Tesla models are technological marvels in electric car design. And as this writer attest to firsthand, they are very fun to drive. Unfortunately, Tesla’s supply chain acumen has sometimes fallen short in comparison to the company’s engineering feats.
Most recently, hiccups in Tesla’s supply chain set its stock price reeling, after supply shortages and glitches in robotics production forced workers to build parts of the Model 3 by hand, in a desperate bid to make up for the production shortfall. Labor issues could further compound the Model 3’s production woes.
Tesla founder and CEO Elon Musk is one of the most well-known modern-day visionaries, hell-raising entrepreneurs, and a vociferously positive showman. His other company, SpaceX, he says, will eventually make space travel to Mars, where Musk hopes to die, possible. But positive thinking and far-reaching visions can only take a company so far.
Tesla’s more immediate concern is that it only made 260 Model 3s in the third quarter and expects to meet its 5,000 per-week production target by the second-quarter 2017, instead of in the fourth quarter this year as forecasted.
Tesla has struggled with production delays of its Model 3, its first mass-produced car. Photo courtesy: Tesla
And yet, all is certainly not lost for Tesla, as it has successfully been able to overcome supply chain issues for its Model S and X production in the past. Its recent supply chain bungles also serve as a great case study for OEMs or suppliers about mistakes to be avoided.
Here are some initial lessons that can be gleaned thus far from Tesla’s Model 3 assembly woes.
Quality comes first
Tesla’s production shortfall has certainly attracted a lot of attention, but it will be a mortal mistake to rush cars out to make up for the glitch at the expense of quality. Sending out a product before it is ready is also a cardinal error for any OEM, but in Tesla’s case, it will serve as an extreme counter example of what not to do if it makes this mistake.
The stakes are especially high since the Tesla 3 is the company’s first mass-produced car. It will compete in the affordable electric vehicle (EV) category that is becoming crowded, with players such as BMW, GM, Mercedes, Nissan, and Volkswagen, and others aggressively entering the fray.
“Tesla is going to be at a turning point for a large number of consumers. If somebody has a bad experience with one of their Teslas, there are so many other different models coming out in the EV space, it will likely be a consumer’s first and last Tesla experience,” Akshay Anand,
an analyst with auto research firm Kelley Blue Book, told EBN. “If you are a niche player and launch a mass-volume product, then consumers are on board. You get that wrong and you've got a bunch of trouble ahead.”
Disruption does not (necessarily) superiority
Tesla has well earned its place as a great disrupter in the automotive industry. Almost out of know where when Tesla began car production in 2012, Tesla’s Model S served as the world’s first all-electric super sports car that could run over 300 miles on a charge, compared to the then paltry ranges of EVs on the market at the time. The model also set a new standard in car infotainment, with an always-on, Internet-connected 17-inch display that was high up on the list of the car’s “wow factors.” All traditional premium carmakers could do at the time was to catch up, by offering alternatives in the EV space and to scramble to design higher-end in-car infotainment systems.
Tesla also disrupted traditional supply chain models, often using its component designs and even producing some tier-one components, such as batteries for its Model S and then Model X.
Comparatively, volume carmakers have adopted a more modular approach for the vast majority of car production that relies mainly on a limited number of tier-one suppliers. One trend that has emerged during the past decades is that volume-produced cars are less distinguished from one another than they were in the past, as a result