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Simplifying Production

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Pushing as much of the software development to post-delivery could be one way to ramp up quicker. Ship with only CarPlay/Android Auto support and AP hardware, add all the software 'when they are ready' via OTA updates.

What I am worried about is Tesla's liability on warranty claims, at the speed they are ramping up, if early Model 3 has major flaws that requires a few visits to the service centre, that's going to cut down on their margin significantly.
That's why employees and west coast gets their cars first.
 
I still fail to see how that simplicity could possibly pay for the increased cost of batteries, even at $1500 per 10kWh minimum. Does it takes 30 hours of labor to differentiate?

Thank you kindly.

Again with this? You failed to see it in the other threads too... but let's go through it again. The ability for the customer to upgrade later more than makes up for the initial investment. Not everyone will upgrade, but if Tesla makes 500% (or possibly more) on their investment in the larger packs just by flipping a switch, then it wouldn't take long to turn it in to a profit.

Example: Assume they go this route and it cost Tesla an extra $1500 per car, and they charge the customer $7500 to upgrade. If 1 in 5 customers upgrade, they break even. If 1 in 4 upgrade, they make $120 million per every 100,000 cars sold. If they sell 350,000 cars in 2018, profit from this strategy alone nets $420 million.

That might be optimistic but you get the idea. It might be a little bit of a gamble for them and you might not approve.... but if you can't see how that makes perfect sense for Tesla then I don't know what to tell you.
 
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On the Model S and Model X, for the most part, options are a la carte. You can order air suspension without having to get Performance or high fidelity without leather, or any combination of items. I realize that they do have "packages," but the only one that really bundles a series of options together is the Premium Upgrades Package.

The Model 3 has been reportedly designed to be easy to build, which is a departure from both the Model S and Model X. One way Tesla could do this would be bundling options together - throwing high fidelity sound into the Premium package, for example.

Do you think Tesla will attempt this? Would it result in "trim" levels on the Model 3? What options would you like to see bundled as a package? Would you prefer a la carte, even if it meant you had to wait longer?

On my previous car, 2012 Toyota Camry SE, I was actually bothered quite a bit that in order to have a moonroof, I had to purchase the Leather and Moonroof package. I never wanted leather. In fact, I was pretty much forced to upgrade to the Sports Edition to get the options that I felt were important to me. I suspect this will be the case with the Model ☰. It is must easier for manufacturing as they could manufacture more cars, if if they handn't been ordered as of yet, knowing it was one of their package deals.
 
With nearly 400,000 orders in the queue it wouldn't be that difficult for Tesla to allow ala cart options and still be able to group the builds in large enough batches to be cost and build time efficient.

This is an excellent point - they could easily group cars configured with similar options to build them as a cohort.

I fail to see how adding upgraded sound system to the upgrade package makes things simpler. If you are running multiple kinds of cars on the same production line (and they have to be), each station needs to assess whether to add a bit, looking to see if some other bit was also added is a terrible way to do that. Each car needs to be spelled out whether that part goes on the car, either to the human or the robot adding the part. If we just start with the things we know will be options we get 9 colors, AWD/RWD, 2 battery sizes, ludicrous, tow, 3 roof options, wheels, we get 50,000 different kinds of cars. Tesla has figured out how to option a car, now they will add how to make them fast when they are designed to be easy to make.

Thank you kindly.

Fewer builds generally equals increased efficiency. Why do you think every other automaker bundles options?

I agree. I don't think packages of options simplify assembly (or parts ordering, etc.)
Having fewer options would make it easier to order, stock and assemble.
Someone mentioned having just one battery which was software locked/unlocked to the level purchased. That would simplify parts and assembly.
Fewer options for interior colors and seat types would also simplify.
Just fewer option choices overall would simplify.

Your first two statements conflict one another, as I see it :). Packaging options inherently allows fewer options, which simplifies builds.

On my previous car, 2012 Toyota Camry SE, I was actually bothered quite a bit that in order to have a moonroof, I had to purchase the Leather and Moonroof package. I never wanted leather. In fact, I was pretty much forced to upgrade to the Sports Edition to get the options that I felt were important to me. I suspect this will be the case with the Model ☰. It is must easier for manufacturing as they could manufacture more cars, if if they handn't been ordered as of yet, knowing it was one of their package deals.

I think we'd all prefer a la carte, but I am also concerned that I may need to pay for an upgrade that I don't really want, just to be able to get an option I do actually want or need.
 
Again with this? You failed to see it in the other threads too...

You failed to convincingly argue it in other threads too... Why do you get to do it again, but not me?

Example: Assume they go this route and it cost Tesla an extra $1500 per car, and they charge the customer $7500 to upgrade. If 1 in 5 customers upgrade, they break even. If 1 in 4 upgrade, they make $120 million per every 100,000 cars sold. If they sell 350,000 cars in 2018, profit from this strategy alone nets $420 million.

So, in your example exactly zero people option it at sales time, but 25% do so afterwards when it is more expensive. That sounds reasonable.

Thank you kindly.
 
Tesla likes to be different. I am hoping this means that they will let use choose options individually, and not packaged. First, the build is computerized, so selecting the options will be automated, with the parts arriving JIT where necessary. Secondly, Tesla cars are designed at production time, and not built and shipped to dealers as pre-build cars, so customization is the name of the game.
 
Example: Assume they go this route and it cost Tesla an extra $1500 per car, and they charge the customer $7500 to upgrade. If 1 in 5 customers upgrade, they break even. If 1 in 4 upgrade, they make $120 million per every 100,000 cars sold. If they sell 350,000 cars in 2018, profit from this strategy alone nets $420 million.

That might be optimistic but you get the idea. It might be a little bit of a gamble for them and you might not approve.... but if you can't see how that makes perfect sense for Tesla then I don't know what to tell you.

Checking the math/logic:

If 1 in 4 upgrade, then every 4 cars Tesla makes $1500 (cost of batteries was $1500*4 = $6000, revenue was $7500 - gross profit of $1500). So for 100k cars, that's $37.5M. Not sure how you arrived at $120M.

BUT, this analysis isn't fair, since it's ignoring the alternative strategy. A better comparison is if only the upgraded car carries the $1500 cost. In that case, if we still use your example of a 1 upgrade out of 4, Tesla would have saved $4500 in cost of goods per 4 cars. Over 100k cars, that's a cost savings of $112.5M. So to justify putting the big battery pack in every car, Tesla would have to find $112.5M in savings elsewhere (production efficiency, no need to redo NHTSA crash testing, potential revenue after delivery, battery warranty savings, additional CPO revenue, etc) to make it worthwhile.

Net, it probably makes sense if the (eventual) upgrade rate is very high - say 80%+.
 
So you say. But you didn't address my argument. How does knowing that this car got air shocks make it more efficient to put an upgraded stereo in it?

Manufacturing efficiency addresses it completely. If you're manufacturing fewer configurations, even if they make no logical sense as in your example above, that would enable the factory to have less manufacturing variance. Do you think it would be easier to build one convertible, then one coupe then one hatchback, or to build a bunch of convertibles, then a bunch of coupes then a bunch of hatchbacks?
 
Manufacturing efficiency addresses it completely. If you're manufacturing fewer configurations, even if they make no logical sense as in your example above, that would enable the factory to have less manufacturing variance. Do you think it would be easier to build one convertible, then one coupe then one hatchback, or to build a bunch of convertibles, then a bunch of coupes then a bunch of hatchbacks?

Do you think it makes sense to make them ALL convertibles?

If you can't make two options and put them correctly in different cars for less than $1500, you don't belong in the car business. You can, of course, build only one variety at a time, if you want.

Thank you kindly.
 
There's a bit more to it than that. Smaller battery pack can mean having additional production elements with cost such as "blank" dummy cells, etc.

Additionally we don't know what the impact of speed of delivery is when they need to stock different battery SKUs for production.

Personally I think that the model 3 will for sure have one battery with software locking. For one thing it means if a buyer needs more range later, even if it's not the original owner Tesla can sell them an "upgrade" that costs them nearly nothing to deliver.

As limp bizkit said, "think about it"
I disagree with some of your posts, and I'm not a fan of limp bizcut, but I think you may be correct, especially if Tesla can get the Cd down to .21. The downsides I can think of are the additional ~200+lbs of weight and ~$2k-3k in marginal battery pack costs (I'm assuming a ~55kWh versus a ~75kWh).

The upsides are...
  • Like you said, range upgrades after sales (Increases margins)
  • Streamlined pack production (Lowers production costs)
  • Similar supercharging rates for different battery sizes (Improves customer satisfaction)
  • Reduced pack wear and a lower pack failure rates (Lowers warranty costs, Improves customer satisfaction)
  • Reduced service center footprint (Lowers capital costs)
  • Streamlined pack refurbishment (Lowers warranty costs or Increases margins, Improves customer satisfaction)
I'm guessing the financial benefits in terms of lower costs and better margins of one pack are greater than the marginal cost of the larger packs, and the improved customer satisfaction and brand image will be icing on the cake.
 
OK. Here's a point. For anything which is automated and computer-controlled, it's quite easy to handle multiple configurations: the software switches automatically and assembles whichever configuration it's supposed to. So multiple battery pack capacties -- no problem. Just like multiple paint colors.

The sections where it becomes problematic to do multiple configurations are the ones where it changes the construction procedure (spoiler or no spoiler, two different typse of door, etc.) -- or the parts which have to be done by hand.

I am very curious as to what's still being done by hand. I strongly suspect that the wire runs are still being installed at least partly by hand, because I don't know of a standard, reliable system for automation of those. This is the closest I've found:

Wire Processing: Automating Harness Assembly

This is likely to be the bottleneck for the entire car assembly process, because pretty much everything else can be automated. (IIRC, they've automated the bolting process.)
 
That's why employees and west coast gets their cars first.
I can't see it would be such an issue. The main reason is simply to speed up deliveries due to physical proximity to production site. You're not going to take the car back to the factory for service. If CA was not such a large chunk of their market, I doubt they would do it that way. They can save money on deliveries by putting more cars on a truck because they are likely going to same general location. Upfront costs consequently go down, providing higher a per-car margin to reinvest.
 
I can't see it would be such an issue. The main reason is simply to speed up deliveries due to physical proximity to production site. You're not going to take the car back to the factory for service. If CA was not such a large chunk of their market, I doubt they would do it that way. They can save money on deliveries by putting more cars on a truck because they are likely going to same general location. Upfront costs consequently go down, providing higher a per-car margin to reinvest.
Yes, but it's close to the design center so that engineers can quickly (and cheaply) go visit the service centers working on malfunctioning cars, in order to adjust the design for future cars.
 
I can't see it would be such an issue. The main reason is simply to speed up deliveries due to physical proximity to production site. You're not going to take the car back to the factory for service. If CA was not such a large chunk of their market, I doubt they would do it that way. They can save money on deliveries by putting more cars on a truck because they are likely going to same general location. Upfront costs consequently go down, providing higher a per-car margin to reinvest.
#50 - yes they definitely take cars back to the factory.