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The Challenges Facing Production of Upcoming Tesla Vehicles

Flipping through Tesla’s Q2 earnings call last night, I found that manufacturing and upcoming vehicles has been a big topic, but spread out all over the call. While many of our readers are going to want to watch/listen to the whole thing themselves, I went through and grabbed a number of manufacturing insights and challenges from the call so you can just get them here if that’s what you’re looking for!

Lines for New Products vs. “Cut-and-Paste”

One of the questions asked how quickly Tesla can ramp up a “cut-and-paste” manufacturing line. In theory, working out all the kinks and coming up with a good production line is something a manufacturer would only have to do once, and then the effort could be replicated again at a second, third, and fourth factory (or more).

When asked about this, Elon Musk said, “There’s no such thing as ‘cut-and-paste’. It doesn’t exist.”

He went on to point out that setting up a new line for a product that’s already ramped up elsewhere isn’t as easy as you’d think. The Model 3 was already going well in California when the Shanghai factory ramp-up began, but a supply chain is a key part of an assembly line. With supplies needing to come from more local sources, the suppliers and even parts can differ a lot.

This meant that while the lessons of assembly in California did inform Shanghai’s ramp-up, there was still a lot to figure out all over again. Despite the company’s skill, it still took a year to figure all of the new things out for the line. This will happen for new factories anywhere else on the planet.

Even then, production only goes as fast as the worst or most unlucky supplier.

Finally, adding people to the process isn’t as simple as it sounds, either. You can’t just lock 10,000 people in a big room and start getting cars. The whole process requires figuring it out, training people to do their part, and making sure their part in the whole “giant cybernetic collective” is right.

Getting it all to work well together requires some smart management and problem-solvers, but that’s an area where Musk feels that there’s a brain drain in the United States. “I think the U.S. has an overallocation of talent in finance and law,” he said. It’s not that we don’t need good accountants, bankers, investors, and lawyers, but those fields are taking a lot of smart people that could go elsewhere and could do things that are more badly needed, like manufacturing.

New Architectures/Vehicles

Dealing with a new vehicle or a new battery has all of those challenges, plus the challenges of trying to figure out everything basically from scratch. Vehicles like the Cybertruck and the Tesla Semi face these challenges in upcoming production ramp-ups.

“Nobody has ever made a car like this before,” Musk said.

When one institutional investor asked where Tesla would be in a year, he said, “You’d need a lot of crystal balls” to see that. It’s not that they don’t have goals, but there are many variables that come with such a prediction, and even one of them being off could affect everything.

Battery Challenges — “31 Flavors”

Batteries are certainly one of those variables, and in reality it’s more of a function than a variable because it has its own complex set of variables.

For one, there are a great and growing number of different batteries Tesla deals with. In fact, it’s enough that Tesla calls it “31 flavors.” There are several different form factors for battery cells, and on top of that, there are different chemistries that can exist for each form factor. In the end, Tesla is literally dealing with dozens of different versions of battery cells, and that makes production complicated.

Ultimately, Tesla would like to reduce that to just two types of battery. Musk told callers that they want to have one type of iron-based battery cell, and one type of nickel-based battery cell. This would vastly simplify production.

This is a lot harder than it sounds because Tesla basically needs all of the battery cells it can get right now, even if it’s not their preferred type. There is significant unmet demand for Powerwalls and Megapacks. More unmet demand for the Cybertruck and Semi are likely coming — or already here if count all of the customers waiting for the first vehicles. If Tesla doesn’t take anything decent that it can get (that meets quality standards, of course), it won’t be able to keep growing.

How This Compares To Other Automakers

One of the big things I learned from Edward Niedermeyer’s book Ludicrous was just how different Tesla is doing production compared to the rest of the industry. Most automakers are using some variant (often a broken and faulty variant) of the Toyota Production System. Consistency, control, and slow-but-steady production is key. Everything is planned out a number of years in advance, and they try to get everything as perfect as possible.

For small and incremental improvement over time, the TPS works great. You do what works well, and add just a few small and new things at a time for vehicle refreshes, etc. While internal combustion engines have made great strides over decades, those strides didn’t happen overnight the way Tesla is trying to make things happen.

This makes working for Tesla and working for Toyota very different experiences. At Tesla, “heroes” who fix problems are valuable. When someone who had worked in a Tesla factory applied at Toyota, Toyota was shocked that there were big problems that needed to solved by a “hero.” The fact that there was a problem at all meant that something had seriously gone wrong.

This has been great for vehicle quality, and has given Toyota a great reputation for durability, longevity, and reliability over the years, but it has also come at the expense of agility and ability to change rapidly, so there are ups and downs to both philosophies.

What This Shows Us

Gathering up all of these nuggets of information buried in the financial mumbo jumbo that a financial call is full of can give us some useful insights into not only Tesla’s manufacturing operations, but also its philosophy. Tesla values growth and speed, even if that creates processes and operations that other manufacturers would consider disorganized and chaotic.

 
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Written By

Jennifer Sensiba is a long time efficient vehicle enthusiast, writer, and photographer. She grew up around a transmission shop, and has been experimenting with vehicle efficiency since she was 16 and drove a Pontiac Fiero. She likes to explore the Southwest US with her partner, kids, and animals. Follow her on Twitter for her latest articles and other random things: https://twitter.com/JenniferSensiba

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