Tesla Employees Say Automaker Is Churning Out a High Volume of Flawed Parts (cnbc.com)

Several current and former employees of Tesla said that the automaker is manufacturing a surprisingly high ratio of flawed parts and vehicles, leading to more rework and repairs than can be contained at its factory in Fremont, California. CNBC reports: One current Tesla engineer estimated that 40 percent of the parts made or received at its Fremont factory require rework. The need for reviews of parts coming off the line, and rework, has contributed to Model 3 delays, the engineer said. Another current employee from Tesla's Fremont factory said the company's defect rate is so high that it's hard to hit production targets. Inability to hit the numbers is in turn hurting employee morale. To deal with a backlog of flawed parts and vehicles, said these current and former employees, Tesla has brought in teams of technicians and engineers from its service centers and remanufacturing lines to help with rework and repairs on site in Fremont. They also said that sometimes the luxury EV maker has taken the unusual measure of sending flawed or damaged parts from Fremont to its remanufacturing facility in Lathrop, California, about 50 miles away, instead of fixing those parts "in-line." Tesla flatly denies that its remanufacturing teams engage in rework. "Our remanufacturing team does not 'rework' cars," a spokesperson said. The company said the employees might be conflating rework and remanufacturing. It also said every vehicle is subjected to rigorous quality control involving more than 500 inspections and tests. The report from CNBC has caused Tesla's stock to tumble today. You can read Tesla's full statement about the CNBC report here.

Comments

Slashdot is lawed too!

[garcia]

From the blurb; emphasis mine:

Several current and former employees of Tesla said that the automaker is manufacturing a surprisingly high ratio of lawed parts and vehicles, leading to more rework and repairs than can be contained at its factory in Fremont, California.

That's ok, Slashdot has had plenty of time to work out all of its kinks in the supply chain for their product and, yet, we still see a surprisingly high ratio of flawed spelling.

Re:Tesla is good for the environment

[Bing Tsher E]

Landfills are the 22nd centuries' resource strip mines.

The thing that the people of the future are going to HATE are the high temperature incinerators that are so popular with some environmentalists today. They destroy so much that could be banked away for the future in a good clay-lined landfill.

I just had a tour of the factory

[Anonymous Coward]

Something overlooked in the description, Tesla is making many if not most of the parts there in the factory right next to the assembly line. Having also been to Ford and GM assembly lines, and seen many others on TV (How it's Made!), Tesla's approach is radically different! If you have to stamp raw aluminum, put it through a bunch of processes, you're going to get a few that have blemish or minor rework issues, or are scrap. Every factory making parts from scratch has a yield. I remember when flat panels were first introduced they were super expensive because the yield was down around 30%. I would guess the current flat panel yield is up in the high 90s.
Ford and GM had parts fabricated away from the assembly line, so there was a lot less yield related issues by the time someone was bolting on a part, those were dealt with elsewhere.

As long as there's a process to catch problems before the become part of the car, who cares. I for one am extremely happy they are having production slowdowns rather than shipping flawed cars.

Re:I just had a tour of the factory

[Ungrounded Lightning]

Tesla is making many if not most of the parts there in the factory right next to the assembly line. Having also been to Ford and GM assembly lines, and seen many others on TV (How it's Made!), Tesla's approach is radically different!

Been to Ford's River Rouge plant? Looked at a documentary of it in its early days?

The Rouge Plant was built as a machine that took in coal, iron ore, and other raw materials at one end and spit out finished cars at the other. This was how Ford tried to do it when he was the Musk of his day.

These days things are spread out more.

Also: Tesla doesn't build EVERYTHING at the plant (though they are partial to suppliers located within a few miles, so they can interact and ship stuff around in a matter of minutes to hours, rather than days or weeks. (Much like the chassis and final assembly plants at the GM complex in Detroit, which function as a two-part line with a gap measured in city blocks.)

Re:I just had a tour of the factory

[Rei]

Since the context of Slashdot is usually the US, and you seem to be assuming the US, I'll assume that as well:

Hint : it may come from coal, it may come from nukes, it may come from hydro, but virtually NONE of those sources are without serious issues.

Coal usage is plunging off a cliff. In the US in the past decade alone it's plunged from nearly 50% of the grid to around 30% of the grid. Coal is dying, and nothing is going to change that, because its killer is economics.

Nuclear power and hydro are relatively static in usage. The intended "nuclear renaissance" failed in a morass of cost overruns. Essentially all feasible large hydro capacity has already been deployed; remaining sites are too well protected (e.g. nobody is going to approve a dam that would flood the lower part of the Grand Canyon). If anything, increasing water shortages will force a reduction in large hydro.

What's actually growing rapidly in the US is the combination of natural gas, wind and solar.

Where do you think the electric power which is used to recharge your electric toy vehicle comes from ?

I don't know, how about you look it up? Choose a Model 3, punch in your zip code, and come tell us about all of the oh-so-horrible emission results you get compared to a gasoline vehicle. Let's ignore the fact that beyond CO2, traditional pollution emissions have finite (often short) lifespans in the atmosphere, and releasing them at altitude in less densely populated areas has a profoundly lower impact on human health (per unit mass) than releasing them at ground height in densely populated areas.

And I'll repeat: that's the results for today - but grids worldwide, including the US, are cleaning up at an incredibly rapid clip. Coal simply can't compete any more. Every day that goes by, EVs become increasingly vehicles fueled by a mix of wind, solar and natural gas.

(None of this applies for me here, mind you - an EV here runs on a mix of hydro and geothermal; coal doesn't even come into the picture)

Heeey...

[XSportSeeker]

...just in time for that Gung Ho reboot?

Any Tesla Owner Could Have Told You That.

[dgatwood]

My Model X came off the line with a bad charge port that was almost impossible to supercharge. I later found out that this was a widespread manufacturing defect that occurred in cars made over a period of weeks in late 2017. As a result, they ran out of (non-defective) replacement charge ports for the entire region, and had to send out field techs to manually file down the defective plastic guides in the charge ports of a large number of vehicles.

The cost of these mistakes to Tesla has to be just incredible. They would be much better off financially if they added an additional validation step early in their supply chain, even if that meant eating the cost of a few parts.

And this doesn't just affect their new cars. These Model X charge port issues happened more than two years after production on the Model X began. That's insanely late in the production cycle for manufacturing tolerance issues to suddenly crop up. Very bizarre.

Re:Any Tesla Owner Could Have Told You That.

[rtb61]

I always find it odd, when workers complain about how bad a job fellow workers are doing. I am sorry but perhaps your contention is that Elon Musk is working the production line and doing a really bad job. It that case, Elon Musk is doing a really shitty job on that production line and should perhaps consider getting into management, rather than making bad parts. Somebody seriously wants to buy Tesla and make no mistake and buy it at a substantive discount. Especially suspect the choice of photo to show Musk in the worse possible light, this from the Crappy News and Bullshit Content network, this part of the comment, exactly matches the choice of photo.

Disclosure I skimmed through the content as little as possible due to the source, US corporate main stream media, not to be trusted, not even for the date heh heh.

Yet another attempt to tarnish Tesla. Thanks, news

[Anonymous Coward]

This is clearly yet another attempt by Tesla's "old-fashioned" competitors to tarnish Tesla's name. You know, the companies whose car parts are total crap and yet do pass their "rigorous testing". And news sites like this are happy to post this shit, without asking questions like "how come we suddenly see news about a car company's' manufacturing failure rates reaching mainstream news?"
Since when has stuff like this started reaching mainstream news? Oh, since Tesla, a company that makes very high quality electric cars with very low failure rates compared to their competitors, and with a VERY different business model (wanna buy directly, anyone?) started being a real threat.
What a bunch of FUD.

Good time to buy stock then

[AlanObject]

The report from CNBC has caused Tesla's stock to tumble today.

Remember all the Tesla fires? The stock tumbled then and I managed to get in at the bottom of that particular drop.

I'll never understand how or why the markets are absolutely eager for anything remotely bad about Tesla Motors so they can let their fear-ridden backbrains take over and sell in a panic. Fine I will just buy then.

As to the issue: new factories pushing the edge on new kinds of parts will inevitably have issues of this kind. I would be more concerned if they reported a zero or tiny defect rate. That would indicate that the QA dept is not doing its job and somebody is hiding something.

Bottom line: Tesla revenues are supply limited. Specifically supply of batteries. They have a huge backlog of sales. Yes a 40% defect rate of something is a problem and has to be fixed. I have seen defect rates like that and worse on stable product that hasn't changed in 5 years. That is why there is a career in supply chain management. That is why there is a career in Quality Assurance.

But if you have a backlog and you have funding (Tesla has both) these problems will be fixed. The stock price drop has to do with the market obsession with making this quarter's shipments and revenue numbers and nothing else.

Had this not made the news I would have been surprised if this had even reached Elon's desk.

Re:Good time to buy stock then

[110010001000]

Tesla has a P/E ratio of -30. You would have to be nuts to invest in that.

Re:Good time to buy stock then

[edtice1559]

The value of a stock is the npv of the future cash flows. P/E tells you what happened in the past and is a good stock value measurement to the extent that it predicts future cash flows. A negative P/E likely means that it may be a long time until positive cash flows occur. But it says nothing about the magnitude of future cash flows especially of a growth business.

Re:Good time to buy stock then

[internet-redstar]

It's a poorly run company run by a narcissistic Silly Valley huckster who doesn't know what he's doing and needs regular cash infusions from delusional people who either don't want to or can't read financial statements.

You would be right if he wasn't making the best cars _in the world_
Trust me, I own both a Model X and a Model S. Once you drive electric there is no way back. Other brands are starting to enter the market but are still far behind. I'm going tomorrow to a VIP event for the launch of the Jag I-Pace and am on the list for the Mission E (will be summer next year when that launches). The Audi eTron might become delivered around the end of this year.
You would also be right if he would only TALK about rockets instead of revolutionising our access to space.
But as he is doing all that, and he is just missing his deadlines, but still going to double the amount of cars they build in total during 2018, it's not that bad at all.
Especially considering he's building the cars in the USA (of all places ;-)
The world is changing and making the transition to electric, and you too will be able to enjoy a better air quality as a direct result :-D

Re:Good time to buy stock then

[david_thornley]

What you don't understand is that some investments are based on current P/E and some based on expected future P/E (and some based on the "greater fool" theory, of course).

Having worked at a Chevy dealer...

[GerryGilmore]

....in their parts department, I can tell you that pretty much every model of car manufactured has some certain parts from some certain providers that are notorious for failing. This is what led to Toyota achieving such dominance today: they learned the "Barney Fife" lesson - "Nip it in the bud, Anj! Nip it in the bud!". They relentlessly send their engineers into their parts provider's lines to perform front-line QA and "kaizen" (continuous quality feedback). Tesla seems like they want to get there, and will - I believe - but as with all complex systems, there is lots to learn (and relearn) along the way.

Re:Having worked at a Chevy dealer...

[Anonymous Coward]

Having worked for an automotive parts manufacturer in the QA department I can tell you that 40% is absurdly abysmal. 1 in 1000 requires an executive meeting. 1 in 10,000 makes the line stop. 1 in 100,000 is the contractual maximum for the Toyota parts we supplied. Ford was tolerant of a few per 100,000 requiring rework (though they just threw the parts away) and was tolerant of 20% "close enough" parts, meaning the plating will wear out on salty roads in 8 years instead of 10.

Zero was the contractual maximum for BMW and Lotus. BMW will accept 5 ppm out-of-spec so long as you don't do it often. Lotus will kick back the whole shipment and threaten pulling your contract with one bad part. Do it twice in a year and the contract is gone with cancellation penalties. Every part for both was QA tested. We had to invest several million into automated multidimensional laser gauging QA equipment.

These Tesla numbers are what you would expect of a garage-based manufacturer of dude-buggies, not a modern auto manufacturer. Perhaps they need to hire engineers and workers from Detroit instead of LA.

Re:Having worked at a Chevy dealer...

[K. S. Kyosuke]

Wait, are you talking about the things that you deliver or the things that you manufacture? Because I'd be rather surprised if 99.999% was the yield of the manufacturing process (unless we're talking about paper sheets or toothpicks or something like that).

Re:Having worked at a Chevy dealer...

[mjwx]

....in their parts department, I can tell you that pretty much every model of car manufactured has some certain parts from some certain providers that are notorious for failing. This is what led to Toyota achieving such dominance today: they learned the "Barney Fife" lesson - "Nip it in the bud, Anj! Nip it in the bud!". They relentlessly send their engineers into their parts provider's lines to perform front-line QA and "kaizen" (continuous quality feedback). Tesla seems like they want to get there, and will - I believe - but as with all complex systems, there is lots to learn (and relearn) along the way.

This.

There is an oft quoted statistic used by GM fanboys that goes something like "Toyota has had more recalls than " which on the outside is true but in reality it's because Toyota will fix absolutely anything where as GM waits until it's killed 17 people and there is a risk of a lawsuit.

A toyota recall looks something like: In extreme conditions above 50C a mishandled seat adjustment handle may become loose if the planets align and you fail to find the jade monkey in time.

A GM recall looks like: During normal operation the bolts holding the wheel to the hub may sheer and cause the wheel to disconnect.

No manufacturer is free of flaws, no process can eliminate them completely, what matters is how a company deals with it. During GM's ignition fiasco, they kept ignoring the problem until the government was about to step in. I once got a recall for my 8 yr old Honda Integra, because of 2 cases of a brake master cylinder failing, they replaced every single one on every single car that used that part.

Re:Having worked at a Chevy dealer...

[Thelasko]

Six sigma is 3.4 defects per million. Per the GP post, none of the major manufacturers are requiring that, except Lotus?

Seriously, I don't think Lotus has made a million cars in the entire history of the company. And they certainly aren't known for their quality.

Re:Tesla is good for the environment

[ShanghaiBill]

They destroy so much that could be banked away for the future in a good clay-lined landfill.

Same with nuclear waste. In the future, all those isotopes are going to be very valuable. We just haven't figured out how or why yet.

The power companies should sell options/futures on the waste, and use the money to pay for the (temporary) storage.
 

Re:Tools?

[arglebargle_xiv]

Friend of mine used to work for GM and this sounds pretty familiar, he said they'd have piles of parts with defects lying around next to assembly lines awaiting rework or perhaps reuse without rework when they were in a hurry and needed a part. There was little to no accounting, parts just ended up shunted off to the side somewhere where they'd be held indefinitely until something could be done with them.

I guess the advance with Tesla is that at least they can track their defective/in-need-of-rework parts.

"Gramer Nazi" approach is wrong for a hit piece...

[denzacar]

Which is what this article by Lora Kolodny is.
She really, REALLY, REALLY has an issue with Tesla.

And again... she puts doom&gloom in the title...

Tesla employees say automaker is churning out a high volume of flawed parts requiring costly rework
        Tesla employees say the company is manufacturing a high ratio of flawed parts and vehicles that need rework and repairs.
        The electrical vehicle maker has had to ship some flawed parts to remanufacturing facilities to avoid scrapping them, rather than fixing them in-line, according to sources; Tesla denies this.

Then she digs through "at least one Tesla employee profile on LinkedIn" to try to "prove" a much greater level of part rework - cause an employee listed working in a team of 130 instead of 40 on a CV.
But the best part is where she quotes experts.

Like this part at the end of the second paragraph...

Lean manufacturing specialist Matt Girvan, founder of MAG Consulting, said: "Even during what is considered 'launch' mode, if a company is selling its cars to customers, it should not be experiencing large amounts of rework.
This speaks to an internal quality issue that is on a magnitude that is not normal for most car manufacturers."

Then... after much more text and a "sad" photo of Musk (Why not a meme, Lora?), more text (including that LinkedIn part) - here's that same expert again, near the end of the article:

He said, "Problems are unavoidable in any factory. 'Rework' does happen... These listings speak to what is probably a large amount of product that has either not been built to specification or that has been built to an incorrect specification where the error wasn't found until later."

In autos, there is a widespread philosophy of "right the first time," Girvan added. Usually, automakers spend a lot of time on planning and prototypes before going into full production. One reason for a cautious approach is that too much scrap, and a high portion of parts that need rework, can eat into the already-challenging profit margins of auto assembly.

Also... Buried between Tesla's responses:

At least, Girvan said, "It's better to catch a defect in the factory and fix it -- far better than something occurring in the field involving a customer's vehicle."

Hmm... Put that way, all that "rework" (note the quote-marks in reply by Girvan) sounds a lot like quality control.
Instead of... you know... "backlog of flawed parts and vehicles", "flawed or damaged parts", "defect rate is so high", "surprisingly high ratio of flawed parts and vehicles"...

I don't know what it is about Kolodny and Tesla... but she really has it in for that company.