Published on March 15th, 2018 | by Steve Hanley0
Tesla Parts Getting Reworked At High Rate, Current & Former Tesla Employees Claim. Tesla Refutes Claims.
March 15th, 2018 by Steve Hanley
CNBC is reporting that several current and former employees claim Tesla is experiencing serious problems on its production line in Fremont, California. Such claims have been surfacing in the press for months and are continuously batted away by the company. It’s impossible to verify these claims and we all (well, most of us) want the Model 3 to be a roaring success, but the persistence of the rumors has to be a cause for concern.
We recently reported on a wide variety of attacks on Tesla as the company has grown, and grown more popular. Since we don’t know exactly who these claims come from, what their motivations were for commenting on factory production, or what they know about how Tesla’s production compares to the mass production of cars at other automakers, it’s quite hard for us to judge the veracity of these claims from former and current employees, especially since Tesla strongly denies them. But in the interest of trying to put as much potentially useful information on the table and letting consumers judge for themselves, we’ve decided to hop on the back of CNBC to share this potential news.
For a little more context before getting into that, recall that last month Tesla began notifying Model 3 reservation holders that they might not get their cars on the date originally forecasted. Then, last week, Tesla acknowledged the Model 3 production line in Fremont and the battery pack assembly line at the Gigafactory in Nevada had been shut down for 4 days in February to allow for scheduled updates to both facilities. That’s approximately the bulk of the information we have on how Tesla production has been going in 2018.
The recent CNBC story centers on reports from former and current workers that many Tesla parts are below acceptable standards and are being sent to an offsite remanufacturing facility 50 miles away to be brought up to snuff. Tesla strongly denies these claims. The inference of the report is that those remanufactured parts are then being used to build new cars. Again, though, Tesla strongly denies all such claims. According to CNBC, “One current Tesla engineer estimated that 40% of the parts made or received at its Fremont factory require rework. The need for reviews of parts coming off the line, and rework, has contributed to Model 3 delays, the engineer said. Another current employee from Tesla’s Fremont factory said the company’s defect rate is so high that it’s hard to hit production targets. Inability to hit the numbers is in turn hurting employee morale.”
Tesla hotly denies there is any truth to the allegations. “Our remanufacturing team does not ‘rework’ cars,” a Tesla spokesperson said. Employees might be confusing “rework” and “remanufacturing,” the person said before reiterating that every vehicle is subjected to rigorous quality control involving more than 500 inspections and tests.
So, what is “remanufacturing?” This is a term the typical car customer with no manufacturing experience may not be familiar with. Here’s how Tesla explains it:
“Remanufacturing is not unique to Tesla, it is something that other manufacturers do too. Remanufacturing involves taking older parts and reconditioning them so they can be used for cars when they eventually come in for service. Rather than making new parts from scratch, this is good for the environment and if done well, is equally good for the customer. Any ‘expert’ claiming there is something unusual about this or that it has something to do with the quality of cars that come off a production line is either very confused or just completely wrong.”
One such “expert” is Matt Girvan, founder of MAG Consulting. He tells CNBC, “Even during what is considered ‘launch’ mode, if a company is selling its cars to customers, it should not be experiencing large amounts of rework. This speaks to an internal quality issue that is on a magnitude that is not normal for most car manufacturers.”
Part of the problem may be that Tesla is a vertically integrated company that takes care of many issues in-house that other manufacturers rely on outside companies to handle. Or it could be another example of Tesla charging through the door before it is open and learning as it goes. For an outsider, it is impossible to tell. Either way, we don’t know who the sources of the claims are and Tesla vehemently denies the claims.
All we can say for sure is that Tesla has tol. the investment community it expects to be building 2,500 Model 3 sedans a week by the end of March. That deadline is only a few weeks away at this point. If Tesla meets the target, all will be forgiven. If not, the boo birds and naysayers will be out in full force. Tesla finished its correspondence with CNBC with this statement:
“Our goal is to produce perfect cars for every customer. Therefore, we review every vehicle for even the smallest refinement. We care about even the smallest imperfection like a slight paint gloss texture or a wheel alignment check. We then feed these improvements back to production in a pursuit of perfection. This is reflected in the overall efficiency of the factory, which has improved dramatically.
“For example, the number of labor hours needed to complete a Model S or Model X vehicle has decreased. Whereas before, it took three shifts with considerable overtime to produce our target annual production of 100,000 Model S and X vehicles, now it can be done with only two shifts and minimal overtime. Nothing speaks to this more than the fact that Tesla has the highest customer satisfaction levels and the highest percentage of customers who say that their next car will be a Tesla in the entire global auto industry.”
Tesla is not wrong about the statement made in that last sentence. Could all the carping about problems at the Fremont factory be driven in part by sour grapes on the part of other manufacturers who can’t make similar claims? Come April 3, we should know the long and short of it.
Hat Tip: Leif Hansen
Note: The title of this article and some of the content have been updated for accuracy and context.
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