Tesla saw its biggest quarterly losses ever in the fourth quarter of 2017, as announced Wednesday in the electric car company’s earnings report, but CEO Elon Musk is characteristically looking toward a brighter future. Think of car-assembling factory as a product, Musk said.
During a conference call with investment analysts after the earnings report was released, Musk again brought up his vision for how largely automated Tesla factories will differentiate the company from other automakers.
There are two things Tesla has to do better in order to make 5,000 Tesla Model 3 vehicles every week and both are related to automated processes.
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It’s safe to say that Musk often thinks about about robots and the speed at which they can potentially move, an obsession that’s manifested itself into how he wants Tesla to assemble its Model 3 and coming Model Y vehicle.
Last fall, Musk predicted on Twitter that in a few years, robots will move so quickly “you’ll need a strobe light” to see them. If only they moved that fast at Tesla’s Gigafactory battery plant, where production of batteries slowed down Model 3 production greatly, causing Tesla to push back production target: Five-thousand Model 3s a week were supposed to be produced in December; that projection has been bumped back to June.
“I’m hopeful that people think that if we can send a Roadster to the asteroid belt, we could probably solve Model 3 production,” Musk said on Wednesday. “It’s just a matter of time, and really error bars on the timing are really quite small in the grand scheme of things.”
“We’re going to productize the factory.”
The Model 3 sedan, a stripped-down version of the luxurious Model S that starts at $35,000, is the prototype for the Tesla Semi and the coming Model Y, a crossover Tesla’s only teased with silhouetted marketing images.
Musk is convinced that once it gets its Model 3 problems solved — which Tesla is doing now — car-making will be more efficient, more prolific, and more futuristic than any of its competitors at General Motors, Ford, or Toyota.
He brought up the Ford River Rogue Complex, which was the largest integrated car factory on the planet when it opened in 1928 in Dearborn, Michigan. The plant inspired designers at other car companies to make their own mega plants.
Here are Musk’s comments in full:
“The competitive strength of Tesla long-term is not going to be the car; it’s going to be the factory,” he said. “We’re going to productize the factory.
“And really, this is a lesson that is kind of obvious in history because the Model T wasn’t the product, it was [the Ford River Rouge Complex]. The Model T was a very simple car. Anybody could have made that car, but not anyone could make River Rouge, and that’s really what will ultimate – what will be Tesla’s long-term competitive advantage.
“We’ll have a great product. So a great design, great engineering the products itself in the vehicles and autonomy and all that sort of stuff. But the factory is going to be the product that has the long-term sustained competitive advantage, in my opinion.
Two Projects to Make Model 3 Vehicles Faster:
1. For Tesla to get its production rate up, it needs to disassemble completely rebuilt automated battery production lines that were developed in Germany, ship them to the Gigafactory in Nevada, reassemble them, and put them into operation. That will get the Model 3 production up to between 2,000 and 2,500 cars per week, Musk said.
2. After that the transfer of materials between areas of its assembly plant in Fremont, California needs to become faster still. To do that, Musk said Tesla has developed a “very sophisticated automated parts conveyance system” that needs to be installed but that project “appears to be on track.”
When those two upgrades are complete, Tesla can produce 5,000 Model 3s a week, which, as the company has said, should happen by the end of June.
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