This week, Tesla reported only making 260 Model 3s since launching production of the all-electric sedan in July—roughly 80 percent under a promised goal of 1,500 in that span. On Friday, the Wall Street Journal reported the source of the issue: major portions of the car were still being banged out by hand as recent as September.
Citing unnamed people familiar with the matter, the WSJ said that Tesla’s advanced production line still wasn’t fully ready as of a few weeks ago. The newspaper reported that Tesla factory workers have been piecing together parts of the cars by hand, while the machinery to design the car is completed. It’s a move that is extremely unusual for the mass-market, volume-seller car the Model 3 is meant to be.
Tesla didn’t address the WSJ’s questions for the story, instead slamming the newspaper as a slanted outlet that “has relentlessly attacked Tesla with misleading articles that, with few exceptions, push or exceed the boundaries of journalistic integrity.”
What’s interesting is that WSJ isn’t the only one that has picked up these threads during the week. On Thursday, the automotive blog Daily Kanban reported that a Model 3 “pilot” body line had yet to be completed. The story cites an anonymous source who claims that two Michigan-based suppliers—Five Lakes Automation and Thai Summit America—are working on the project.
As the story noted, it’s unclear if the project is meant for the current iteration of the production system, or a future revamp down the line. (Musk has said the production line will be updated and evolve over time.) The story didn’t explicitly draw a connection between the body line project and the Model 3 bottleneck. Tesla disputed the Daily Kanban story.
When pressed by a Jalopnik reporter multiple times this week about the handmade parts issue, a Tesla spokesperson vehemently denied this was the case.
Bits and pieces started to trickle out after a statement on Monday from Tesla, which said the “vast majority of manufacturing subsystems” at its car plant in California and the Nevada Gigafactory are “able to operate a high rate, but admitted that “a handful have taken longer to activate than expected.”
Tesla has been up front that it expects some bumps along the way, with CEO Elon Musk forecasting a “production hell” for workers as it ramps up Model 3 production to 5,000 cars per week by December, increasing to 10,000 per week “at some point” in 2018.
And missing the early production target for the Model 3 isn’t exactly a surprise for the company. Production will follow an S-Curve, the company said in August, “meaning it will begin slowly, grow exponentially, then start to tail off once we achieve full production.” (Ford replicated a similarly vague chart in a presentation this week to Wall Street investors.)
Just after Model 3 production launched, Tesla said it was “confident we can produce just over 1,500 vehicles in Q3.” That hasn’t happened, and the company only mustered a vague explanation this week about why it fell short.
“It is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain,” the company said. “We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near-term.”
The company told Jalopnik on Friday that it has nothing to add beyond what’s stated in the Q3 release.
Around the time the WSJ story was published, CEO Elon Musk attempted to address the matter on Twitter:
Update, 6:30 p.m.: A Tesla spokesperson sent along a statement to Jalopnik that reiterates some of the earlier points in the company’s comment to the WSJ.
This reporting is fundamentally wrong and misleading. We are still in the beginning of our production ramp, but every Model 3 is being built on the Model 3 production line, which is fully installed, powered on, producing vehicles, and increasing in automation every day. However, every vehicle manufacturing line in the world has both manual and automated processes, including the Model S and Model X line today. Contrary to the Journal’s reporting, this is not some revelation. As we’ve always acknowledged, it will take time to fine-tune the line for higher volumes, but as we have also said, there are no fundamental issues with Model 3 production or its supply chain, and we are confident in addressing the manufacturing bottleneck issues in the near-term. We are simply working through the S-curve of production that we drew out for the world to see at our launch event in July. There’s a reason it’s called production hell.
Know anything about the Model 3 ramp up? If you want to share, reach out at email@example.com or find my contact for Signal here.