Boy wouldn't it be great if it were that simple. But, it's not.
First, scaling up a complex manufacturing operation with a complex supply chain isn't simple. It's never simple. It's complicated, and fraught with problems.
Not only does Tesla have to dramatically scale, but their suppliers have to as well. So, if you are a supplier to Tesla, who's funding your production capacity expansion? Are you willing to take on the risk, financially, based on a forecast that seems almost unrealistic? It may not be just Tesla that needs to execute a capital raise. The supply chain has to be in lock-step, especially those suppliers who make unique components. I'm not talking about commodity items like tires, etc. I'm talking about companies who have to front end load the expense of designing new products and programs.
It's much more than throwing money.....
I work in small parts manufacturing. My wife works in complex custom designed tool manufacturing for large aerospace. I'm fully cognizant of the complexity of scaling and sourcing of custom designed products. I'm also of the believe that it usually
is simply a matter of throwing money and focus at a supplier when it comes to sourcing and production. Yes the companies have to front end load the expense of some of this, but that's part and parcel of being a manufacturer. And has been correctly pointed out, this is a big build and a huge acceleration, but it still pales in comparison to the number of cars the larger automotive companies are producing. That means the supply chains already exist for volume like this.
In general, for sourcing this complex, you always get backup suppliers and backup quotes for your critical processes/assemblies/parts. You go on site to audit inspection & metrology in advance to certify a supplier can meet your needs and you often have several companies produce first article prototypes to make sure a company can provide what it says it can provide. You get statistics on % failures and returns, and you investigate and get commitments on lead times in advance so you can predict product flow a timeline. You ask for cause and corrective action reports for anything that's not going according to plan. And while you may see suppliers lag, they're ultimately going to do what they can to win and keep your business, particularly if you have a very public and obvious demand.
On the upside, Tesla actually has pre-orders in place (refundable, I readily admit) that gives the suppliers MORE reason to believe the numbers they're being fed aren't just pie in the sky best case forecast numbers. When a manufacturer goes to subsource and asks for pricing, they ALWAYS inflate the number they're supposedly going to buy to force best pricing. At least in this case, the suppliers will have a more transparent view of timelines. Is this all a simple process? No. Is it time consuming? Yes. Is it something that you can throw money and people at to get moving? Yes.
Here it is straight from Elon:
"It's worth saying that making one of something is quite easy. Making lots of something consistently that's going to last a long time is extremely hard. In fact, it is way harder to make the machine that makes the machine that it is to make the machine in the first place."
Hard. He didn't say expensive, he said hard.
That is a good point actually. I'm willing to agree that actually getting custom machines in place to assemble something like the Model 3 will take time. I suspect that's a large part of the reason you see that July 1st deadline, and then you don't actually see him claiming cars will ship until several months later.
Now if you want to talk about payment terms, I
DO potentially see a problem there given Tesla's rocky financials. I could see that backfiring on them. Suppliers don't always comply as quickly when you're 90 days overdue for paying your bills.
Full disclosure, I work with a company that provides parts to Tesla, so I have a pretty good sense of what's being asked for on this front. Those of you saying that Tesla is small peanuts to larger companies are only half right. Yes the volumes aren't as high as some of the other automotive companies, but smart businesses diversify whenever possible, and when they see opportunities like this, it's incredibly lucrative if you can get your foot in the door early and prove yourself. Becoming a trusted supplier on a potentially huge new market tends to rate pretty high on the priority list. Particularly when getting your foot in the door on this particular project means being ahead of the curve as the automotive industry evolves into an (at least partially) electrified future.
I'm probably more concerned about material quality, fit and finish, and long term reliability than anything else. Regardless of whether you see the M3 competing with Honda/Toyota/Mazda or Audi/BMW, the competitors are fierce in these specific areas.
For the masses, means competing as such.
http://jalopnik.com/tesla-model-x-approaches-old-jaguar-levels-of-build-qua-1777626087
The comment section is particularly interesting reading.
I'm fully in agreement with you here. I think that may actually be the big sticking point on these cars, and for me personally. Teslas, groundbreaking though they may be, have enough quality and reliability problems that if one thing prevents me from following through on my order, the worries about having a 1st generation model car with potentially a lot of break in problems that only Tesla can fix will probably be it. I know they tend to take care of their customers, but can they really continue the level of service they're known for when they quadruple or quintuple the cars they need to service in a 12-18 month period?
Please don't misunderstand my previous posts - I do see some serious potential pitfalls in this ramp up. And I do have my own set of concerns. But the ramp up to volume production is actually lower on the list than stuff like this and their borderline abysmal financials.
