The ICE muscle car is dead?

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Actually nope. More experience, to be sure, but it is Tesla that is doing the innovation in the actual manufacturing process. Way ahead.

Could you elaborate on that?

As noted upthread, their factories look cool. But does that mean that they’re doing a great job manufacturing? They’ve got massive unmet demand for their main products (the 3 and Y), and have been slow to get their next model (pickup truck) into production.

There’s a bit of figure and ground question there. Does a long waitlist without any advertising mean you’re doing something right (everyone wants our product! we don’t need to advertise!) or doing something wrong (we’re underproducing our product leaving money on the table! we’d make even more money if we could produce fast enough that we needed to advertise!).

I don’t know the answer - but I’m curious why you think their manufacturing process is way ahead of other firms’ processes.

Albaby

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but it is Tesla that is doing the innovation in the actual manufacturing process. Way ahead.

OK. How so? What are those innovative processes? How are they advantageous? How does that advantage reflect in profits?

–Peter

PS - Included here for no particular reason: Elon Musk addresses some of the Model 3’s production issues. From Feb 2021, so not the latest news, but not that long ago, either.
https://www.engadget.com/tesla-elon-musk-model-3-production-…

23

With all the auto makers moving to EVs I am not sure why I would want to buy TSLA shares. Do they have a secret sauce I am not aware of?

Branding and user experience. My analogy is iPhone vs. Android, with Tesla being the iPhone. Most EVs I’ve driven feel like a normal car, just electric. Teslas feel very whiz bang and the driver’s interface is very different from a normal car. Telsa owners, like iPhone owners, really like the feel and experience of a Tesla. I personally can take it or leave it, mainly because I like knobs, but I can see the appeal. So I suspect Tesla will have much higher brand loyalty than other EVs.

24

Could you elaborate on that?

I’m sure someone else can do a better job than I, but a couple of things include:

They have developed a sort of mega-casting technique for making the basic chassis which is like 3 parts replacing over 150.

The automation and flow in a Tesla factory is dramatic. I remember a film from a couple years ago that looked at the flow in the Tesla factory compared to a relatively new ICE plant and it was dramatic.

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They have developed a sort of mega-casting technique for making the basic chassis which is like 3 parts replacing over 150.

The automation and flow in a Tesla factory is dramatic. I remember a film from a couple years ago that looked at the flow in the Tesla factory compared to a relatively new ICE plant and it was dramatic.

Thanks - but do those things actually translate into better manufacturing?

Tesla only very recently managed to produce more vehicles out of Fremont than the old GM/Toyota operators did at their peak - and even then only by expanding the plant (turning parking areas into additional production area). The “flow” might look really awesome…but again, that doesn’t necessarily speak to the efficiency of the manufacturing process. Maybe they’re doing some things better than other manufacturers - but “way ahead” better?

I wonder how much of that stems from the fact that they basically only produce two vehicles (the 3 and Y make up 93% of their production volume)?

Albaby

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26

tamhas,

They have developed a sort of mega-casting technique for making the basic chassis which is like 3 parts replacing over 150.

Of course that’s a two-edged sword.

If the giant casting fails or cracks, you’ll likely need to total the vehicle. If one of the 150 parts that the casting replaced failed or was damaged in an accident, it would likely be replaced at much lower cost.

I don’t think too many people want a $70,000 vehicle where you wrap the power cord around it like a broken toaster when it fails.

intercst

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their factories look cool. But does that mean that they’re doing a great job manufacturing? They’ve got massive unmet demand for their main products (the 3 and Y), and have been slow to get their next model (pickup truck) into production.

Does a long waitlist without any advertising mean you’re doing something right (everyone wants our product! we don’t need to advertise!) or doing something wrong (we’re underproducing our product leaving money on the table!

While it’s true they have massive unmet demand, they’ve been ramping up incredibly fast for years. The last 4 quarters they sold 1,115,000 cars, despite their Shanghai factory being severely constrained for several months due to the Covid lockdown this spring. The 4 quarters prior they sold 707,000. 58% growth. The four quarters before that they sold 388,000, 82% growth year over year and 187% growth over two years.

It takes time to build factories. This year they have opened two massive new factories, Austin and Berlin, doubling the number of automobile factories they operate, so as they ramp up over the next couple years, we’ll continue to see the remarkable growth rates, and more factories will be coming in a few years.

Tesla has been aggressively trying to improve on existing factory automation from the very first production lines they opened in Fremont. As long as they keep working hard to improve, and implement iteratively better processes as they open new factories, I expect they’ll become one of the best automobile manufacturers if they are not already.

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In frames, stamping body panels, final assembly, yup. I think Denny is more concerned with the parts of the EV that are not shared with an ICE car.

I’m not an expert at making cars but Sandy Munro is. I do share some experiences with Sandy, one of them being parts count, the fewer the better. Not only are EV drive trains simpler than ICE drive trains (and hybrids have the complexity of two drive trains) but Tesla is eliminating massive number of parts with the giga castings, over 170 body parts eliminated, less soldering, screwing, glueing, assembling, and inspecting. A huge number of robots eliminated and a much smaller factory to assemble the cars. The complaint about quality was real when only Fremont was producing cars the old way. According to Sandy Munro the giga casting produce much higher quality because there are fewer operations to screw up at – over 170 parts that don’t need to be assembled.

The refrain that incumbents have so much more experience brings to mind my old boss at NCR, Sr. Tulio Hansen. During one of the weekly sales meeting one salesman brought up an objection a client had presented, “Young man, I have 20 years experience running this business” to which Sr. Hansen said, “Maybe he has a one year experience repeated 20 times.” People don’t like change. How many Fools don’t want EVs? For myself, I don’t like being a beta tester, I rather wait a while to adopt new stuff.

In building cars Elon and Tesla have moved the goal posts! That’s what “disruption” means.

Sandy Munro brought up an interesting innovation during one of his Tesla tear downs. He discovered rigid wire harnesses. Robots have a hard time assembling flexible parts, the old style wire harnesses required humans to assemble. The rigid wire harnesses cost more but they eliminate the need of humans on the assembly line. Lower total cost with more expensive labor saving parts. Tesla’s advantage is not any one thing but the Agile concept that allows Tesla to innovate on the fly. It’s hard to teach old dogs new tricks!

And add to all that, JUST FOUR MODELS instead of hundreds – mass production efficiency, economy of scale. I can hear the objection now, “people want more variety!” True but while EVs are production constrained consumers have to buy what’s available. Variety, for Tesla, is 5 to 10 years in the future. Incumbents they just compete with one another with their 100 models.

The Captain

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Yes, Tesla’s manufacturing facilities are likely a bit more advanced in terms of robotics and other technologies, but that doesn’t necessarily make them better.

You are right. What makes them better is their superior margins and much lower hours to assemble numbers.

Production quality at Tesla is notoriously mixed. They might have more advanced technology in their plants, but they don’t yet know how to take advantage of that advanced technology to make better or cheaper cars.

Aren’t they the only car company to increase production in the last ~2 years during the parts shortage? Somehow, the companies with all the expertise couldn’t do this.

But having an advantage in batteries is not the same as having an advantage in manufacturing of the entire car.

It might be when the battery is the most expensive part in the car.

Mike

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If the giant casting fails or cracks, you’ll likely need to total the vehicle. If one of the 150 parts that the casting replaced failed or was damaged in an accident, it would likely be replaced at much lower cost.

Much higher chance of failure with a higher part count. This frame is integrated with the battery and is very rigid, so other than initial casting failures, I would think the chance of subsequent failure was very low in the absence of forces that would total the car anyway.

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I don’t know the answer - but I’m curious why you think their manufacturing process is way ahead of other firms’ processes.

https://www.motorbiscuit.com/tesla-electric-vehicle-10-hours…

Tesla is no stranger to producing electric vehicles rapidly, but it seems Volkswagen is having trouble keeping pace with the EV maker. Volkswagen AG Chief Executive Officer Herbert Diess spoke to a group of workers in Germany earlier this week, hoping to inspire change. What did Diess say during the ominous meeting?
At the nearby Gruenheide factory outside of Berlin, Tesla is currently trucking along and set to achieve the goal of making an electric vehicle in under 10 hours. At this time, Volkswagen’s main Zwickau plant requires 30 hours per vehicle. Diess hopes to reduce that to 20 hours per vehicle by next year.

Hmm. So by telling the truth it seems that VW got rid of Diess.
This is the Legacy “advantage.”

Mike

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Much higher chance of failure with a higher part count. This frame is integrated with the battery and is very rigid, so other than initial casting failures, I would think the chance of subsequent failure was very low in the absence of forces that would total the car anyway.

For sure there are possibly both upsides and downsides to this new casting process.

The unsaid plan, IMO, is to get it working on existing car models and then use it later in a new cheaper car, since the main advantage is lower part count and fewer assembly steps. Again, years ahead of the legacy car makers

Mike

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It takes time to build factories.

True. Although having lots of existing factories - and an existing labor force - that you can repurpose to building new models as consumer preferences shift over time is itself a manufacturing advantage. If, for example, the Lightning really were to take off as a consumer-preferred alternative to ICE F-150’s, Ford has options for increasing manufacturing capacity that Tesla does not.

The flip side of that, of course, is that those existing factories are old - and a repurposed one is not going to be as flexible or efficient as a bespoke factory built from scratch. I wonder if Tesla’s new factories are doing anything radically “way ahead” than the new factories for other manufacturers.

Albaby

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My understanding is that it is a major, major rework to convert an ICE factory to an EV factory.

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Tesla now has a huge advantage in all aspects of manufacturing an entire non-ICE car, You should see Denny’s (The Captain)'s excellent links to Munro commenting on the advances Tesla is making in manufacturing.

The old ICE manufacturers are being left in the dust. It is quite remarkable to watch and contemplate.

david fb

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tamhas writes,

<<<If the giant casting fails or cracks, you’ll likely need to total the vehicle. If one of the 150 parts that the casting replaced failed or was damaged in an accident, it would likely be replaced at much lower cost.>>>

Much higher chance of failure with a higher part count. This frame is integrated with the battery and is very rigid, so other than initial casting failures, I would think the chance of subsequent failure was very low in the absence of forces that would total the car anyway.

We’ll find find out when the auto insurers have the “cost to repair” data and set the auto insurance rates accordingly.

It is interesting that Tesla insurance offers insanely low auto insurance rates vs. its competitors. Either Tesla is selling insurance as a loss leaders or the other insurers are collecting massive “skim”.

https://www.valuepenguin.com/tesla-car-insurance

intercst

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Thanks - but do those things actually translate into better manufacturing?

Sandy Munro says they do, having to join 170 parts adds 170 instances of possible failure. Also, the resultant product is more solid which improves quality (fewer squeaks?).

The Captain

Giga Castings with Sandy | Evolution of Tesla Bodies In White
https://www.youtube.com/watch?v=WNWYk4DdT_E

Seats mounted on the structural battery pack, simpler than pushing the through the doors

Tesla Model Y 4680 Structural Pack OUT!!!
https://www.youtube.com/watch?v=FXpfU6I_T3w&t=0s

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Tesla Model Y 4680 Structural Pack OUT!!!
https://www.youtube.com/watch?v=FXpfU6I_T3w&t=0s

Cool video!

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Albaby,

Unfortunately I cannot send you to a link, I can’t even find the interviews. I will attempt to explain why I think Tesla is way ahead on manufacturing.

I watched an interview with Elon Musk and Sandy Monroe. Sandy was questioning Musk on the stamping of the Model 3 frames and was wondering if it would not be better to make the whole frame in one stamp.

Musk said “Yes it would” but then he went on to explain that there were only so many engineering resources available to Tesla and Tesla must put cars out the door to keep cash flow going. So, while the single step body was a good idea, it could not be implemented right then. He went on to say that every change especially in body manufacturing and interior manufacturing led to production hell and even commented that it takes a while, (6 months? I forget the time frame he mentioned) to get manufacturing straightened out and waiting to buy a car until that was straightened out was a good idea.

Fast forward to today. The new factory in Germany is stamping out one piece frames. This one process reduces cost and improves quality.

In the same interview Musk talked about dash board hell. He had a team use the best materials for each part of the dash board. When they tried to put it together it was impossible to get good quality. So he reorganized the team and came up with simpler dash. While each part was not optimized, the dash was. Because Tesla has so much manufacturing in house, each part can be designed to work optimally with each other part. The rate of innovation is so much greater than the incumbent model of pushing specs out to contractors that Tesla is now out manufacturing the cars themselves compared to the incumbents.

I am sorry I cannot provide a link. All I can say is find a Sandy Monroe tear down video and the You Tube AI will take you around from there.

Cheers
Qazulight

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Either Tesla is selling insurance as a loss leaders or the other insurers are collecting massive “skim”.

Perhaps some of both?

—Peter