Musk looks tired. There are bags under his eyes and an embattled
admittance of disappointment has replaced the billionaire
entrepreneur’s typical exuberance. A big, yellow strapline reads
"PRODUCTION HELL" and CBSThis
Morningco-host Gayle King appears
agrees with every one of her questionsthat
suggests Tesla hasn't been performing as well as it should.
the eight-minute exclusive tour of his enormous Giga Factory in
Silicon Valley, Musk is asked why it's producing just 2,000 Model 3s
a week, as opposed to the 5,000 a week he promised at launch. He
simply nods and admits: "I need to work out how we can be better and
get better at meeting goals.”
enough. But he then goes on to point out the conference room he
sleeps in overnight while he sorts out the myriad issues facing the
company. A billionaire business owner sleeping on a sofa above a
factory floor: admirable behaviour or a sign of desperation?
looks like investors haven't been too impressed by Tesla's recent
performance, either. In late March, the company's share prince
plunged after it announced a voluntary recall of 123,000 Model S
vehicles. On Tuesday April 17, the company's share price continued
to wobble after it said itwould
temporarily halt productionof its
mid-priced, mass produced Model 3 to "address bottlenecks" in its
Model 3 production plan includes periods of planned downtime in both
Fremont and Gigafactory 1," a Tesla spokesperson said at the time.
"These periods are used to improve automation and systematically
address bottlenecks in order to increase production rates. This is
not unusual and is in fact common in production ramps like this.”
the latest closure makes it the second temporary shut down since
February, and although, as previously stated, this is nothing
completely new in the automotive industry, it is yet another black
mark on a company that has been under fire for production, quality
and autonomous driving issues since its very first car.
was always a huge task to scale up from being a low-volume producer
of luxury cars to a big player in the mass-market electric vehicle
sector,” explains David Bailey, an expert on economic restructuring
and industrial policy at Aston Business School in Birmingham.
has been a pioneer in technology and a trailblazer in the electric
vehicle market, but it has limited knowledge in the manufacturing
process, and to go it alone could spell trouble for the company. The
Model 3 is potentially a make or break scenario for Tesla, and if it
can't prove to its investors that it can scale up and make
significant profit, it could spell bad news,” he adds.
top of this, Musk is addressing build quality issues that have been
raised by customers and critics, with the likes of JD Power, one of
the most influential consumer guides in the world, complaining of
faulty door handles and excessive bodypanel
recent allegations raised by Reveal and The Center for Investigative
Reporting claim that Musk's company concealed the true number ofworkplace
injuriesat its Fremont, California assembly
plant in an attempt to put a positive spin on safety numbers and
divert some of the negative press surrounding the company.
as the fire continues to spread, the entrepreneur is seemingly
employing the tactic of giving as good as he gets, branding Reveal
an “extremist organisation” that “harassed” his workers by “phone or
social media or even in the parking lot of the factory” in astatementon
the company's blog.
"shame"at a group of journalists on a
conference call that dared to allege recent performance-related
firings of hundreds of employees was to "disrupt possible
blustering, almost Trump-like reactions on social media speak
volumes of the gulf that separates Tesla and the more established
automakers of this world.
of engaging in online social disputes or writing ranting blogs on
the company website, traditional OEMs are busy lubricating a
well-oiled PR machine that makes finding a spokesperson to comment
on an article such as the one you are reading near impossible. They
simply don't want to get involved.
is a fantastic marketer, and the reason why his investors have been
so patient up to this point is mainly down to his actions," explains
Bailey. "But Tesla should learn from the larger OEMs about
transparency, the way Toyota fell on its sword over its numerous
recall issues, for example. Musk has to start being more accountable
and improve on the way he communicates with the outside world if the
company is to be a big player in the volume market.”
it right first time
a recent 'digital day' hosted by BMW to showcase some of its future
innovations, Klaus Fröhlich, member of the Board of Management of
BMW AG, said that he didn't want the widespread implementation of 5G
networks in the auto sector to be used as a conduit for continuous
over-the-air “patching” of systems and features.
want to get our products right first time," he said while joined by
fellow member of the board Peter Schwarzenbauer. "Customers should
not expect to receive lots of patches and updates on their vehicles
like they do with some other manufacturers, we want to release a
product when it is ready," he added.
many Tesla customers have enjoyed unlocking new features on their
cars, should the wider car-buying public really play guinea pig to
test systems that aren't quite ready?
Model X should have been a turning point for Tesla, but it got a lot
of things wrong there, too," explains Mike Ramsey, automotive
analyst at Gartner and former automotive journalist for the likes ofBloombergandThe
Wall Street Journal. "It was rushed out to meet production
deadlines, which meant customers had to wait for updates to access
the full functionality," he adds.
have historically been slow to react and too corporate in their
approach to car making, but more than 100 years of experience
suggests that slow and steady can help win the race and the trust of
its customers, certainly when it comes to safety.
2016, following the death of a Tesla driver in Florida, Tesla had to
introduce new safety functionality, such as shutting off Autopilot
if the driver's hands are off the wheel too long, after the US
National Transportation Safety Board claimed Tesla "lacked
understanding" of Autopilot's limitations.
was on one of the original calls when Musk announced some of the
Autopilot features on the Model S," explains Ramsey. "It wasn't sold
as a comfort feature or an additional safety device, this was sold
as a fully hands-off system that could be used on the highway and
everyone was sceptical back then.”
also didn't want to spend a lot of money, so much of the system used
off-the-shelf parts and additional software, which every other
manufacturer could also do at the time but chose not to because they
didn't want their customers thinking these cars could actually drive
themselves," he adds.
help Tesla meet the self-imposed Model 3 targets, it recently
invested in Germany’s Grohmann Engineering, an experienced
automation expert that would be brought in to “build the machines
that build the machine”, as Musk put it at the time.
move would see much of the Model 3 build process handled by robots,
which is not uncommon in the advanced production lines of this
world, but industry insiders claim this overly aggressive move is
costing Tesla time and money.Business
Wall Street analysts have condemned Tesla's attempt to automate the
final assembly process in a move to speed up production.
Japanese style of production is to try and limit automation
initially as it is expensive and statistically inversely correlated
to quality," explains Benny Daniel, vice president of consulting on
Mobility in Europe for Frost & Sullivan. "The approach is to get
the process right first, then bring in the robots, basically the
opposite of what Musk did.”
sentiment that is echoed by Gartner’s automotive analyst Ramsey, who
explains that Tesla is attempting to produce its Model 3 using
prototype tooling, rather than testing its abilities first. "It's
the start-up mentality again," he says. "Tesla takes the approach of
trying something and then fixing it when it doesn't work, rather
than testing before committing," he adds.
is another example of a lack of experience, and possibly research,
seeing as aggressive automation has been attempted by the likes of
Volkswagen and Fiat in the past but ultimately failed.
great expense, Musk now admits this and took toTwitter
to say: “Yes, excessive automation at Tesla was a mistake. To
be precise, my mistake. Humans are underrated.”
subject that isn't being broached is Tesla's experience with steel,"
explains Bailey. "Its previous models used copious amounts of
aluminium, but to cut costs the Model 3 uses steel and that requires
a completely different set of manufacturing knowledge. Collaboration
with experts in this field could have saved a lot of the confusion
perfect storm of tough, self-imposed deadlines, inexperience in the
manufacturing process and a PR strategy that aggressively defends
its position in the face of criticism has lead to the predicament
Tesla is currently facing.
response, Musk announced that the Fremont plant would move to 24/7
operations to hit a new deadline of 6,000 Model 3s per week,
according to anemail
sent outto employees. He also famously
added his tips on how to improve productivity by walking out of
meetings or ending phone calls that weren't relevant, as well as
stating that any department that couldn't meet the targets he set
would "need to have a very good explanation why not".
Musk might be going through “production hell” right now, but it
seems he is taking Winston Churchill's advice, which he hasquoted
in the past, to "just keep going". And that likely means a few
more rough nights on the sofa in conference room above the shop