As I write this, Workforce Tesla (NASDAQ:TSLA) is probably laborious at work on the Q3 Replace Letter.
The letter would require some intelligent wordsmithing certainly to string the needle on so many troubling questions, to discover a constructive spin for the damaging numbers, and to maintain alive the hope within the hearts of the Fremont devoted.
The letter shall be launched after market shut on Wednesday, together with the slimmed down model of the Q3 monetary statements. Prior to now few weeks, the badyst world lastly has caught up with CoverDrive in anticipating report losses.
Most fascinating of all would be the convention name. How for much longer will Adam Jonas and Ben Kallo proceed to kneel in adoration as an alternative of to query with furrowed forehead? After CFO Ahuja and CEO Musk duck and dodge on the primary query, will their interlocutor bore again in once more with a decided follow-up?
Briefly, will the badysts and journalists on the convention name lastly lose their endurance with non-answers and completely happy speak, and begin demanding Tesla come clear with particular info?
As a result of there most definitely is quite a lot of particular info to wash about. Anton Wahlman has instructed 10 questions that cry out for solutions (and an excellent many extra had been put forth in his article’s feedback).
Right here, I contact on two latest experiences that counsel enormous issues at each the Fremont auto plant and the Nevada battery manufacturing unit.
One other Niedermeyer Blockbuster
Edward Niedermeyer of The Every day Kanban is out right this moment with one other blockbuster story. (I reported on his earlier blockbuster right here.)
Counting on a supply whom he claims is acquainted with the event and deployment of the Mannequin three manufacturing gear, Niedermeyer experiences how Tesla did the hokey-pokey with an unnamed automated tooling provider relating to Physique In White (BIW) switch strains for the Mannequin three.
First there have been to be two switch strains. A witch’s brew of disagreements amongst Tesla personnel mixed with personnel turnover led to quite a few contract revisions, and the second line was dropped.
The plans then underwent no fewer than 5 revisions earlier than a purchase order order was signed, after which 4 extra after it was signed, leading to added prices because the timeline was compressed.
It will get worse:
Along with the compressed deadline and excessive quantity of design revisions, the Mannequin three observe diverged from normal trade observe in that it was a so-called “chilly construct.” Usually automakers fully design the manufacturing line after which contract the provider to construct the road at their facility, the place it’s completely examined as much as its nominal jobs-per-hour (JPH) specification earlier than being shipped to the meeting plant for set up. The “chilly construct” strategy that Tesla took with the Mannequin three BIW switch line skips the provider testing step, which means the road was shipped to Fremont for set up at Tesla’s plant with out having been validated.
Due to the compressed timeline and “chilly construct,” Tesla’s first Mannequin three line will seemingly require extra debugging than common and will even require post-installation modification. That work should all happen at Fremont, requiring Tesla to pay for journey and time beyond regulation for the provider’s extremely expert engineers. That set up and debugging work is ongoing in keeping with the supply, who confirms that Tesla has not but constructed a Mannequin three utilizing the automated tooling.
As they are saying, learn the entire thing.
Niedermeyer, who clearly has achieved some cautious overview of allow functions filed by Tesla in California, cited a report from Wards Auto claiming Tesla wants a second physique store to succeed in the manufacturing volumes forecast Tesla has forecast for 2018.
From that story:
A supply in place to know says a second physique store mirroring Fremont’s can be required to badist the excessive quantity Musk has forecast. “I perceive they’re speaking a couple of second physique store,” he says, “however I can’t see them reaching 2,500 to three,000 weekly till the tip of subsequent 12 months” with present manufacturing amenities.
Once more, learn the entire thing.
As he all the time does, Niedermeyer repeatedly reached out to Tesla for remark.
Tesla, alas, has been mum. Let’s see whether or not the badysts and journalists on the convention name can elicit some significant info.
All this on prime of the information that, earlier this month, Tesla slashed its Mannequin three elements orders from a Taiwanese elements producer, Hota Industrial Manufacturing Co. A report which, by the way, is per experiences from a Searching for Alpha member who evidently works for a Mannequin three elements provider within the U.S.
The Gigafactory Woes
I reported not too long ago on indications the Sparks, Nevada, Gigafactory has run into severe manufacturing issues.
There are additional indications one thing is significantly amiss in Sparks. Somebody claiming to be employed on the Gigafactory by Panasonic has continued to submit about issues on the plant. From a latest submit:
Probably as excessive as 20-30% of Panasonic’s workers on website are managers, engineers and precise technicians instantly from Japan. The folks there from Japan are nothing in need of superb. It’s the American hires in administration and technical positions which are chargeable for the issues.
When you could have technicians and managers inflicting extra issues than they repair it’s a difficulty. Not one of many technicians working there even is aware of the right way to use a fundamental voltage meter if that tells you something, significantly. The technical check they took to be employed displayed a hammer, pry bar and wrench and asks them to determine which one is a lever. As soon as employed there’s no coaching or apprentice applications to show them technical troubleshooting expertise that take years to acquire.
They’ve short-term technicians from Japan which are rotated in and overseas who they check with in-house as “TA’s” (Technical Advisors). These guys are superb however get ran to loss of life making an attempt to remain on prime of all the issues the American employed workers trigger (it makes being an American there embarrbading). The intention was for the TAs to coach the People to do the job and whereas Panasonic is absolutely conscious this isn’t an in a single day course of they’ve additionally shortsighted themselves on the language and cultural obstacles that stop this from working.
Panasonic is a really spectacular firm as a complete. Elon made an excellent alternative bringing them into this. Each single worker they’ve there from Japan are very spectacular and nothing in need of superb. 100% high quality manufacturing with no corners minimize to fulfill manufacturing targets takes precedence over all the things with them… Like I stated, the rapid repair is for Panasonic to ship the American administration from the highest down packing out of there. I’m undecided the Japanese at Panasonic are conscious they might do significantly better by recruiting out of state from areas the place folks do have generational expertise in technical and manufacturing jobs.
I hate to say it as a result of I’m a neighborhood (albeit transplanted from the Midwest) however the Gigafactory location determination was poorly made. Dependable energy equipped to the manufacturing unit seemingly wasn’t a consideration for the reason that early plans had been to be off grid, however there’s little excuse for the opposite location oversights that are actually large points with the bodily location. The manufacturing unit is simply too distant from the place workers dwell with the closest metropolis being 20 miles away. Nearly all of the labor workers making $14 an hour the maths doesn’t work for what it prices them in gas and automobile upkeep value to make that 40-mile spherical journey each day. They need to have additionally recognized they had been constructing in an space the place folks didn’t have tech or manufacturing backgrounds.
In the meantime, from Elon Musk we’ve Twitter postings a couple of campfire on the Gigafactory roof, and making this charming Instagram submit of his Karaoke model of Johnny Money’s Ring of Fireplace. Do you should definitely flip up the amount.
Money. It burns, burns, burns.
I feel Musk is sending you a message.
Disclosure: I’m/we’re brief TSLA.
I wrote this text myself, and it expresses my very own opinions. I’m not receiving compensation for it (aside from from Searching for Alpha). I’ve no enterprise relationship with any firm whose inventory is talked about on this article.
Further disclosure: I’m brief TSLA through long-dated choices.