Tesla Considers Boosting Model S Production To Meet Demand

[CapitalistOppressor]

As I heard it, the increase was definitely news. But I think this is driven by their sense of NEW recent demand, since the launch. George B was definitely brimming with confidence, of the "insanely great" variety. This may be just emotional, and subject to a letdown in the months to come, OR it may be that they have really done analysis of the performance of their new store system and really have numbers to back up these brighter forecasts.

Would it not be cool if Model S overtakes the Leaf in installed base by late next year or sometime in 2014? Not likely, perhaps, but it would be a huge validation of the philosophy of building and selling a "no compromise" EV product.

I don't think it would be cool at all for the Model S to overtake the Leaf installed base. What would be cool would be for the Model S to overtake the installed base of the BMW 528i.

 

[CapitalistOppressor]

It's not just equipment either. Elon took the time to point out how non-trivial it I'd to hire and train a second shift.

I agree, I've never hired for an assembly line but I've built teams before and I'd want ~6 months to hire folks, orient them, train them, put them as shadows on the first shift then put first shifters as minders on the second shift while they get dialed in. You also have to be careful with the first shift (which is still building stuff) because you need to promote some out to supervise the second shift but you have to be careful about how you manage the leadership talent. If you strip too much the first shift gets degraded, and if you don't strip enough it takes too long to get the second shift up to speed.

 

[CapitalistOppressor]

Because of all the space they have it would be better to have a second production line on the first shift, as opposed to a second shift, or if you just need a temporary boost in production have two long days a week. Most employees would be glad for the overtime.

A second line is expensive for all the new equipment. It's also a poor use of capital since you have perfectly good machines sitting idle for 16 hours out of the day, and building a second line to operate another single shift is just doubling down on poor capital allocation. Your theoretical ideal is one line, three shifts, so that you are keeping the machines in continuous use and maximizing your return on capital.

 

[Vger]

I don't think it would be cool at all for the Model S to overtake the Leaf installed base. What would be cool would be for the Model S to overtake the installed base of the BMW 528i.

Sorry for thinking so modestly! Of course, eventually we want to overtake competition such as the BMW 5-series, but according to Wikipedia, U.S. sales alone are over 40k annually, and the U.S. installed base is probably well over 500K. Overtaking that will not happen in the next year or two. I am a pragmatic optimist. :wink:

BMW 5 Series - Wikipedia, the free encyclopedia

 

[Norbert]

Sorry for thinking so modestly! Of course, eventually we want to overtake competition such as the BMW 5-series, but according to Wikipedia, U.S. sales alone are over 40k annually, and the U.S. installed base is probably well over 500K. Overtaking that will not happen in the next year or two. I am a pragmatic optimist. :wink:

BMW 5 Series - Wikipedia, the free encyclopedia

Global sales of 5-series in 2010 were over 210,000.

While it is true that 'better-than-Leaf" is not the measure of success, I do think that if Tesla sells more than, or about as much as, 10,000 in the US in the first 12 months (as the Leaf and Volt did each), it does something to show that Tesla's approach is valid. A few months ago, there was a debate over Tesla being criticized for offering only more expensive "toys for the rich", instead of affordable mass-market cars, and that this would not be effective in supporting the popularization of electric cars. If Tesla can contribute to demonstrating that in the US there is a market for electric cars, even when selling them with profit rather than below cost (as the Leaf and the Volt are), then that goes a long way to proving that in the US there is a valid business case for auto manufacturers to build electric cars. And that a company dedicated to providing a compelling product can achieve this even with the current cost of batteries, and the handicap of being a new company that lacks the resources for low-cost mass-manufacturing.

 

[Vger]

Well put, Norbert!

 

[jerry33]

A second line is expensive for all the new equipment. It's also a poor use of capital since you have perfectly good machines sitting idle for 16 hours out of the day, and building a second line to operate another single shift is just doubling down on poor capital allocation. Your theoretical ideal is one line, three shifts, so that you are keeping the machines in continuous use and maximizing your return on capital.

I agree, as far as capital expenditures go. But if it's the difference between spending capital on equipment or having workers that are working because they must have a job but aren't happy because of the times they have to work, quality and the car will suffer. Years ago, you never wanted to purchase a Big 3 car that was built on Monday or Friday. You don't want to be in a position where you don't want to be in a position where you have to say, "Don't purchase a Tesla made on the second shift".

Unfortunately, in many companies bean-counter type decisions turn a good company with dedicated workers into a company where people work there just because they need a job and it's easier to stay working there then it is to move.

 

[T@oo]

You can fire a worker if the demand for your product is low. Try that with an assembling / molding / stamping robot.

Two shifts are ok. Night shifts are dangerous. For workers health and for product quality. Been there, done that.

 

[vfx]

Are there some sort of stats that back up these wild claims that night shift produces substandard product?

I have worked nights before and am quite insulted.

 

[T@oo]

I have my own stats producing electronics. But I couldn't name officials. Tho, I thought I've also read about it somewhere.

Insulting you was't the point. You know that.

 

[dsm363]

I assume the shifts are 8 hours each? That would mean second shift was 3-11PM. While not great, some people might actually prefer a shift like that. You run errands and make appointments during the day and the go to work at night. It's not like it's a 24+ hour shift of anything. I don't see why a motivated team couldn't achieve the same quality as the day shift. They could always pay them slightly more from 5-11PM to motivate people to join the night shift.

 

[vfx]

I have my own stats producing electronics. But I couldn't name officials. Tho, I thought I've also read about it somewhere.

Insulting you was't the point. You know that.

And others could show stats to the opposite.

Your statement was rather general to include all nightshifts. I was looking for some global statistics.

 

[PattyChuck]

We run a skeleton night shift at the company I work for (manufacturing plant), and it's quite successful. They get paid an extra 5% shift-differential and only work M-Th for 10 hours (instead of M-F eight hours). The flexibility offered with a skeleton crew has gotten us out of more than one pickle, and the friendly competition between the two shifts has actually helped quality and productivity. All that being said, supervision is the key here. Without a good communication and a good leadership team on both shifts, there is major potential for problems. However, with a good team in place, it can work really, really well.

As someone mentioned earlier, however, there is the problem with ramping up a night shift. Our night shift guys will spend three to six months working the day shift before they are moved to nights just to get the hang of things.

 

[jkirkebo]

We run a skeleton night shift at the company I work for (manufacturing plant), and it's quite successful. They get paid an extra 5% shift-differential and only work M-Th for 10 hours (instead of M-F eight hours).

Wow, only 5% extra for working nights ? Is that common in the US ? I work a few nights per month (usually 6-8) but the pay is 45% better between 8pm and 6am...