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[Guevara]

Two back-to-back articles about Tesla's production woes, and more damagingly, Musk's potentially misleading statements to investors.

New revelations about Tesla Inc.'s production of the highly anticipated Model 3 sedan should shock, but not surprise, investors.

The Wall Street Journal reported Friday that Tesla has recently been building major portions of the Model 3 by hand. This comes less than a week after Tesla announced it fell short of its third-quarter production guidance of 1,500 cars by more than 80%.

At the time, Tesla attributed the shortfall to ”production bottlenecks." On Friday, Tesla said it would postpone its launch event for a new truck to November to deal with Model 3 issues and to help provide assistance to Puerto Rico.

Tesla Chief Executive Elon Musk is known as a risk-taker, which has endeared him to Wall Street analysts and investors alike. There is a fine line, however, between setting aggressive goals and misleading shareholders.

Tesla is inching closer to that line. Tesla was making three Model 3s on an average day in the third quarter. Mr. Musk should have known in August, when production guidance was reiterated, that the company wasn't going to produce 1,500 Model 3s by the end of September.

There are other examples. At the Model 3 launch event in July, he told reporters that Tesla had received more than 500,000 customer deposits for the car. Five days later, after a series of questions from The Wall Street Journal, Mr. Musk revised that number to 455,000 on a conference call with investors. The earlier, higher figure he quoted had been ”just a guess."

https://www.wsj.com/articles/the-truth-is-catching-up-with-tesla-1507399374

FREMONT, Calif.— Tesla Inc. TSLA -1.06% blamed ”production bottlenecks" for having made only a fraction of the promised 1,500 Model 3s, the $35,000 sedan designed to propel the luxury electric-car maker into the mainstream.

Unknown to analysts, investors and the hundreds of thousands of customers who signed up to buy it, as recently as early September major portions of the Model 3 were still being banged out by hand, away from the automated production line, according to people familiar with the matter.

While the car's production began in early July, the advanced assembly line Tesla has boasted of building still wasn't fully ready as of a few weeks ago, the people said. Tesla's factory workers had been piecing together parts of the cars in a special area while the company feverishly worked to finish the machinery designed to produce Model 3's at a rate of thousands a week, the people said.

Automotive experts say it is unusual to be building large parts of a car by hand during production. ”That's not how mass production vehicles are made," said Dennis Virag, a manufacturing consultant who has worked in the automotive industry for 40 years. ”That's horse-and-carriage type manufacturing. That's not today's automotive world."

https://www.wsj.com/articles/behind...of-model-3-were-being-made-by-hand-1507321057

More at the links.

This thread made by hand, if old.

 

[Jezbollah]

I think they had the same issues with both the model X and S when they started production.

 

[TAJ]

"Just a guess"?
Hahaha, wow.

 

[The Technomancer]

That's....weird? Is there something about the assembly of the Teslas that require uniquely developed automation solutions?

Every production line is different but what specifically are they not able to solve the automation for?

 

[Fuchsdh]

The car is so hipster-oriented, it even features bespoke manufacturing!

Really don't get how Musk intends on revolutionizing cars if he can't produce them in necessary quantities.

 

[djplaeskool]

Not being prepared when the demand for the Model 3 was a well known quantity is pretty inexcusable.

If you aren't an ultra luxury brand like Aston Martin or Bugatti and aren't charging hundreds of thousands or millions per vehicle, you can't afford to hand-build cars.

 

[Kill Your Masters]

The car is so hipster-oriented, it even features bespoke manufacturing!

Really don't get how Musk intends on revolutionizing cars if he can't produce them in necessary quantities.

He mistook people for robots.

 

[Slayven]

The car is so hipster-oriented, it even features bespoke manufacturing!

Really don't get how Musk intends on revolutionizing cars if he can't produce them in necessary quantities.

artisan organic circuit boards and axles

 

[DizzyCaffeine]

Wow, no one could have seen this high of a demand coming! /s

 

[Aiii]

That's....weird? Is there something about the assembly of the Teslas that require uniquely developed automation solutions?

Every production line is different but what specifically are they not able to solve the automation for?

Probably boils down to a lack of experience. Automation is an art, takes a lot of trial and error and practice.

I reckon they just didn’t give themselves enough time to set up a reliable production line.

 

[Kaiken]

Customers will be waiting their whole lives for a Model 3 at this rate.

 

[SonicXtreme]

I don't understand why this companies stock goes to the moon when it's pretty clear they're run by incompetent people who are never going to cut an actual profit

 

[NateDrake]

Probably boils down to a lack of experience. Automation is an art, takes a lot of trial and error and practice.

I reckon they just didn’t give themselves enough time to set up a reliable production line.

And the Gigafactory isn't fully operational yet.

 

[mlclmtckr]

Makes sense that they would fire all their pro-union employees, they can't afford to pay their people well if they need so many of them.

 

[Lorcain]

I think they just laid off several hundred (around 300?) employees associated with their manufacturing work division, including operations and sales employees. The press statement said the terminations were tied to their annual performance process. Seems like there's some smoke there.

Speeding up production when they have to backfill and train 300 new employees in that work group is going to be tough. And that doesn't even factor in the cost of lost production, if those people were directly impacting the production assembly.

 

[dragonchild]

This thread made by hand, if old.

That’s not how threads are made. That’s typewriter type shit. That’s not today’s NeoGAF.

That's....weird? Is there something about the assembly of the Teslas that require uniquely developed automation solutions?

Artisan manufacturing?

 

[Shao Kahn Brewing a Stew]

I thought they moved resources away from Model 3 production for other business work?

That said, no one should believe Tesla's exponential manufacturing. It's not easy, and it'll be hard to achieve the 2018 target as well.

Thank God I'm in no hurry lol.

 

[East Lake]

I don't understand why this companies stock goes to the moon when it's pretty clear they're run by incompetent people who are never going to cut an actual profit

The stock is high because nobody is going to care if it takes an extra month to get production issues sorted out. For now they have no competition.

Obligatory

In the 2016 first quarter investor call, Musk said the production date is contingent on a “quite aggressive” target date internally and with suppliers.

“It is worth explaining how manufacturing a complex object with several thousand unique components actually works, and what dates are relevant,” Musk said. “In order to achieve volume production of a car, a new car with several thousand unique items, you actually have to set a target date internally and with suppliers that is quite aggressive. And that is the date that has to be taken seriously.”

He continued: “Now, will we actually be able to achieve volume production on July 1 next year? Of course, not. The reason is that even if 99 percent of the internally produced items and supplier items are available on July 1, we still cannot produce the car because you cannot produce a car that is missing 1 percent of its component.”

“Nonetheless, we need to both internally and with suppliers take that date seriously, and there needs to be some penalties for anyone internally or externally who does not meet that timeframe,” he went on. “This has to be the case, because there’s just no way that you have several thousand components, all of whom make it on a particular date.”

https://jalopnik.com/the-tesla-model-3-goes-to-production-in-july-and-protot-1792948565

WSJ report shouldn't be taken at face value.

 

[Lombax]

I don't understand why this companies stock goes to the moon when it's pretty clear they're run by incompetent people who are never going to cut an actual profit

Honestly if you are going to throw shade at the management you should also target the more established auto makers in the US. Several got bailed out for the utterly fucking stupid decisions they made.

Imagine where Telsa [automotive, and battery tech] ]would be today if we let the GM, Chrysler and Ford take the hits they absolutely deserved and diverted funds to better tech.

 

[SwiftDeath]

That's....weird? Is there something about the assembly of the Teslas that require uniquely developed automation solutions?

Every production line is different but what specifically are they not able to solve the automation for?

I'm not a Tesla Engineer but looking at it plainly, I would've thought pure electric vehicles would have less moving parts/less parts in general and should be simpler to assemble, not harder

Initial engineering may be harder though

 

[TheRedSnifit]

The stock is high because nobody is going to care if it takes an extra month to get production issues sorted out. For now they have no competition.

Obligatory

https://jalopnik.com/the-tesla-model-3-goes-to-production-in-july-and-protot-1792948565

WSJ report shouldn't be taken at face value.

You see nothing wrong companies telling investors that they'll produce 1500 cars by x date, when in reality they have nowhere near the ability to hit that? This isn't just some internal goal they missed.

They produced less than 20% of what they told investors they'd have. That's less than 300 finished cars.

 

[DeathoftheEndless]

Obligatory

https://jalopnik.com/the-tesla-model-3-goes-to-production-in-july-and-protot-1792948565

WSJ report shouldn't be taken at face value.

That doesn't contradict the WSJ article at all. In fact, it supports it because it shows that back in March, Tesla didn't even have the prototypes completed.

 

[RecRoulette]

You see nothing wrong companies telling investors that they'll produce 1500 cars by x date, when in reality they have nowhere near the ability to hit that?

They produced less than 20% of what they told investors they'd have. That's less than 300 cars.

Yeah, the actual numbers are crazy. 3 cars a day!

 

[qcf x2]

I like Elon but you can't do 50 different revolutionary things well. You gotta focus on one until it's self-sufficient. I wasn't going to invest in the 3 until it was readily available, with millions of miles of data on reliability, etc. Looks like I have lots of time to hold my money before deciding whether it's worth it.

 

[paperboywriter]

The entire thing seems so overly ambitious it screened failure from the beginning.

 

[-Plasma Reus-]

Don't tell Musk worshippers.

 

[Hickbilly Deluxe]

Cant wait till Tesla has to ask for a bailout. Because eventually investors are going to get fed up and yank their money.

 

[IceCold]

Ya no shit. People look at Testla like its Apple vs a car manufacturer. Cult of personality all over again. Pre-ordering cars? This ain't a SNES mini guys.

 

[Just_myles]

Well this cannot be solved with people power as that will likely create more delay(on boarding getting up to speed etc..). I would spend the money and automated where possible. Only way if they want to increase production. Or develop newer partnerships. What they're doing over there is great work. I 'm willing to overlook this(not even an owner. Had stock for like a week) as long as their goals remain lofty.

 

[Nafai1123]

They better hope people don't start pulling their preorders.

 

[SRG01]

As a former investor, I got out of Tesla for the exact same reasons. I have zero faith that they will meet any of their production targets unless something changes within the corporate culture of that company.

The fact that they laid off hundreds of workers recently and are still piecing some components together by hand is just more problems on top of everything else.

Well this cannot be solved with people power as that will likely create more delay(on boarding getting up to speed etc..). I would spend the money and automated where possible. Only way if they want to increase production. Or develop newer partnerships. What they're doing over there is great work. I 'm willing to overlook this(not even an owner. Had stock for like a week) as long as their goals remain lofty.

It's not even an automation problem. Tesla still has little experience with genuine mass production, whether it be in the manufacturing or management side.

 

[Living the Dream]

I bought a Model S P100D when it became known that the 3 was being delayed. I recommend this route for everyone.

 

[ZeezbruhTV]

Building a $35,000+ vehicle with thousands of parts from all over the world is difficult, news at 11.

 

[Liha]

For now they have no competition.

The world's leading EV maker is Renault-Nissan and not Tesla.

 

[Spyder_Monkey]

Maybe people will stop idolizing Musk. Maybe.

 

[SonicXtreme]

I bought a Model S P100D when it became known that the 3 was being delayed. I recommend this route for everyone.

isn't that like 4x as expensive

 

[perfectchaos007]

He needs to move the company to Germany. Marry Tesla with German Engineering and they'll meet their quota.

 

[SRG01]

isn't that like 4x as expensive

Living the Dream
Member

 

[Bizazedo]

If he still had his personal assistant, he probably wouldn't have missed these "minor details".

 

[Jezbollah]

http://www.theregister.co.uk/2012/09/25/tesla_model_s_production_slows/

http://www.marketwatch.com/story/te...promises-model-3-will-be-different-2016-04-04

So it's happened before with the Model S and Model X.

The only thing that Tesla has to answer for is the claim after the Model X that they wouldnt have such issues with the 3.

 

[-Plasma Reus-]

He needs to move the company to Germany. Marry Tesla with German Engineering and they'll meet their quota.

Not with his abysmal working conditions he won't.

 

[shwimpy]

I bought a Model S P100D when it became known that the 3 was being delayed. I recommend this route for everyone.

Can't believe I didn't think of this... brb going to the Tesla store.

 

[mlclmtckr]

Building a $35,000+ vehicle with thousands of parts from all over the world is difficult, news at 11.

I wish I could fuck up at my job and then tell my boss that work "is difficult, news at 11."

 

[East Lake]

You see nothing wrong companies telling investors that they'll produce 1500 cars by x date, when in reality they have nowhere near the ability to hit that? This isn't just some internal goal they missed.

They produced less than 20% of what they told investors they'd have. That's less than 300 finished cars.

Generally no because that's what they believe the date to be. Like I said before, the stock is still high because on the whole Tesla is fulfilling the goals of investors and production issues happen even among manufacturers with a lot of production experience.

Search "carmaker production disruption" and you'll find hits for every major manufacturer.

http://www.dw.com/en/missing-bosch-part-slows-bmw-production/a-39025630

That doesn't contradict the WSJ article at all. In fact, it supports it because it shows that back in March, Tesla didn't even have the prototypes completed.

It's not meant to contradict the article. The point in bringing it up is that production isn't totally predictable. If you say you're going to produce 1,500 cars on x date and there's production or manufacturing issues that's not really an indication of doom for Tesla. The truth is that production is complicated and not entirely predictable, and probably less so for a younger company, and like I said investors are not going to care if it's going smoothly a couple months from now.

 

[GeordieMark]

The car is so hipster-oriented, it even features bespoke manufacturing!

Really don't get how Musk intends on revolutionizing cars if he can't produce them in necessary quantities.

Shouldn’t have bothered assembling it at all. Just call it “deconstructed”.

 

[HStallion]

The stock is high because nobody is going to care if it takes an extra month to get production issues sorted out. For now they have no competition.

Maybe a few years ago you could have made this claim but this isn't true at all anymore. Its quickly become a hot market and tons of players are in or getting into the game.

 

[SRG01]

Generally no because that's what they believe the date to be. Like I said before, the stock is still high because on the whole Tesla is fulfilling the goals of investors and production issues happen even among manufacturers with a lot of production experience.

Search "carmaker production disruption" and you'll find hits for every major manufacturer.

http://www.dw.com/en/missing-bosch-part-slows-bmw-production/a-39025630

Any company that misses its own targets and guidance by that much on a regular basis deserves to be ravaged by the market and its investors. The fact that Tesla is not and people are waking up to it is the real story here.

Maybe a few years ago you could have made this claim but this isn't true at all anymore. Its quickly become a hot market and tons of players are in or getting into the game.

Exactly. GM actually has a well-built EV and battery testing facility back in 2008 way before Tesla even got off the ground.

 

[Goro Majima]

I think the long term regulatory reality is the other manufacturers throwing their full weight behind EVs and Tesla becoming just another niche manufacturer. The barrier of entry for automotive manufacturing is extremely high and I’m not sure Tesla can compete the with the capacity or logistics of somebody like Ford or Toyota in 10 years or so when most cars are some kind of hybrid or electric.

Their issues with production really just cements their place as a long term side player. So I can see why investors might be less enthusiastic.

 

[SRG01]

I think the long term regulatory reality is the other manufacturers throwing their full weight behind EVs and Tesla becoming just another niche manufacturer. The barrier of entry for automotive manufacturing is extremely high and I’m not sure Tesla can compete the with the capacity or logistics of somebody like Ford or Toyota in 10 years or so when most cars are some kind of hybrid or electric.

Tesla would probably find its niche in AI or something, but really, nearly every other car manufacturer has more resources to throw into AI as well.

I think BMW (or M-B?) already poured hundreds of millions into self-driving vehicles over the past couple of decades, IIRC.

 

[Jeels]

He mistook people for robots.

Wow, that one stung.