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Tesla’s Model 3 production bottleneck is related to a constraint in the battery module assembly line at Gigafactory 1, where cells are packaged into modules.
According to the company’s Q3 2017 letter to shareholders:
Four modules are packaged into an aluminum case to form a Model 3 battery pack. The combined complexity of module design and its automated manufacturing process has taken this line longer to ramp than expected. The biggest challenge is that the first two zones of a four zone process, key elements of which were done by manufacturing systems suppliers, had to be taken over and significantly redesigned by Tesla. We have redirected our best engineering talent to fine-tune the automated processes and related robotic programming, and we are confident that throughput will increase substantially in upcoming weeks and ultimately be capable of production rates significantly greater than the original specification.
Tesla CEO Elon Musk said on the earnings call that software for the manufacturing systems had to be rebuilt from scratch and “there’s still a long way to go.” He said software is the easy part. The larger challenge will be actually deploying the software to mechanical elements of the system.
Musk said there are thousands of processes involved in building the Model 3 and the factory can only “move as fast as the slowest piece.”
With manufacturing woes in mind, Tesla has updated the Model 3’s production timeline. According to the shareholder letter:
Based on what we know now, we currently expect to achieve a production rate of 5,000 Model 3 vehicles per week by late Q1 2018, recognizing that our production growth rate is like a stepped exponential, so there can be large forward jumps from one week to the next. We will provide an update when we announce Q4 production and delivery numbers in the first few days of January. With respect to the timing for producing 10,000 units per week, it has always been our intention to implement that capacity addition after we have achieved a 5,000 per week run rate.
Musk said the company remains in “production hell,” but he can now “see a clear path to sunshine.”