Tesla’s making a bet on its production process for the Model 3 that defies accepted industry know-how – which is not at all an unusual strategy for the young carmaker. Basically all of Tesla’s success thus far has been due to its ability to defy accepted industry wisdom, but with the Model 3 production line, the risk centers around skipping a step in the manufacturing process of a new vehicle that could lead to greater expense down the road.
Typically, automakers start the production of a new model using prototype tooling and machinery (called ‘soft tooling’) that’s designed to help get the fit, finish and tolerances right on new vehicle parts, which are then scrapped and replaced with more expensive, permanent units once the process has been established and configured correctly, Reuters reports. Tesla is skipping that step and going right to purchasing permanent, pricey production equipment to help it meet its own timeline of spinning up full-scale production of the Model 3 in time for fall.
This could be risky because any changes required will have to be made on the more expensive permanent machines, instead of on essentially disposable prototypes designed for use in iterating on the process early while working out the kinks. The Model 3’s projected sales volume, which easily dwarfs current production numbers of the Model S and Model X, further complicates things by introducing more opportunity for even small errors to result in recalls. Tesla just issued a voluntary recall for 53,000 Model S and X units built in 2016 due to a non-threatening parking brake problem, and at scales where you’re producing up to 500,000 cars per year, that kind of issue balloons bigger.
If, however, Tesla skips this step and all goes well, it could recoup considerable cost and time savings by going right to final production equipment, and Tesla apparently had only bad experiences from soft tooling the Model X at its launch in 2015. Reuters also notes that Audi tried something similar with a new plant in Mexico recently, and this saved the plant around 30 percent of its usual spin-up time.
Going against accepted wisdom is basically how Tesla, and all of Elon Musk’s businesses, have been founded and how they continue to thrive. This Model 3 move may present risk, but it also presents considerable upside if it proves successful.