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Autonomous Vehicles

Published on May 2nd, 2018 | by Kyle Field

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Tesla Model 3 Production Rates Continue To Climb

May 2nd, 2018 by  


Today, as it does every quarter, Tesla shared its quarterly update in an earnings letter that precedes its quarterly investor earnings call (where analysts are able to poke and prod for additional detail). Below are what we considered to be the production highlights.

Model 3 Production Rates

In this month’s earnings call, which looks back on the first quarter of 2018, all eyes are on Tesla’s Model 3 production ramp, which has been underwhelming compared to Tesla’s typical, aggressive estimates, leaving investors uncertain of Tesla’s ability to deliver on building Model 3 at full production volume of nearly 10,000 cars per week.

CEO Elon Musk calls the production ramp “production hell” and has even resorted to sleeping at the factory in an attempt to sand off as many of the rough edges in the production process as quickly as possible. Getting right into the details, the quarterly letter confirms that Tesla was able to exceed a Model 3 production rate 0f 2,000 cars per week for three weeks, topping out at 2,270 cars per week at the peak one week in April. After that week, production was shut down for a few days as previously planned — not as an emergency to deal with a problem, as many media outlets implied.

For context, Tesla produced approximately as many in the first half of April — 4,750 Model 3 vehicles — as were produced in half of the preceding quarter (Q4 2017). That serves to highlight just how much Tesla has struggled to build Model 3 as well as the impressive progress over the last few months, progress that allowed it to triple its Model 3 production rates in just a handful of weeks.

Following the three weeks of high throughput in April, Tesla took a few days of downtime on the Model 3 lines to make improvements in the equipment. Looking out at the rest of the current quarter, Tesla noted that it plans to take another couple of days of downtime on the lines to make the next set of upgrades and improvements to the Model 3 line. “During Q2, we expect to shut down production for about 10 days, which includes the shutdown we took in April, to address bottlenecks across the lines and increase production to new levels.”

In terms of putting cars into the hands of (eager) customers, Tesla is already cutting into the competition in a big way. We covered this last month from our own initiative/legwork and Tesla confirmed as much in an update on how Tesla Model 3 shipments compare to its competition in the mid-size luxury car class. It nearly took the #1 spot in the class by April.

The graph clearly shows the Model 3 production ramp streaking up and through the market share of the competition in the mid-sized premium sedan category. If the Model 3 reveal back in 2016 didn’t have the competition waking up in the middle of the night sweating about Tesla eating their lunch, this graph surely will.

Breaking the Bottlenecks

Looking into the future for the Model 3 production numbers, Tesla is targeting to hit a production rate of 5,000 vehicles per week in two months. At that point, after what will surely be a massive party at Tesla’s Fremont factory, Tesla will start expanding the options available on Model 3, including by offering all-wheel drive (expected in mid-2018) and the highly anticipated base configuration, which will include the standard battery pack with its 220 miles of range (expected in late 2018).

Beyond those near-term milestones, Tesla will look to push production further, but in a more “capital efficient manner to add incremental capacity to ultimately get to a 10,000 unit weekly rate.

Tesla commented that while it had alleviated the near-term throughput bottlenecks in battery module production, a longer-term solution was already in the works at its engineering facility in Germany that would still be completed in parallel to the work happening in Fremont, California, at its production facility. It hopes to achieve a module production rate of 5,000 “car sets per week,” using its current semi-automated production design until the new line design, which will automate the battery module assembly process, is installed.

The new automated battery module assembly line will allow Tesla to drive the cost of operating the line down even further, at which point Tesla’s engineering team in Germany will re-focus on alleviating other bottlenecks in the production line.

Automation Reigns Supreme

In the last few weeks, Elon has waffled a bit on his bold claims of a nearly autonomous production line for Model 3, but Tesla’s Q1 2018 letter reaffirms that automation is still a pillar in Tesla’s plan to build high-volume, low-cost electric cars for the masses.

In addition to just being able to churn out vehicles by the hundreds of thousands, Tesla believes automation will help it to build vehicles at lower safety incident rates as well. This is a point that Tesla has taken a lot of flak for in recent months as the autoworker’s union has continued to push on the company, publicly and through its employees at every hint of a safety incident or injury. Logically, automating a process and physically removing humans from the day-to-day process of building cars will make the production lines safer, but Tesla has to deliver on the promise of increased automation before the utopian zero-safety-incident factory can be realized.

To that effect, Tesla shared that its plan for a highly automated production line for Model 3 have largely been successful:

“We are already seeing many benefits from heavily increasing automation as part of the Model 3 production process. Through the vast majority of Model 3 production, including in body welding, general assembly, inverter and drive unit production, our automation effort has been very successful. Based on every measurable metric, Model 3 is already the highest quality vehicle we have ever produced, and this is unquestionably due in large part to automation.

“Additionally, we’ve been able to create significant safety benefits in the factory. For example, many steps in the assembly process, including “marriage” of the battery pack and drive unit with the body, and installation of the instrument panel, seats, and wheels, are ergonomically challenging for our employees, but by automating these processes, we have been able to solve this and significantly improve safety for our team. That said, a step change in manufacturing doesn’t come without its challenges, particularly early in the process, and we made a mistake by adding too much automation too quickly.”

The Machine that Builds the Machine

The bullish approach Tesla took to designing the Model 3 to be easy to manufacture also looks to be paying out in terms of the much more streamlined production process required to piece it all together. Tesla shared that the Model 3 general assembly process is comprised of fewer than 50 steps and that it is built using a single, standard body frame, whereas the Model S had 80 (!!) different body frame configurations.

The wiring harness for the Model 3 has also been distilled down to the bare bones, with 50% less mass than comparable vehicles. These optimizations translate into fewer touches, less time, fewer materials in each car and less raw material inventory that must be maintained.

Source: Tesla


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About the Author

I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. TSLA investor. Tesla referral link: http://ts.la/kyle623



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