So what has gone wrong at Tesla?
“The situation is really very simple,” said Peter Wells, automotive industry expert and professor at Cardiff Business School. “Tesla has seriously underestimated the challenges of bringing a new model to market in major volumes of production.”
The seeds of this misadventure were sewn in May last year, a month after Tesla triumphantly opened the order books for the Model 3 and reservations, each backed by a $1000 returnable deposit, hit 230,000 on the first day.
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Success must have come as a pleasant surprise. Before the launch, Tesla had talked about a 2017 launch date with limited production and a slow ramp-up to more than the 50,000 per year each of the Model S and Model X.
Just a few weeks later, encouraged by the huge demand, Tesla owner Elon Musk boldly announced he would bring volume production forward by 24 months and, instead of making 500,000 units per year in 2020, pledged to hit that number in 2018. Left-hand-drive production is planned to increase to 10,000 a week by the end of 2018, when exports are scheduled to start. Right-hand-drive UK cars are expected in 2019.
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“It is fraught with danger to ramp up production so fast because of the pressure it puts on management, process control, purchasing and, of course, assembly,” said Wells.
Details of Tesla’s struggles to put the Model 3 into production have leaked out on several news websites and paint the picture of a company besieged by its own expectations.
Pictures of the Fremont factory in California appear to show parts stored chaotically line side, vulnerable to damage, and details have emerged of essential production processes very different from those of established car factories.
“You have to remember that it’s a very different mindset in California and Silicon Valley,” Wells said. “But now Tesla is having to pull in experienced automotive people to help.”
Sources suggest Tesla is recruiting significant numbers of car industry purchasing experts as pressure builds on the Model 3 ramp-up.
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Going mainstream with production methods will help Tesla solve its problems, but it goes against Musk’s passion for reinventing the factory – what he calls “the machine that makes the machine”.