Model 3 Production Line Paused for Improvements

Tesla’s Model 3 production line has shut down for four to five days, according to a report from Buzzfeed.

A Tesla spokesperson said the assembly line is stopped to “improve automation.” According to Buzzfeed:

The announcement of the four- to five-day production pause for Model 3 came without warning, according to Tesla employees who spoke with BuzzFeed News. During the pause, workers are expected to use vacation days or stay home without pay; a small number of workers may be offered paid work elsewhere in the factory.

Tesla had a similar pause of production in February. At the time, the company said the Model 3 production plan includes periods of planned downtime in both the Fremont factory and Gigafactory 1 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 company told Bloomberg.

The latest pause comes just days after CEO Elon Musk told CBS that he has a “clear understanding of the path out of [production] hell.”

Tesla’s current goal is to manufacture 5,000 cars per week by the end of the second quarter, which was originally the year-end goal for 2017. The company said two weeks ago that it had achieved a production level of 2,000 Model 3s per week.

 

[TriTexan]

Man, I always dreamed I lived in a world where I produced the most unbelievable product..........AND could lose, and continue to lose billions of dollars. 2,000/4,000/6,000 a week really doesn't matter! Automakers don't make money on small, sedan, EVs, regardless of volume. Tesla has the Early Adopter money (buying a $30k car for $50k) and the $7.5K Federal money....neither will last more than a year.

This is why Elon can be bullish on Q3/4 cash flows and margins...tick tock, tick tock!

Oh sorry - for a second there, I thought you were talking about Netflix! They just announced earnings - $2 billion loss this year, with a $3-$4 billion loss expected next year. And oddly, the BEST performing tech stock over the last 10 years. Go figure - welcome to the modern age.

 

[TriTexan]

Texan

Can you provide a link to that info? The one report of a Model 3 at a track was that the brakes were gone by lap 4. Photos were posted too. Tesla better focus on the $35,000 car before working to produce a small number of $70k Model 3s.

First - if you haven't seen this elsewhere, here's a link, with pictures, from a driver who spotted a small fleet of test mules at a track in California. He didn't get much in the way of pictures, but you can see the front drive axle and the air suspension and other indications of a much more track-worthy design for the Model 3. Not the crappy one that guy posted the toasted brakes on YouTube with. Other people have confirmed various versions of the Model 3 dual-motor version, and a track version probably includes:

• Improved wheel and tire package with stickier (but shorter wearing and less efficient) tires
• Larger brakes with better cooling
• Improved battery cooling system, so that power reduction doesn't happen

That's about it. So here's your link - but feel free to use Google as there is ample information on Reddit and dozens of other places about a performance version of the Model 3, not just a dual motor/AWD version. Please note that one track video of the toasted brakes is a base/non-performance Model 3. The Performance version is NOT out yet and is a mostly-confirmed rumor, but spottings are limited to closely guarded testing by dedicated test drivers at this point.

Tesla Model 3 with dual motor and air suspension spotted on race track – potentially ‘Performance’ version

And let's clarify the context of what you saw on YouTube, since it clearly warrants explanation and the guy who posted that video obviously didn't teach anyone anything about track racing...

Context: The CTS-V I drive set a Nurburgring lap record. When hot shoe John Heinricy finished that record lap, the front brakes were literally on fire briefly. This is an expert driver in a car built to break records and on a fast, high speed track (more speed = more brake cooling). The CTS-V has air inlets at the front end with dedicated ductwork to direct cooling air directly on the front brakes. Track racing puts SERIOUS stress on components like brakes, and even "high performance" recording setting cars like mine do not fare well.

Everyone who track races would tell you that ANY stock brake pads would look like those you saw on the Model 3 after just a single day. In fact, people who track race the CTS-V usually change even the super high quality Brembo setup. They install:

• Special track racing pads. These work well on the track, but don't come on the car from the manufacturer because they don't work well in non-track conditions, such as rain. But they are the ONLY ones that will survive more than one day of track racing. But even then they don't survive long.
• Special brake fluid. The factory brake fluid boils easily and sometimes catches fire. Even on cars like Lamborghini, Ferrari, Porsche, and the V all usually benefit from track-day specific brake fluid. Again - this fluid isn't ideal from the factory for daily driving, but is required for good track performance.
• Special brake lines - again due to heat and expansion. Usually high end braided stainless brake lines are the order of the day.

Anyone who has done any track racing would have taken one look at that YouTube video and called the guy an idiot for ruining some otherwise decent factory brakes. Then again - he clearly knew what he was doing, and hopefully he's capable of fixing it on his own. Swapping brake rotors, calipers, pads, and brake lines isn't too big a job even on jack stands in your garage.

 

[TriTexan]

My only concern, if it is true, is sending the workers home without pay or forcing them to use vacation days. Any savings achieved from the furlough will be quickly offset by lost productivity due to morale.

I share your concern, but I also understand that this is common in many industrial settings. I think workers always knew that the production line would need updating, probably multiple times, to get things where they need it to be.

But here's what sets my mind at ease about morale: Last year Tesla had 2,500 job openings to fill. But they got more than FIVE HUNDRED THOUSAND applications. 500,000 for 2,500 spots. That's more exclusive than the most prestigious universities on earth, by a LONG shot.

If Tesla were even a remotely bad place to work, there would not be such a massive pool of people applying for so few job openings. No company on earth has those kinds of application statistics. And globally, SpaceX and Tesla regularly rate among the BEST places to work. The fact that Elon Musk has 2 companies in the top 5 or 10 best places to work worldwide should tell you something.

 

[TriTexan]

Well said........production (and its close cousin - quality) will continue to suffer. NO (Global) Automaker shuts down critical production unless is was part of a well orchestrated and extremely detailed plan.....this was not it appears.

I too would like there to be more of a plan. But many companies nowadays have adopted a culture where disruption is acceptable as long as it accelerates product development and production. At companies like Google, Apple, and many others, management AND employees accept that plans may change, sometimes with less than desirable notice. If everyone agrees that is the faster path to success and can help them beat the competition, go for it.

Other companies will get left behind while they wait for the well-thought-out, thoroughly detailed plan. But making such a plan takes time and money, and it costs companies time-to-market. Modern thinking like just-in-time development, delivery, design, and implementation are really the new ways in which many companies operate. To be clear, it's not how I was taught, but I am recognizing that this is the new reality that most workers - whether at high tech or industrial companies - operate under.

So while I agree this *appears* to be ad-hoc, we don't actually know if it was or not. Might have been planned a few weeks ago, but the exact day wasn't known until the new equipment or machinery was in-transit or unloaded off a ship. Until that ship docks and parts are on a truck, you keep running the line as expected. If you get the parts in, then wait 6 weeks to inform everyone and get a "perfect" plan in place, you just lost 6 weeks of potentially improved productivity with the new equipment.

Gotta pick your poison to some extent.

 

[cwerdna]

Maybe it's just time to switch out the panel stamping dies

A little more hand work that at TESLA I assume

Haven't watched the video, but Toyota supposedly has die changing down to 3 minutes.

Search for minutes in these:
Hilma Magazine Article: Stamping Dies: Quick Change Artists
The History of Quick Change Over (SMED) | AllAboutLean.com
Changing the die - that can't go faster

 

[cwerdna]

Oh sorry - for a second there, I thought you were talking about Netflix! They just announced earnings - $2 billion loss this year, with a $3-$4 billion loss expected next year. And oddly, the BEST performing tech stock over the last 10 years. Go figure - welcome to the modern age.

Huh? You talking about Netflix?

Netflix just announced earnings. I see no losses (see net income) at https://ir.netflix.com/static-files/419958ac-5fd7-4bcd-9fb1-ebca445a9016. Q1 2018 showed a positive net income of $290 million.

 

[TriTexan]

Huh? You talking about Netflix?

Netflix just announced earnings. I see no losses (see net income) at https://ir.netflix.com/static-files/419958ac-5fd7-4bcd-9fb1-ebca445a9016. Q1 2018 showed a positive net income of $290 million.

Sorry - I should have been more specific. I'm looking at free cash flow, which is usually the common concerned raised about Tesla and the reason everyone seems to think they will be...bankwupt.

And yet Netflix operates just fine racking up $300 to $600 million per quarter in negative free cash flow. Like Tesla, they have literally been burning thru massive, incredible amounts of cash each quarter. Projections from Reed Hastings are for $3-$4 billion, or a billion dollars per quarter, for the year ahead. That makes Tesla's cash burn look like an ashtray fire...

Free cash flow is a way of also incorporating various factors into the mix that aren't always about this quarter's opex and income. It gives a slightly more clear (IMHO) picture of what's actually going on. Negative free cash flow is rarely sustainable UNLESS (like in Netflix and Tesla's situation) they are making LARGE investments for the future. The only rub here is that with Netflix, they are spending like $10 billion annually on RAPIDLY depreciating assets - content. The value of a blockbuster movie declines EXTREMELY fast once most of the early movie-goers have seen it. But Tesla's Gigafactory, once built and equipped with solar panels, is an asset that has a much longer and more useful operational value.

IOW - companies like Tesla and Amazon, that are investing in infrastructure that can pay out in capabilities for many, many years are quite different than content that is useful for a season or two while it's hot. That's just my take...

 

[Electroman]

.. and Netflix builds what..?? they make aeroplanes? build bridges? make earth movers?

what do they BUILD ?

 

[Kingdragon8]

Oh sorry - for a second there, I thought you were talking about Netflix! They just announced earnings - $2 billion loss this year, with a $3-$4 billion loss expected next year. And oddly, the BEST performing tech stock over the last 10 years. Go figure - welcome to the modern age.

Tesla is competing with a industry that already has global massive scale and profitability. CAFE and CARB laws force automakers to make and sell small electric vehicles (Model 3) in a limited market at a price where nobody makes money....making it impossible for Tesla to sustain profitability once the Early Adopters (spending $50k+ on a $30k+ vehicle) and the federal credits run out.

 

[Kingdragon8]

Really? are you sure?

How about this - I give you $30k and you go get me a 320 mile range EV that drives itself.

if you can't then please stop posting nonsense. Rather just stop posting.

The model 3 competes with Toyota and Honda hybrids plus a dozen other vehicles, all of which cost much less than the 3. Keep your eyes on the road!

 

[Xcelerator]

It is amazing how myopic Fudsters can be and are about every time Tesla breaks wind. How quickly it is forgotten the last break to rework the assembly process earlier this year resulted in an immediate, significant increase in production numbers. How do people who follow this company closely still not understand that doing things the same way and expecting different results is insanity and Elon Musk is not insane? If something needs to be done differently to achieve a goal, Musk follows the scientific approach and takes things where the evidence leads him. My only hope is that he will continue to follow this approach and not get caught up in a sniping war with shorters, doubters, fudsters and anyone else throwing up road blocks to accomplishing what he set out to do.

 

[Electroman]

The model 3 competes with Toyota and Honda hybrids plus a dozen other vehicles, all of which cost much less than the 3. Keep your eyes on the road!

Thank you. Thats what I thought. You have been caught with your pants down on your FUD, or you have no clue what an EV is, or what AP is.

You might want take your little lies and exaggerations to Seeking Alpha, and I am sure you will fit right in there among your like minded peers, and you will get 25 likes to every one of your comments.

 

[TT97]

The model 3 competes with Toyota and Honda hybrids plus a dozen other vehicles, all of which cost much less than the 3. Keep your eyes on the road!

If you feel the Model 3 competes with cars with blender engines, soft suspensions and bad slushboxes, why are you cross-shopping the 3? You should just keep moving.

 

[thx1139]

Frustrating that people dont get how improving the production line works. They did this in February to achieve over 2000 per week and looked like it continued to climb after that. Now they know a bottleneck and halt production line to fix boost output. What do people think they do simply a dial to produce more? Not to mention isnt now the best time to lose a little production anyway with the 200K limit for the $7500 tax credit?

 

[PJFW8]

Tesla is competing with a industry that already has global massive scale and profitability. CAFE and CARB laws force automakers to make and sell small electric vehicles (Model 3) in a limited market at a price where nobody makes money....making it impossible for Tesla to sustain profitability once the Early Adopters (spending $50k+ on a $30k+ vehicle) and the federal credits run out.

You sound exactly like my friend in Ford marketing, and you may be right. Two years ago I would have agreed. The end of tax credits will have a significant impact as it did in Denmark and Hong Kong. Nevertheless, Model 3 competes with the Audi A/S4, at $40,000 to $60,000, not the Prius. 400,000 "early adopters" may also be the vanguard. Model S already outsells all cars in its segment (Mercedes S, Cadillac and Lincoln Continental). Electric vehicle are simply better than similar ICE cars. The Chinese and most European manufacturers are moving quickly to compete. Ford, GM and Fiat are not yet in the game, in spite of talk. Telsa's risk is high but this is likely a paradigm shift. My money is on Tesla!

 

[Cloxxki]

Does anyone know the delay of the Bloomberg tracker versus production? Or will we find out now that we have a confirmed shutdown?
Suppose, delivery centers have a week's worth of cars on their lots, we could even not notice a dip, if they get back to 3,000 per week instantly and spread those over close by locations first.

 

[TT97]

Does anyone know the delay of the Bloomberg tracker versus production? Or will we find out now that we have a confirmed shutdown?
Suppose, delivery centers have a week's worth of cars on their lots, we could even not notice a dip, if they get back to 3,000 per week instantly and spread those over close by locations first.

Their tracker seems to use longer term averages so it is slow to adjust for slow downs/shutdowns as well as fast ramp ups. Similar to the last shutdown, the tracker never got to zero yet appeared to have below actual tracking afterwards adjusting down due to the past shutdown.

I see the same happening this time that the production on their tracker will just dip (guessing to maybe 1,500-2,000 per week) but then will stay at that level for a bit once the factory starts up again but Tesla at that point may be north of 3,000 per week.

 

[AmpedRealtor]

[QUOTE="TriTexan, post: 2684538, member: 74840"And honestly - I don't think that Elon Musk cares if Tesla makes that, or if Tesla forces GM to make it. As long as the transition to sustainable energy and transportation is happening, then it's probably mission accomplished as far as Musk is concerned. And that probably holds true for most of Tesla's employees as well.[/QUOTE]

And that doesn't bode well for investors or stockholders. Forcing GM to do something doesn't bring profit to Tesla investors. Musk's goal has to also be for investors to make money.

 

[jtpassat]

Where’s my VIN??!!??

 

[ValueAnalyst]

Unfortunately, there goes another week off the calendar. Ramp is still not where it was supposed to be on 3/31/18.

Can you provide a link to that info? The one report of a Model 3 at a track was that the brakes were gone by lap 4. Photos were posted too. Tesla better focus on the $35,000 car before working to produce a small number of $70k Model 3s.

You should probably let people know who you are on Seeking Alpha when you post on TMC maybe in your signature?