Tesla Inc CEO Elon Musk took numerous risks with the technology in his company’s automobiles en route to going beyond Ford Motor’s market price. Now Musk is pushing borders in the factory that makes them.
The majority of automakers test a new design’s production line by developing vehicles with fairly low-cost, model tools designed to be ditched once they provide doors that fit, body panels with the best shape and dashboards that don’t have spaces or joints.
But Tesla is skipping that initial step and ordering permanent, more pricey equipment as it races to release its Model 3 sedan by a self-imposed volume production due date of September, Musk informed investors last month.
Musk’s decision highlights his high-risk tolerance and desire to forego long-held market standards that has helped Tesla overthrow the standard automobile market. While Tesla is not the first automaker to attempt to speed up production on the factory floor, no other rival is putting this much faith in the production plan succeeding.
Musk anticipates the Model 3 rollout to assist Tesla deliver 5 times its present yearly sales volume, a crucial target in the automaker’s efforts to stop burning money.
“He’s forging ahead to see how much time and cost he can take out of the procedure,” stated Ron Harbour, a manufacturing expert at Oliver Wyman.
Investors are already depending on Tesla’s factory floor success, with shares skyrocketing 39 percent since January as it makes the leap from niche manufacturer to mass manufacturer in far less time than competitors.
There are caution indications, however. The production devices developed to produce millions of vehicles is costly to repair or replace if it does not work, market professionals state. Tesla has encountered quality issues on its present low-volume vehicles, and the Model 3 is developed to offer in numbers as high as 500,000 automobiles a year, raising the prospective expense of recalls or warranty repair works.
