Tesla's Immediate Problem Is Its Long-Term Advantage: Automation

Getty Images / Bill Pugliano

The Tesla Model 3 production line is heavily automated, and right now that’s a problem. During the company’s third quarter earnings call on Wednesday, CEO Elon Musk told investment analysts that the $35,000 electric car, which launched this summer to much fanfare, has struggled to reach its lofty production goals because of issues with manufacturing. Automation will certainly prove faster in the long term, but in the short term, Tesla can’t switch out its army of robots for humans.

“There’s vastly more automation with Model 3,” Musk said during the call. “Now the tricky thing is that when one automation doesn’t work, it’s really harder to make up for it with men and labor. So with [Tesla Model] S or X, because a lot less that was automated, we could scale up labor hours and achieve a high level of production.”

The Model 3, by far the cheapest car Tesla has ever produced, is central to a company mission to boost production rates. Although the car has been “designed for manufacturing,” as Musk described it earlier this year, the Model 3 has 10,000 unique parts, meaning there’s tens of thousands of processes to produce each car. Any delays in this process can quickly build up.

Tesla Model 3.


An unexpected issue in battery module assembly has had a knock-on effect. Musk decided to take Wednesday’s call at the Gigafactory, an under-construction building in the Nevada desert that’s already started producing Model 3s, because he moves to “wherever the biggest problem is in Tesla.” Right now, that’s in the second of four of the Model 3’s major production zones.

“We had a subcontractor, a systems integration subcontractor, that unfortunately really dropped the ball, and we did not realize the degree to which the ball was dropped until quite recently, and this is a very complex manufacturing area,” Musk said. “We had to rewrite all of the software from scratch, and redo many of the mechanical and electrical elements.”

This was a monumental task that involved rewriting somewhere around 20 and 30 man-years of software in the space of four weeks.

These issues have hit the expected production rate. In July, when Model 3 production started, Musk said Tesla could produce over 1,500 cars in the month of September. The company only made 260 Model 3s over that three-month period and delivered 222 of them. In the earnings call, Musk said that Tesla now expects to produce 5,000 cars per week sometime in March, a rate the company previously expected to reach by around December. But Musk was optimistic, describing the Model 3 as a “10-year program” that can handle some small delays, and that production will grow exponentially.

With a highly-automated production line, Tesla is constrained in how it can boost production speeds.

“We are pushing robots to the limit in terms of the speed that they can operate at, and asking our suppliers to make robots go way faster, and they are shocked because nobody has ever asked them that question,” Musk said. “It’s like if you can see the robot move, it’s too slow.”

Tesla shared a video of these slow-moving robots in action:

The company also shared a video of its general assembly:

Tesla expects to announce fourth quarter delivery and production stats in the first few days of January. At that point, it should become clear whether it can reach its March goal.

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