Investor's Corner

Tesla explains oversight on Model 3 production line automation

Following consistent delays in Model 3 production, Tesla is attempting to fine-tune their automation strategy to solve production bottlenecks. As noted in Tesla’s Q1 Earnings Report, the company is currently producing 2,270 Model 3’s per week, less than half of the 5,000/week goal they set for the end of June.

Even after Tesla CEO Elon Musk stated that humans were “underrated” and that “excessive automation at Tesla was a mistake,” Tesla is largely crediting quality improvements to their highly-automated production.

“We are already seeing many benefits from heavily increasing automation as part of the Model 3 production process. Through the vast majority of Model 3 production, including in body welding, general assembly, inverter and drive unit production, our automation effort has been very successful. Based on every measurable metric, Model 3 is already the highest quality vehicle we have ever produced, and this is unquestionably due in large part to automation,” Tesla stated in their Q1 Update Letter.

Despite early success with a large amount of the Model 3’s automated production line, Tesla is dialing back some of the processes. The company stated, “In those select areas where we have had challenges ramping fully automated processes, such as portions of the battery module line, part of the material flow system, and two steps of general assembly, we have temporarily dialed back automation and introduced certain semi-automated or manual processes while we work to eventually have full automation take back over.”

Model 3 Simplified by Design

Tesla isn’t only banking on automated processes to ramp up production of the Model 3. The company also highlighted that the vehicle was designed to be easily mass-produced. Tesla stated that the vehicle’s assembly line consists of 70% less steps compared to traditional assembly lines.

The Model 3’s assembly line has 50 different steps and the vehicle is built on a singular body frame. By comparison, the Model S has over 80 different body frames. Tesla also cited that the vehicle has lighter wiring and fewer controllers, connectors, and CPUs compared to ‘average vehicles’.

As a result of the Model 3’s simplified design and highly-automated production line, Tesla expects the vehicle to carry a 25% gross margin, much higher than its peers.

“All these elements are rooted in design and critical not only to our ability to reach higher levels of output in a smaller amount of factory space but also to achieve lower levels of
cost,” Tesla stated.

It’s expected that Tesla will optimize the level of automation on the Model 3 line following a planned 10-day shutdown in production in the second quarter. With more people involved in vehicle production, Tesla can dynamically adjust overtime hours and staffing levels to meet line goals.

Tesla explains oversight on Model 3 production line automation
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