March 29, 2018
Tesla Is Using Too Much Automation In Model 3 Manufacture, Some Analysts Say

Is the Tesla Model 3 depending too heavily on automation? According to Techcrunch, Wall Street analysts Max Warburton and Toni Sacconaghi say yes. They claim that the luxury electric car's overuse of automation is causing their difficulties with scaling up production of their mass-market vehicle.

"Tesla has tried to hyper-automate final assembly," their report says. "We believe Tesla has been too ambitious with automation on the Model 3 line. Few have seen it (the plant is off-limits at present), but we know this: Tesla has spent c.2x what a traditional OEM spends per unit on capacity."

They state that Tesla uses automation in their final assembly process, which means that they use the robots to put the car parts together in the last stage of manufacturing. They also use automated machinery in earlier parts of the process as well, like stamping and welding.

The analysts outline that the cost of automation is high and does not translate over to the quality of the assembly. It is "statistically inversely correlated to quality," the reports says of Tesla manufacturing machines. They also state that they are not saving on the cost of labor by automating so extensively. The Wall Street analysts claim that Elon Musk and Tesla are only saving $50 on every car for all of that machinery. However, it costs a lot to install and maintain the machinery.

"So the net labor saving may be only $50 per unit. Yet putting the automation into the plant seems to involve an apparent capital cost that's $4,000 higher per unit of capacity than for a normal plant," they said.

They add that it's "hard to see an economic case" for automation, even if they ever find a way for their manufacturing model to work.

"So why exactly has Tesla taken this route? It's unclear," they asked.

Techcrunch claims that Tesla hasn't responded to their efforts to reach them for comment. Bloomberg reports that the company's "production bottlenecks" have continued. The situation has reportedly become so dire that investors are questioning whether Tesla will have to pursue another round of funding. According to Bloomberg, based on a note from the vice president of production, Tesla has stopped production on the Model S and X on a couple of days a week because they are ahead of schedule on those vehicles. Those workers will have the option of working on Model 3 production. The company claims that the shift of workers has nothing to do with Model 3 production goals.