The whole world is talking about Tesla’s inability to produce cars, Elon Musk’s unrealistic timelines, and “broken promises.” But the facts are different:
Fact — 9 months after start of the assembly line, GM had produced about a 1,000 Bolts.
Fact — 9 months after start of the assembly line, Tesla had produced about 10,000 Model 3.
The hype and wild speculations are caused by the Tesla PR disaster in the communication around the Model 3 ramp up. It is a PR failure, because in the real world, the Model 3 ramp is as good or better than the Chevy Bolt ramp.
The “broken promises” are hopes and expectations Musk vented when talking to the press, and Twitter remarks taken out of context. And for the timelines, it is confusing:
We have the intentionally too short timelines to pressure workers and suppliers.
We have the vague, wild-ass guesses about what might happen.
We have the hopes of what could happen when all the stars miraculously align.
We have sometimes the serious planning about what is to happen when and the real financial guidance about next quarter’s production and sales.
It can be very hard to distinguish between these different types of communication from Tesla. Some see it all as “guidance” that results in broken promises and missed deadlines.
The problem in production is mostly a problem in communication. Tesla is doing things differently from others in the car industry. Using different words to describe those actions. That results in confusion among car journalists, car financial analysts, and the public at large.
To understand what has really happened, we need to ignore the words and look at what happened on the factory floor. I wrote a detailed description a few weeks back. But in short, both GM and Tesla employed an army of engineers who installed the robots, tools, and other equipment that form the assembly line, and then turned the whole thing over to production workers and engineers when they were ready. The production department started the new line (very carefully) with perhaps one car a day.
And here starts the confusion. Tesla calls this production and GM calls it pre-production. Tesla needs the cash and sells the first cars to employees, while GM makes its first cars available as company cars to employees. But these are the same types of cars, byproducts of testing and configuration of the assembly line.
GM is using an existing assembly line with a trained workforce. After six months, it is functioning well enough to call it the start of production. In the ninth month, GM delivered its first batch of 579 cars to customers. With the cars delivered to employees and the cars in transit to their dealers, about 1,000 Bolts produced in the first nine months is a reasonable guess.
Tesla used a brand new production line and a freshly hired workforce. The run-up to the start of the production line had gone above expectations. Design of the car was finished within a few days of the target date. The assembly line was installed and ready to start on the never intended to be realized date of July 1, 2017. I think they were on a high and hoped their luck would keep up.
After one month, they delivered their first 30 cars. And then the predicted and expected problems started to appear. As Tesla has often said, which has been forgotten as often — they know where they start (on the first of July), and they know where they end (with 5,000 cars per week), but the middle period is highly uncertain. The line is designed for 5,000 cars per week, and sooner or later it will work as designed. What is not known, and can not be known, is the rate of improvement and the time that it will take.
The most recent prediction/hope of Musk was 2,500 per week at the end of the first quarter. It would not surprise me if Tesla produced at a rate of 2,500 per week in the last 7 or 8 days of March. Using overtime, built up stocks of supplies, and sheer determination, they might have gotten it done. That would bring the total number of Model 3 cars produced in the first 9 months to well over 10,000.
Does this mean Tesla is 10 times as good at producing cars as GM? Not really. The Tesla line is designed to produce 10 times as many cars. Having produced 10 times as many as GM is expected, more or less.
So, does this mean Tesla and GM are just the same in car making? Also not really. Tesla did have a more difficult route with a new assembly line and a new workforce.
It means that Tesla is well above average compared with others in the car industry. And also that news about production problems with Model 3 is normal and doesn’t mean there is any reason to doubt that the line will run as designed after some time.
It took GM 15 months before the Bolt was produced at the rate that was intended. And this was so normal that not a single journalist wrote a long article about the Bolt production problems.
If Tesla succeeds in coming close to 5,000 at the end of the second quarter, using only 12 months to go from zero to full speed, that would be exceptional.
If they need a few more months, that would be normal.
Tesla Model 3 — Cash Cow When Tesla Needs It Most
Tesla Model 3 Competitive Advantage — Costs ~$10,000 Less To Make Than Chevy Bolt
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