Tesla appears to have bumped into the reality of automotive logistics, as difficulties in its production operations cause financial losses and problems for customers.
Elon Musk, the founder and CEO of the Californian electric car manufacturer, effectively admitted this when he described the company as going through “production hell” earlier in the year.
A series of press reports have suggested that Tesla is having problems with the level of automation on its assembly line, with both the Wall Street Journal and now the Financial Times stating that important processes, such as welding, which are meant to be using fully automated systems, are presently being done manually, with workers directly manipulating the welding-arms.
In addition, the Financial Times reported on Saturday (4/11/17) that new ‘Model 3’s’ were arriving at distribution points with components missing: “In multiple instances, the company shipped cars from the factory that lacked key parts such as computer modules, digital displays, or even seats. These parts were flown to Tesla-owned dealers, who then assembled them into the vehicle before completing the shipments to customers, according to several people familiar with the practice. “This goes back years,” says a former regional executive, who declined to be named.”
To any logistician who has managed a major assembly operation this must appear quite familiar. Either due to suppliers not delivering the component or the component not being delivered to the assembly line on time, the part is not attached to the product. At Tesla it appears that the problem is internal logistics with in-bound parts inventory not being accessed and delivered to the line fast enough. This a failure of assembly-line scheduling and communication with suppliers.
Indeed, the same article reported that: “They [Tesla] showed complete befuddlement,” says one person who was involved in the process. “Tesla kept saying ‘you need to make it faster’,” the person added. “But any time you make changes [to the design], you go back to the start of the process.”
Conflict on the supply chain was also confirmed by Tesla who said last week that a component supplier associated with battery manufacturing had “dropped the ball”.
None of these issues are particularly original. Indeed, experienced vehicle manufacturers have suffered from not dissimilar problems, with for example, Volkswagen having acute production-line dysfunction on the introduction of its MQB platform. The question for Tesla is how quickly and how effectively they can solve these issues. And, indeed, whether they can solve these issues before they run out of money.
Author: Thomas Cullen
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