Production Rate (incl manufacturing waves)

[ChrisC]

You guys are cracking me up with this geometric growth talk. 10, then 40, then 80, therefore it's exponential right? Doubling every week, 1600 per week in 4 weeks, woohoo! [edit: this is sarcasm!]

It could just as well be linear growth -- adding ~40 per week to the rate. So that would be 40, 80, 120, 160, etc. That seems a lot more realistic to me. But it sure can be fun getting momentarily unhinged from reality

High growth rates with low baseline numbers are much easier than with high baseline numbers. And while Tesla certainly has that 5000 goal, they frankly aren't going to ship garbage just to meet it and satisfy Wall Street. Play the long game. In the long term it would hurt far more to have to do problem rework in the field.

 

[Norbert]

The statement in the last stock holder meeting was that the soft target was 500 deliveries. They were very specific about that.

My point is that they can finish the bodies ahead of time, so they might be able to complete 500 cars in Q3. I don't think the term "delivery" is terribly important even if they said that.

I have not expected them to hit that number for quite some time. I do expect them to hit the 5000 number by the end of the year. The ramp up took just a little to long for this quarter.
However, I am also ecstatic that they put such a premium on quality and I think an extra week or two is well worth it.

Agree, quality is more important. Also, I don't think 5,000 by the end of the year is terribly important (soft target), it is more important that they are able to achieve a high production rate going into 2013.

 

[aviators99]

Also, I don't think 5,000 by the end of the year is terribly important

No, but delivering 1,340 is terribly important! ;-)

 

[Zzzz...]

Doubling every week, 1600 per week in 4 weeks, woohoo!

??? How about them hitting 1,600,000+ per week doubling for an extra 10 more weeks? Woohoowoohoowoohoo!!!

Keep dreaming, but I would say that such dreams are idiotic. Doesn't matter if we are talking about more then one thousand or one million per week production rates - both out of the question in foreseeable future.

Tesla Motors were doing capital investments in machinery with the production goals and hope to reach of 83 car per shift, a little bit over 400 a week, 20 000 a year. They will have hard time to get there. But they eventually might get there. Hopefully they would be able to solve gazillion of Tesla Factory ramp up problems. And fix their supply chain ramp up - another really huge issue.
But imagining that they suddenly and secretly started to actively invest many hundreds of millions in tooling/machinery, to allow them get 4x production rates is nothing but a childish imagination. Why would they do it? To run the plant for a week every month and idle it for the rest of month? Not to mention, where they would get all that money to invest? In their last quarterly report there was no spare billion or so laying around at their disposal...

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Also, I don't think 5,000 by the end of the year is terribly important (soft target), it is more important that they are able to achieve a high production rate going into 2013.

Agree. As long as they reach ~400 per week production rate by the end of the 4th quarter, market wont overreact about them not delivering 5000 cars total.

 

[Trnsl8r]

.... Also, I don't think 5,000 by the end of the year is terribly important (soft target), it is more important that they are able to achieve a high production rate going into 2013.

There's a guy named Elon that might give you an argument... ;-)

 

[jkirkebo]

Tesla Motors were doing capital investments in machinery with the production goals and hope to reach of 83 car per shift, a little bit over 400 a week, 20 000 a year. They will have hard time to get there. But they eventually might get there. Hopefully they would be able to solve gazillion of Tesla Factory ramp up problems. And fix their supply chain ramp up - another really huge issue.
But imagining that they suddenly and secretly started to actively invest many hundreds of millions in tooling/machinery, to allow them get 4x production rates is nothing but a childish imagination. Why would they do it? To run the plant for a week every month and idle it for the rest of month? Not to mention, where they would get all that money to invest? In their last quarterly report there was no spare billion or so laying around at their disposal...

Well, if demand settles at for example75,000 Model S per year they have two options. Push up the price to lower demand to capacity (and earn more), or push up production capacity (which also earns more). If they have the demand, I'd guess borrowing money for a second line won't be a problem.

Commisioning a second line should be easy compared to the first line

 

[dsm363]

??? How about them hitting 1,600,000+ per week doubling for an extra 10 more weeks? Woohoowoohoowoohoo!!!

Keep dreaming, but I would say that such dreams are idiotic. Doesn't matter if we are talking about more then one thousand or one million per week production rates - both out of the question in foreseeable future.

While I agree that 1,600 per week isn't going to happen, calling someone's statement 'idiotic' isn't necessary and is never constructive.

 

[Doug_G]

??? How about them hitting 1,600,000+ per week doubling for an extra 10 more weeks? Woohoowoohoowoohoo!!!

Elon said the production rate would be an "S" curve, with the rate doubling during the ramp-up portion of the curve. It will not go to infinity.

 

[Citizen-T]

A thought: just because the rate doubled from last week to this week does not mean that they are doubling every week. From what I remember the plan was to run at a particular rate for about 3 weeks then run at double that for the next 3 weeks. It might have just been that when Elon was asked they happened to be in week 1 of a new production rate.

Using this reasoning we should expect 80/week for the next couple weeks, then 160 a week for a few weeks, etc.

 

[timdorr]

Tesla Motors were doing capital investments in machinery with the production goals and hope to reach of 83 car per shift, a little bit over 400 a week, 20 000 a year. They will have hard time to get there. But they eventually might get there. Hopefully they would be able to solve gazillion of Tesla Factory ramp up problems. And fix their supply chain ramp up - another really huge issue.
But imagining that they suddenly and secretly started to actively invest many hundreds of millions in tooling/machinery, to allow them get 4x production rates is nothing but a childish imagination. Why would they do it? To run the plant for a week every month and idle it for the rest of month? Not to mention, where they would get all that money to invest? In their last quarterly report there was no spare billion or so laying around at their disposal...

From what I understand, the issue isn't machinery, it's warm bodies to run all that equipment. They're staffing up rapidly to begin bringing up production rates. Having seen the factory almost a year ago, they've got all the parts in place to do this ramp up. Stamping hundreds of bodies a week isn't really an issue if you've got the operational manpower to back the amount and scale of equipment they have in the factory.

 

[Krugerrand]

Stamping hundreds of bodies a week isn't really an issue if you've got the operational manpower.

Not quite true. 'Assembling' hundreds of bodies a week isn't really an issue if you've got the operational manpower and have the parts. But a press line can only operate as fast as the presses can work, regardless if five people or fifty people are standing there. There is a max amount of strokes per minute. Are we there yet? At the max? Wouldn't think so, unless they are the oldest, crudest press lines in the world, which they are not.

How many body parts are stamped per week depends on several other factors that are not directly associated with the number of people involved. If a die breaks, for example, having two hundred people doesn't get the die fixed any faster. It can only be fixed/worked on by one or two depending on the issue.

So, just a clarification that stamping body parts is a different world than assembling body parts and isn't necessarily dependant on manpower. Indeed, I think you'd be surprised how many fewer bodies are in stamping/press areas vs assembly areas.

 

[Grendal]

I hadn't noticed if anyone had posted Elon's tweet:

Tesla made 100 vehicle bodies this week for the first time. Really proud of the team! Pic of S/N 396: pic.twitter.com/fZzbUIjn

That's 20 a day. He does say bodies and does not say completed cars but the ramp up indication is clear.

 

[dflye]

I hadn't noticed if anyone had posted Elon's tweet:

Tesla made 100 vehicle bodies this week for the first time. Really proud of the team! Pic of S/N 396: pic.twitter.com/fZzbUIjn

That's 20 a day. He does say bodies and does not say completed cars but the ramp up indication is clear.

He also posted that on a Sunday, which doesn't exactly lend itself to the belief they were produced on a 5 day work-week. So more like 14 a day.

 

[Eberhard]

its 20 a day with one shift only. Elon told, with current stamps he can do 20.000 year and increase to 60.000 with 3 shifts.
for full production it has increase to 80 a day.

 

[Zzzz...]

Well, if demand settles at for example75,000 Model S per year they have two options. Push up the price to lower demand to capacity (and earn more), or push up production capacity (which also earns more). If they have the demand, I'd guess borrowing money for a second line won't be a problem.

Commisioning a second line should be easy compared to the first line

I agree. In fact, in low margin/highly automated industries, like plastic molding lines that produce bottles for your catchup/mustard you buy in grocery store, it is not uncommon to have 4 shifts, each working 40h weekly, 160 hours a week total...

Elon said the production rate would be an "S" curve, with the rate doubling during the ramp-up portion of the curve. It will not go to infinity.

S curve do happens when you are investing in a line that are supposed to produce 83 cars total per shift, at the time when production is belong to 15-70 range. That is what usually give that almost vertical steep line in production ramp up... You just making every "step" to take as long as it designed to be, or fix problem in underlining design...

From what I understand, the issue isn't machinery, it's warm bodies to run all that equipment. They're staffing up rapidly to begin bringing up production rates. Having seen the factory almost a year ago, they've got all the parts in place to do this ramp up. Stamping hundreds of bodies a week isn't really an issue if you've got the operational manpower to back the amount and scale of equipment they have in the factory.

I'm afraid I could not agree with you. The most complex part is assembly line(it is somewhat independent from stamping/welding/painting stages in auto industry). But assembly still highly automated, and one could not substitute for workflow drawbacks and lack of machinery by simply hiring more ppl. Plus assembly is totally dependent on supply chain.

Not quite true. 'Assembling' hundreds of bodies a week isn't really an issue if you've got the operational manpower and have the parts. But a press line can only operate as fast as the presses can work, regardless if five people or fifty people are standing there. There is a max amount of strokes per minute. Are we there yet? At the max? Wouldn't think so, unless they are the oldest, crudest press lines in the world, which they are not.

How many body parts are stamped per week depends on several other factors that are not directly associated with the number of people involved. If a die breaks, for example, having two hundred people doesn't get the die fixed any faster. It can only be fixed/worked on by one or two depending on the issue.

So, just a clarification that stamping body parts is a different world than assembling body parts and isn't necessarily dependant on manpower. Indeed, I think you'd be surprised how many fewer bodies are in stamping/press areas vs assembly areas.

I would agree and disagree in the meantime The Tesla Factory was producing up to 500 000 cars a year at one time. Question is - how many presses Tesla Motors got in working condition? Are they all restored? How many welding/painting robots they got? I bet enough to do ~80 cars per shift, but not likely to exceed that number. And same go for paint shop, while ovens could handle up to 500 000 cars a year, I would bet ovens already been modified to handle 120 cars a day for energy save reasons... Scale up of stamping/paint lines is possible and easy, and not too capital expencive, but it is simply not the target of Tesla Motors, at this moment at least. Their goal is to get to 20 000 cars production rate, and do it least expensive/most cost effective way.

I hadn't noticed if anyone had posted Elon's tweet:

Tesla made 100 vehicle bodies this week for the first time. Really proud of the team! Pic of S/N 396: pic.twitter.com/fZzbUIjn

That's 20 a day. He does say bodies and does not say completed cars but the ramp up indication is clear.

First, they do work 6 days a week, not just 5. Second, Elon was giving an interview to FoxBusiness and they actually were about to produce 80 cars last week. And that is great, with this production in mind, they most likely will hit or exceed 500 cars goal for this quarter... Just pointing that 100 bodies a week is way less impressive then 80 cars

 

[Grendal]

An interesting question would be, how long does it take from completed body to completed car?

 

[Lyon]

You guys are cracking me up with this geometric growth talk. 10, then 40, then 80, therefore it's exponential right? Doubling every week, 1600 per week in 4 weeks, woohoo!

It could just as well be linear growth -- adding ~40 per week to the rate. So that would be 40, 80, 120, 160, etc. That seems a lot more realistic to me. But it sure can be fun getting momentarily unhinged from reality

High growth rates with low baseline numbers are much easier than with high baseline numbers. And while Tesla certainly has that 5000 goal, they frankly aren't going to ship garbage just to meet it and satisfy Wall Street. Play the long game. In the long term it would hurt far more to have to do problem rework in the field.

Actually, the idea of geometric growth didn't come from anyone here's imagination, it came from various statements made by Elon and others at Tesla.

Frankly, it makes more sense that it be geometric. If you thing about what they're doing, it's not about making cars very slowly and then speeding all the individual tasks up later. They'll be doing each individual task at the speed that they need to do it eventually and making sure that the end result of each step is as good as it needs to be. So they run the line at full speed and then stop to make sure that everything is perfect and then start it again. Repeat with longer run times and eventually the thing just stays on.

This is just my speculation and I'm sure that I'm not 100% correct, but, as a concept, it makes much more sense to do perfect each step at the speed it will need to be done eventually from the very beginning and perfecting the step at speed as opposed to learning to do it slowly and perfectly and then trying to speed it up later.

Anyone with experience with car manufacturing want to weigh it?

 

[DrDave]

First, they do work 6 days a week, not just 5. Second, Elon was giving an interview to FoxBusiness and they actually were about to produce 80 cars last week. And that is great, with this production in mind, they most likely will hit or exceed 500 cars goal for this quarter... Just pointing that 100 bodies a week is way less impressive then 80 cars

I think its closer to 7 days a week they are running the lines.

 

[GSP]

As mentioned above, Elon commented that Tesla plans to double the production rate several times until they reach the planned 20,000 per year. He also said this is common practice in auto manufacturing.

Well, GM did exactly the same thing with Volt production. They started at 300/month for the first 5-6 months, then did 600/month for several months, then 1200/month for several months, then 2400/month. There were some shutdowns sprinkled in to match production to demand. I think they have run at the full 4800/month (60,000/year) rate prior to the latest shutdown to install tooling for the Impala.

GSP

PS. Doubling every week is likely not sustainable. Running over a month or two at a given rate seems more realistic to me.

 

[CapitalistOppressor]

The statement in the last stock holder meeting was that the soft target was 500 deliveries. They were very specific about that.
I have not expected them to hit that number for quite some time. I do expect them to hit the 5000 number by the end of the year. The ramp up took just a little to long for this quarter.
However, I am also ecstatic that they put such a premium on quality and I think an extra week or two is well worth it.

They emphasized "deliveries" but the key metric is "sales". Tesla is taking payment 2 weeks before delivery, so my estimation is that they will have completed 500 sales for Q3. Also, if they double production in each of the last two weeks they should have completed ~700 cars by then, while having made 200-250 deliveries.