoken up about Tesla and its future prospects this week is Bob Lutz, a former industry executive with big opinions on many subjects. He told an audience at a classic car auction in Scottsdale, Arizona this week that Elon Musk “hasn’t figured out the revenues have to be greater than costs … when you are perennially running out of cash you are just not running a good automobile company.

“I don’t see anything on the horizon that’s going to fix that, so those of you who are interested in collector cars may I suggest buying a Tesla Model S while they’re still available. Twenty-five years from now, [the Model S] will be remembered as the first really good-looking, fast electric car. People will say ‘Too bad they went broke.’”

This is one we hear all the time. Elon Musk might just know that making more money than you spend is how you make a profit, but Tesla’s focus has been the fastest growth possible for a decade or so. If that means waiting over a decade to get profitable, so be it — in the name of a sustainable energy future. Bob thinks this approach will take down Tesla, and he’s been saying that for practically a decade now. Elon clearly disagrees.

So, here we are: Is Tesla trying to fool all the people all the time? Or are the bears piling on in a desperate attempt to protect the bets they have made against the company? You decide.