Tesla’s CEO Musk’s (NASDAQ:TSLA) Production Policy: ‘Build Fast, Fix Later’

Tesla’s CEO Musk’s (NASDAQ:TSLA) Production Policy: ‘Build Fast, Fix Later’

Tesla’s CEO Musk’s (NASDAQ:TSLA) Production Policy: ‘Build Fast, Fix Later’

$TSLA

 Tesla (NASDAQ:TSLA) is disputing workers’ portrayal of the EV maker as struggling to produce defect-free vehicles.

A spokesperson has described a rigorous process that requires all cars to pass more than 500 inspections and tests.

Any reworking of cars after assembly reflects the company’s commitment to quality, the spokesperson said.

“Our goal is to produce perfect cars for every customer,” Tesla said in a statement. “Therefore, we review every vehicle for even the smallest refinement. Most customers would never notice the work that is done post production, but we care about even a fraction of a millimeter body gap difference or a slight paint gloss texture. We then feed these improvements back to production in a pursuit of perfection.”

Employees who worked on Model S and Model X described pressure to keep the assembly line moving, even when problems emerged.

Some told of batches of cars being sent through with parts missing – windshields in 1 case, bumpers in another because there were none on hand.

The understanding, was that these and other flaws would be fixed later.

Quality inspectors would sometimes find more defects than those reported by workers in the internal tracking system when a car came off the line.

“We’d see 2 issues, that’s pretty good. But then we’d dig in and there would be like 15 or 20,” 1 person said.

A persistently tricky area was alignment, where body parts had to be “muscled,” in the words of the senior manager, to a certain degree of flushness.

Not every team follows the same rule book, workers said, resulting in gaps of different sizes.

Tesla has denied that its quality control is inconsistent and said its “extensive” process for locating and fixing errors was “very successful.”

Some workers traced the challenges to CEO Elon Musk’s determination to launch vehicles faster than the industry norm by shortening the design process, skipping some pre-production testing, then making improvements on the fly.

Such improvisation leads to high repair rates, employees said.

For a March report called “Beyond the Hype,” JD Power found creaks, scratches and poor door alignment on new Model S and Model X vehicles, issues it blamed on the company’s lack of manufacturing experience. The overall quality of Tesla vehicles, it concluded, was “not competitive” within the luxury segment, lacking “precision and attention to detail.”

Such sloppiness is a rarity in luxury brands such as Mercedes-Benz and BMW, said Kathleen Rizk, director of global automotive consulting at JD Power.

Auto industry experts say the company’s survival now depends on its ability to crank out high-quality cars in volume as it begins to build its first mass-market car, the Model 3, which starts at $35,000.

Tesla has never turned an annual profit and is burning through $1-B a Quarter.

That is unsustainable without fresh cash or a big increase in sales to mainstream customers who may prove less forgiving of potential defects.

Tesla sacrifices quality for speed, Bearish.

Symbol Last Trade Date Change Open High Low Volume
NASDAQ:TSLA 308.35 30 November 2017 0.81 308.56 310.7 304.54 2,922,613
HeffX-LTN Analysis for TSLA: Overall Short Intermediate Long
Bearish (-0.40) Neutral (-0.17) Very Bearish (-0.52) Very Bearish (-0.50)

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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