Entrepreneurial action junkie Elon Musk predicted it would be “manufacturing hell” to quickly ramp up Model 3 electric car production this year. Days after Tesla said it fell short of its initial goal for the car, he’s delaying the debut of another new product to focus on resolving assembly-line snags.
“Tesla Semi unveil now Nov 16,” Musk told his 13.3 million Twitter followers. “Diverting resources to fix Model 3 bottlenecks & increase battery production for Puerto Rico & other affected areas.”
Tesla had said it would make at least 1,500 of the new cars, nominally priced from $35,000, in the quarter that ended Sept. 30. The actual figure was just 260. It blamed the sluggish output on unspecified challenges, noting that “although the vast majority of manufacturing subsystems at both our California car plant and our Nevada Gigafactory are able to operate at a high rate, a handful have taken longer to activate than expected.”
Musk has touted a plan to create the most advanced automated vehicle manufacturing system in the industry, describing a “machine that makes the machine” approach that will give Tesla key competitive advantages. That may happen at some point, but based on one report, it may not be soon.
The Wall Street Journal reported late Friday that Tesla was hand-making “major portions” of the Model 3, citing people familiar with the matter who weren’t identified. Production of the cars is happening “in a special area” as the company works “feverishly” to complete installation of new machinery to enable high-volume assembly, according to the story.
Tesla called the report “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,” Tesla said in an e-mailed statement. “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.”
Tesla has racked up about 500,000 advance orders for the Model 3, and requires would-be buyers to put down $1,000 to reserve one. Delivery dates for pre-ordered vehicles aren’t yet clear, and currently Tesla isn’t producing the base $35,000 version, but only a higher-grade variant that starts at $44,000.
The initial 30 units were delivered to customers in July, all of whom are Tesla employees. The Model 3 is a critical project to achieve Musk’s long-held goal of evolving Tesla from a niche producer of luxury vehicles selling for about $100,000 on average to a true mass-market brand. He’d anticipated Tesla would reach a 500,000-unit production rate in 2018 for its vehicles and a million-unit annual rate by 2020, and bought German engineering firm Grohmann last year to help create the manufacturing system to do that.
Last year, in mapping out his ambitious vision, Musk talked about creating “alien dreadnought” factories.
“Model 3 efficiency as a whole, that really is a quantum change in productivity, like really, really, crazy,” Musk said during the company’s Oct. 26 earnings call.
“As we go to high volumes, what really matters is the factory, the machine that designs the machine – the machine that creates the machine – becomes actually of greater significance, much greater significance than the machine itself. That’s where we have most of our engineering team working on. So sort of an internal codename for the factory machine that builds machine is the alien dreadnought so a point in which our factory looks like an alien dreadnought and we know it’s probably right.”
Alien dreadnoughts aside, early stumbles with Model 3 assembly complicate Musk’s timetable. Tesla is also still completing construction of its $5 billion Gigafactory battery plant in Nevada that’s key to driving down the cost of its energy storage devices.
In response to a question on Twitter about when Model 3 customers would be notified about delivery timing, Tesla’s CEO said, “You’ll know as soon as we do. We are deep in production hell.”
Tesla had planned to show off its electric Semi at its Hawthorne, California, design studio on Oct. 26. That event is now pushed back to next month. Musk is also working to provide large-scale battery packs to Puerto Rico, to help the island regain power after its energy grid was devastated last month by hurricanes.
The company defended the Model 3 rollout, noting that it had said it would take time to “fine-tune the line for higher volumes.”
“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,” Tesla said. “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.”
Musk told Twitter questioners he’s doing his best to “recalibrate” timing for Model 3 customers, and that criticism about delays was justified.
“However, if I wasn’t inherently optimistic, I wouldn’t be doing electric cars and rockets in the first place.”
Alan Ohnsman covers technology-driven changes reshaping transportation. Follow him on Twitter. Have tips to share with Forbes anonymously? Click here.