Tesla Super Assembly Line Evolution History
Tesla's fortunes were once unpromising. Seven years later, Tesla's success is indisputable. It has four car factories around the world, produces nearly 2 million cars a year, sold 930,000 cars last year, and is on track to hit 1.4 million sales this year. Tesla's gross margin on the entire vehicle last year exceeded 30 percent, far exceeding that of Toyota (19.6 percent), the world's largest car manufacturer by volume.
An unobserved turning point behind this change occurred in the spring of 2018, when Tesla set up a large tent to assemble the Model 3 in the empty lot of its first car factory, the Fremont, Calif. plant, at a time when Tesla was in capacity hell for not being able to deliver the Model 3 on a large scale. The big tent was derided as a "vegetable shed" and fined $29,000 for building violations.
It was also in this tent that Tesla forged the prototype of what would become its super factory. It explored a different set of production ideas and practices from scratch than the traditional automotive industry, consisting of some self-developed automated equipment, sophisticated software systems and innovative processes. It introduced the concept of autopilot in the production line, allowing the assembly line and workstations to learn and evolve with changes in materials, orders and other environments.
The extreme pursuit of production efficiency and capability also explains Tesla's unique product design and resulting high gross margins. Tesla has worked for years to reduce vehicle parts, which streamlines production steps, shortens production time and reduces manufacturing costs. 2017 deliveries of the Model 3 began with just over 10,000 parts, a third of the Model S delivered in 2012. Before Tesla, the number of parts for traditional fuel vehicles was typically 30,000 or more.
Elon Musk has a clear understanding of the importance of manufacturing capacity. He said on Tesla's Q3 2017 earnings call that the essence of manufacturing competition is the competition for manufacturing capacity, i.e., the competition for factories.
This article reviews and dismantles the history of the evolution of Tesla's factories, and the changes in product design that correspond to improved manufacturing capabilities. Competitors are already copying the innovations in Tesla's factories: for example, both Azera and Xiaopeng are introducing one-piece die-casting processes to reduce the number of parts used to make body-in-white and shorten manufacturing time. But the more important, and harder to imitate, part is the way Tesla thinks about doing it all.
The most difficult product is not the car, but the factory that makes it
"The hardest part isn't designing the Model T, it's discovering how to build cars like the Ford assembly line and building the Rouge River factory." At a 2017 earnings meeting, Elon Musk said Tesla sees the factory as a product, a machine that makes machines.
Tesla's factory quest began when it bought the Fremont, California, plant from GM and Toyota in 2010, and since then Tesla has built the Nevada battery plant, the Shanghai plant, the Deblin plant and the Texas plant.
The key turning point in Tesla's factory evolution was the delivery of the Model 3 from 2017 to 2019. This is also the period when Tesla is in capacity hell.
When the Model 3 was launched in early 2016, Tesla had planned to start with small-scale mass production and then climb to 5,000 units per week. But skyrocketing orders led Musk to move up Model 3 deliveries from late 2017 to July 2017, banking on building a highly automated, worker-free assembly line to boost production speeds.
Before 2018, Elon Musk tried to automate by sourcing off-the-shelf robotic arms, AGVs (mobile robots that move material through the production line) and other equipment with poor results.
At the California plant, engineers were still teaching robots to identify and grab different colored wires by the summer of 2017. At the Nevada battery plant, robots were far less accurate and faster than humans in lining up thousands of cells into packs. Tesla had to borrow dozens of workers from Panasonic to manually assemble the packs. in the fourth quarter of 2017, Tesla produced only 2,425 Model 3s.
The bigger challenge in automating the Model 3 is that the Model 3 changes frequently, and Elon Musk wants the line to keep up with product iterations, which means the line has to be flexible enough to quickly adapt to new parts and changing processes.
The traditional car company's manufacturing method cannot meet the requirements. In the original assembly line, each process repeated only one fixed process, and the goal of automated equipment such as robotic arms was to complete a single step quickly and precisely, not to adapt to change.
In mid-2017, Elon Musk changed his thinking when he began recruiting more "amateurs." Allen Chih Lun Pan, an engineer who had been doing smart driving at GM, joined Tesla's factory team at that time. Allen was 33 years old, from Taiwan, China, and favored robotics, autonomous driving and other areas Musk called "real-world AI" (Physical AI). Pan and a group of newcomers at the time were young and inexperienced in production compared to the technicians Tesla had recruited in the past who had years of experience in car production.
That's exactly what Elon Musk saw. "You don't have the old production ideas of the automotive industry in your head, and you can solve problems with a different kind of perception." Musk had said when he recruited Allen.
Six months later, Elon Musk wrote an all-hands email in April 2018 asking all R&D staff not directly related to the Model 3 to help out at the factory. Tesla began something far-reaching at this point, building GA 4.
GA, or General Assembly, is the final assembly line. Previously, there were three general assembly lines in the California factory, of which GA 3 was responsible for producing the Model 3.
Unlike the first three lines, GA 4 is housed in a semi-permanent, enclosed "big tent". It has long been derided as a "vegetable shed," a testament to Tesla's overstretched production capacity.
An unobserved turning point behind this change occurred in the spring of 2018, when Tesla set up a large tent to assemble the Model 3 in the empty lot of its first car factory, the Fremont, Calif. plant, at a time when Tesla was in capacity hell for not being able to deliver the Model 3 on a large scale. The big tent was derided as a "vegetable shed" and fined $29,000 for building violations.
It was also in this tent that Tesla forged the prototype of what would become its super factory. It explored a different set of production ideas and practices from scratch than the traditional automotive industry, consisting of some self-developed automated equipment, sophisticated software systems and innovative processes. It introduced the concept of autopilot in the production line, allowing the assembly line and workstations to learn and evolve with changes in materials, orders and other environments.
The extreme pursuit of production efficiency and capability also explains Tesla's unique product design and resulting high gross margins. Tesla has worked for years to reduce vehicle parts, which streamlines production steps, shortens production time and reduces manufacturing costs. 2017 deliveries of the Model 3 began with just over 10,000 parts, a third of the Model S delivered in 2012. Before Tesla, the number of parts for traditional fuel vehicles was typically 30,000 or more.
Elon Musk has a clear understanding of the importance of manufacturing capacity. He said on Tesla's Q3 2017 earnings call that the essence of manufacturing competition is the competition for manufacturing capacity, i.e., the competition for factories.
This article reviews and dismantles the history of the evolution of Tesla's factories, and the changes in product design that correspond to improved manufacturing capabilities. Competitors are already copying the innovations in Tesla's factories: for example, both Azera and Xiaopeng are introducing one-piece die-casting processes to reduce the number of parts used to make body-in-white and shorten manufacturing time. But the more important, and harder to imitate, part is the way Tesla thinks about doing it all.
The most difficult product is not the car, but the factory that makes it
"The hardest part isn't designing the Model T, it's discovering how to build cars like the Ford assembly line and building the Rouge River factory." At a 2017 earnings meeting, Elon Musk said Tesla sees the factory as a product, a machine that makes machines.
Tesla's factory quest began when it bought the Fremont, California, plant from GM and Toyota in 2010, and since then Tesla has built the Nevada battery plant, the Shanghai plant, the Deblin plant and the Texas plant.
The key turning point in Tesla's factory evolution was the delivery of the Model 3 from 2017 to 2019. This is also the period when Tesla is in capacity hell.
When the Model 3 was launched in early 2016, Tesla had planned to start with small-scale mass production and then climb to 5,000 units per week. But skyrocketing orders led Musk to move up Model 3 deliveries from late 2017 to July 2017, banking on building a highly automated, worker-free assembly line to boost production speeds.
Before 2018, Elon Musk tried to automate by sourcing off-the-shelf robotic arms, AGVs (mobile robots that move material through the production line) and other equipment with poor results.
At the California plant, engineers were still teaching robots to identify and grab different colored wires by the summer of 2017. At the Nevada battery plant, robots were far less accurate and faster than humans in lining up thousands of cells into packs. Tesla had to borrow dozens of workers from Panasonic to manually assemble the packs. in the fourth quarter of 2017, Tesla produced only 2,425 Model 3s.
The bigger challenge in automating the Model 3 is that the Model 3 changes frequently, and Elon Musk wants the line to keep up with product iterations, which means the line has to be flexible enough to quickly adapt to new parts and changing processes.
The traditional car company's manufacturing method cannot meet the requirements. In the original assembly line, each process repeated only one fixed process, and the goal of automated equipment such as robotic arms was to complete a single step quickly and precisely, not to adapt to change.
In mid-2017, Elon Musk changed his thinking when he began recruiting more "amateurs." Allen Chih Lun Pan, an engineer who had been doing smart driving at GM, joined Tesla's factory team at that time. Allen was 33 years old, from Taiwan, China, and favored robotics, autonomous driving and other areas Musk called "real-world AI" (Physical AI). Pan and a group of newcomers at the time were young and inexperienced in production compared to the technicians Tesla had recruited in the past who had years of experience in car production.
That's exactly what Elon Musk saw. "You don't have the old production ideas of the automotive industry in your head, and you can solve problems with a different kind of perception." Musk had said when he recruited Allen.
Six months later, Elon Musk wrote an all-hands email in April 2018 asking all R&D staff not directly related to the Model 3 to help out at the factory. Tesla began something far-reaching at this point, building GA 4.
GA, or General Assembly, is the final assembly line. Previously, there were three general assembly lines in the California factory, of which GA 3 was responsible for producing the Model 3.
Unlike the first three lines, GA 4 is housed in a semi-permanent, enclosed "big tent". It has long been derided as a "vegetable shed," a testament to Tesla's overstretched production capacity.
In fact, it was in GA 4 that Tesla explored the foundations of the many superfactories that would follow.
Thanks to Elon Musk's earlier email, a number of teams that had nothing to do with Model 3 production came together at the factory, and Allen met Lukas Pankau, a 31-year-old vehicle systems architect from the University of Michigan who had joined Tesla in 2013 and was responsible for the electrical and electronic architecture of the Model X, 3 and Y. The two engineers, with very different backgrounds and experience, began to solve production problems from a systems perspective.
The two engineers, with very different backgrounds and experiences, began solving production problems from a systems perspective, and Allen says it was a "horse race" within Tesla, with different teams coming up with different solutions.
Considering that the development to mass production time for the Model 3 was drastically shortened, and that production at that time was still accompanied by frequent product iterations, Allen and Lukas decided to organize production around logistics materials and introduced the concept of Autopilot technology.
Autonomous driving consists of 3 parts: perception, decision, and control, which correspond to a human driving with eyes on the road (perception), brain thinking about how to drive (decision), and hands and feet steering the vehicle (control). Projected to production, it is perception, learning, and automation. Sensing is done by deploying sensors on the production line to monitor the status of each workstation and the relationship between adjacent workstations, where people are crowded and where the speed is slow; learning is based on the data collected to find optimization space, such as integrating workstations, adjusting the sequence, etc.; automation is the final part of execution, i.e., sending new actions to workers and robotic arms, AGVs and other equipment, then monitoring the new status, and then learning, execution, and spiral upgrading.
The software carriers of this solution are MOS (Material Operation System) and MES (Manufacturing Execution System), the former grasps the material situation and is the source of production; the latter mobilizes personnel and equipment and is the realization of production. Allen's first six months at Tesla were spent optimizing the intelligent controllers for the AGVs and robotic arms. Together with his colleagues, he rewrote the underlying software of the robotic arm, modified the controllers and motors in Tesla's cars, and used them in the AGV, which was designed from scratch.
After a small-scale test in May 2018, this solution was supported by Elon Musk, and it is called Station Control.
One of the key features of Station Control is that it helps Tesla shorten the cycle time between development of models and mass production. This approach to speeding up production delivery is similar to "agile development" in the software industry. Without stopping the line, when a part is missing or changes in a process on the assembly floor, the system can tell a machine or worker to skip it in a few tens of seconds and plug it back in at the right place later, and the line can continue to run. This breaks the traditional car company perception that mass-produced models cannot be "iterated in small steps" online.
In addition, this solution can also discover which work stations can be merged and streamlined and which steps can be changed in sequence, which helps to improve the production line beat, reduce the number of work stations, save overall quality inspection time after each process, and improve manufacturing speed.
Allen says that in 2018-2019, when Tesla is rapidly iterating its production schedule, some of the GA 4 stations may be adjusted every half day. In a traditional car factory, production lines can only focus on one major tweak per year.
A new experiment in the big tent helped Tesla get out of capacity hell. on July 1, 2018, Elon Musk announced that Tesla had achieved its goal of producing 5,000 Model 3s per week. Before that summer, Tesla laid off more than 4,000 people one by one, many of them management and R&D staff with years of experience in traditional car production. Tesla built a production system that no longer relied on them.
The production methods proven in GA 4 were replicated in 2019 in the Shanghai plant, the first Tesla car factory designed from the ground up. With this July's expansion, the Shanghai plant can increase production capacity by more than 20 percent without expanding the plant. Thanks to functional integration of parts, volume reductions and production line iterations, the Model 3's total assembly steps have been reduced from 198 in 2017 to 43 in the first half of 2020. The race for manufacturing efficiency ends when traditional car companies have to build new factories to increase capacity, while Tesla simply upgrades its production lines.
The Shanghai plant also shows another vein of Tesla's factory evolution: the ultimate pursuit of improving the efficiency of space utilization and compressing logistics time.
The layout of Tesla's California factory follows that of traditional automotive factories: stamping, assembly, painting, and final assembly, each of the four major automotive manufacturing processes has its own independent plant, scattered around the factory. In the Shanghai plant, all four processes are integrated into a large 80-hectare facility, the size of 110 standard soccer fields. Each part of the plant has a double or multi-layer structure, with the upper floor used for component manufacturing and the lower floor for component transportation. We pursue not only the efficiency of flat space, but also the efficiency of three-dimensional space.
Thanks to Elon Musk's earlier email, a number of teams that had nothing to do with Model 3 production came together at the factory, and Allen met Lukas Pankau, a 31-year-old vehicle systems architect from the University of Michigan who had joined Tesla in 2013 and was responsible for the electrical and electronic architecture of the Model X, 3 and Y. The two engineers, with very different backgrounds and experience, began to solve production problems from a systems perspective.
The two engineers, with very different backgrounds and experiences, began solving production problems from a systems perspective, and Allen says it was a "horse race" within Tesla, with different teams coming up with different solutions.
Considering that the development to mass production time for the Model 3 was drastically shortened, and that production at that time was still accompanied by frequent product iterations, Allen and Lukas decided to organize production around logistics materials and introduced the concept of Autopilot technology.
Autonomous driving consists of 3 parts: perception, decision, and control, which correspond to a human driving with eyes on the road (perception), brain thinking about how to drive (decision), and hands and feet steering the vehicle (control). Projected to production, it is perception, learning, and automation. Sensing is done by deploying sensors on the production line to monitor the status of each workstation and the relationship between adjacent workstations, where people are crowded and where the speed is slow; learning is based on the data collected to find optimization space, such as integrating workstations, adjusting the sequence, etc.; automation is the final part of execution, i.e., sending new actions to workers and robotic arms, AGVs and other equipment, then monitoring the new status, and then learning, execution, and spiral upgrading.
The software carriers of this solution are MOS (Material Operation System) and MES (Manufacturing Execution System), the former grasps the material situation and is the source of production; the latter mobilizes personnel and equipment and is the realization of production. Allen's first six months at Tesla were spent optimizing the intelligent controllers for the AGVs and robotic arms. Together with his colleagues, he rewrote the underlying software of the robotic arm, modified the controllers and motors in Tesla's cars, and used them in the AGV, which was designed from scratch.
After a small-scale test in May 2018, this solution was supported by Elon Musk, and it is called Station Control.
One of the key features of Station Control is that it helps Tesla shorten the cycle time between development of models and mass production. This approach to speeding up production delivery is similar to "agile development" in the software industry. Without stopping the line, when a part is missing or changes in a process on the assembly floor, the system can tell a machine or worker to skip it in a few tens of seconds and plug it back in at the right place later, and the line can continue to run. This breaks the traditional car company perception that mass-produced models cannot be "iterated in small steps" online.
In addition, this solution can also discover which work stations can be merged and streamlined and which steps can be changed in sequence, which helps to improve the production line beat, reduce the number of work stations, save overall quality inspection time after each process, and improve manufacturing speed.
Allen says that in 2018-2019, when Tesla is rapidly iterating its production schedule, some of the GA 4 stations may be adjusted every half day. In a traditional car factory, production lines can only focus on one major tweak per year.
A new experiment in the big tent helped Tesla get out of capacity hell. on July 1, 2018, Elon Musk announced that Tesla had achieved its goal of producing 5,000 Model 3s per week. Before that summer, Tesla laid off more than 4,000 people one by one, many of them management and R&D staff with years of experience in traditional car production. Tesla built a production system that no longer relied on them.
The production methods proven in GA 4 were replicated in 2019 in the Shanghai plant, the first Tesla car factory designed from the ground up. With this July's expansion, the Shanghai plant can increase production capacity by more than 20 percent without expanding the plant. Thanks to functional integration of parts, volume reductions and production line iterations, the Model 3's total assembly steps have been reduced from 198 in 2017 to 43 in the first half of 2020. The race for manufacturing efficiency ends when traditional car companies have to build new factories to increase capacity, while Tesla simply upgrades its production lines.
The Shanghai plant also shows another vein of Tesla's factory evolution: the ultimate pursuit of improving the efficiency of space utilization and compressing logistics time.
The layout of Tesla's California factory follows that of traditional automotive factories: stamping, assembly, painting, and final assembly, each of the four major automotive manufacturing processes has its own independent plant, scattered around the factory. In the Shanghai plant, all four processes are integrated into a large 80-hectare facility, the size of 110 standard soccer fields. Each part of the plant has a double or multi-layer structure, with the upper floor used for component manufacturing and the lower floor for component transportation. We pursue not only the efficiency of flat space, but also the efficiency of three-dimensional space.
The Shanghai factory has more than one hundred road junctions, when the transport parts of the container truck into the factory, will stop directly to these road junctions, the container door open, parts directly from the container into the production line, eliminating the unloading, parts into the warehouse, out of the warehouse, on the production line time, but also eliminates a number of warehouses, the container is a temporary warehouse.
Based on the experience of the Shanghai factory, Tesla has "produced" another factory in Berlin, Germany and Austin, Texas in the last two years. Together, they will serve Tesla's ambitious goal of producing 20 million cars per year in the future, a figure close to China's total passenger car sales last year (21.48 million).
Looking back at Tesla's journey out of capacity hell, it was a victory without compromise. If the idea of having production lines follow the rapid iteration of the Model 3 were abandoned, Tesla's factories could have leveraged more of its predecessor's legacy to meet the target faster, but it insisted on doing excellence on its own terms. Rather than filling the holes of the moment, they're building up long-term assets and building a deep enough moat with heavy enough R&D.
Easier to build cars
The effort to build manufacturing capability is not only happening inside the factory, but also in the product design phase. in 2017 Musk said that much of Tesla's manufacturing capability comes from making vehicles easier to build. The way to achieve that is: fewer parts with more software.
When development of the Model S began in 2008, Tesla was already reducing car parts and simplifying the manufacturing process.
This is partly the fate of new technology products: you can't buy something off the shelf that works well and cheaply.
This was before the highly vertically integrated production model of the Ford era of buying your own rubber and building your own tires gave way to a more efficient division of labor in the industry chain. By the 1980s, the main processes undertaken by car companies were fixed to stamping, welding, painting and final assembly. The flow line started with manufactured goods from suppliers, and car companies simply bought parts off the "shelf" and put them in the car.
But when Tesla developed the Model S, that approach didn't work. What Tesla wanted, suppliers couldn't meet. Tesla went back to vertical integration, developing and building more things itself. Just like IBM did when it started making mainframe computers in the 1940s, it developed and manufactured everything itself, from transistors to punched components.
When designing the Model S, Tesla had to develop its own special fuses to enable faster acceleration so that the vehicle could withstand short spikes in current. Tesla also became more deeply involved in the supplier development process. in mid-2013, Tesla discovered that a component of the battery cooling system was costly and had a low yield because manufacturing it required the processing and welding of two separate aluminum products. Tesla later asked Chinese cast aluminum parts supplier Sunrise to remanufacture the part through one-piece die-casting, eliminating the welding process.
Reducing the number of parts was also Musk's subjective intention.
The Model S has a 17-inch touch screen embedded in the car, integrating the functions originally found in the car, such as air conditioning adjustment and in-car entertainment device adjustment, into one screen. Dozens of buttons have been eliminated, except for physical switches that are required by law to remain, such as emergency lights.
Musk was outraged when engineers wanted to put another light switch outside the steering wheel of the Model S: "How dare they try to get a damn switch, write software to fix it, and have the lights turn on automatically when it gets dark, it's that simple."
The Model S is followed by the Model X, an SUV that began development in 2012 and is not among the "easy to build" cars. The Model X, with its eagle-wing door design, is more of a work of art and extremely difficult to manufacture. during the Q1 2017 earnings call, Musk admitted that the biggest mistake Tesla made with the Model X was designing too many complex features.
After this, the first Tesla model to shoulder the goal of mass production was the Model 3, which began development in 2015.
The Model 3 has even fewer parts. When owners sit in the Model S, they can still see the dashboard in addition to the center console. The Model 3, however, completely removes the dashboard and puts all controls and car status displays, including speed, on the center screen.
There is a "super kettle" on the Model 3, which is responsible for cooling all three systems - battery, motor and air conditioning - at the same time. The Chevy Bolt EV, which came out the same year as the Model 3 and has an initial price tag of $35,000, performs these functions with three separate kettles.
Building on the Model S and X, a more integral change to the Model 3 is the centralization of the electrical and electronic architecture, which uses fewer ECUs (electronic control units) and shorter wiring harnesses.
In a conventional car, separate ECUs are needed to control functions such as turning on lights and air conditioning, and a wiring harness is needed to connect these ECUs. cars before Model 3 typically had about 80 ECUs and wiring harnesses that could be miles long. For example, the new Volkswagen Golf coming in 2019 has 70 ECUs behind more than two hundred suppliers; the Audi A8 has a harness that is more than 6 kilometers long.
The Model 3 replaces the large number of ECU controllers in other cars with one integrated computing module and three body control modules. Each module is responsible for the data processing of multiple ECUs in its immediate area, enabling the same or even more functionality with fewer ECUs, fewer chips, and a shorter wiring harness.
In the end, the Model 3 has more than a dozen ECUs, down from dozens in previous cars, more than 10,000 parts, down from more than 30,000 in the Model S, and a harness half the length of the Model S, at 1.5 kilometers.
The centralization of the electrical and electronic architecture requires a strong software capability, and in traditional car companies, the software for the ECU is written by the supplier. Tesla's reduction in the number of ECUs meant redeveloping software that could control multiple functions, relying on software to ensure that less hardware could perform the same function. Tesla's software and hardware capabilities allow it to reduce its dependence on the supply chain. In times of chip shortages, engineers at traditional car companies are waiting for suppliers to send chips over, while Tesla engineers are rewriting code to replace shortages with generic chips.
The Model Y's electrical and electronic architecture design is largely a carryover from the Model 3. Its advancements include a combination of new technologies such as one-piece die-casting, CTC (Cell to Chassis), and 4680 cells to improve the efficiency of manufacturing and assembly of the body and triple electric powertrain.
According to Wired Magazine, the one-piece die-casting technology used in the Model Y was inspired by a zinc toy car on Musk's desk. British toy factories used die-casting to make such toy cars in the 1950s, with workers loading molds into casting machines, scooping spoonfuls of melted zinc alloy into the machines and building a toy car in seconds, with one casting machine capable of building 7,000 cars a day.
Musk wants to build cars in this way of building toy cars, which requires finding the right materials and equipment.
In 2016, Space X, founded by Elon Musk, tapped Apple's alloy expert Charles Koyman, the designer of the metal case for the MacBook, to head Space X's materials engineering team. Two years later, Koyman developed an aluminum alloy material suitable for high-strength die casting, and Space X transferred the technology to Tesla.
With the specialized metal material, Tesla approached the Hong Kong-based Likin Group in 2019, which built the world's first die-casting machine with a clamping force of 6,000 tons (the clamping force applied to the die by the die-casting machine).
In June 2020, Tesla tore down a spare shop at its California plant and built a vaulted metal factory. Two months later, a 19.5-meter-long, 5.3-meter-high, 410-ton die-casting machine was erected there.
Based on the experience of the Shanghai factory, Tesla has "produced" another factory in Berlin, Germany and Austin, Texas in the last two years. Together, they will serve Tesla's ambitious goal of producing 20 million cars per year in the future, a figure close to China's total passenger car sales last year (21.48 million).
Looking back at Tesla's journey out of capacity hell, it was a victory without compromise. If the idea of having production lines follow the rapid iteration of the Model 3 were abandoned, Tesla's factories could have leveraged more of its predecessor's legacy to meet the target faster, but it insisted on doing excellence on its own terms. Rather than filling the holes of the moment, they're building up long-term assets and building a deep enough moat with heavy enough R&D.
Easier to build cars
The effort to build manufacturing capability is not only happening inside the factory, but also in the product design phase. in 2017 Musk said that much of Tesla's manufacturing capability comes from making vehicles easier to build. The way to achieve that is: fewer parts with more software.
When development of the Model S began in 2008, Tesla was already reducing car parts and simplifying the manufacturing process.
This is partly the fate of new technology products: you can't buy something off the shelf that works well and cheaply.
This was before the highly vertically integrated production model of the Ford era of buying your own rubber and building your own tires gave way to a more efficient division of labor in the industry chain. By the 1980s, the main processes undertaken by car companies were fixed to stamping, welding, painting and final assembly. The flow line started with manufactured goods from suppliers, and car companies simply bought parts off the "shelf" and put them in the car.
But when Tesla developed the Model S, that approach didn't work. What Tesla wanted, suppliers couldn't meet. Tesla went back to vertical integration, developing and building more things itself. Just like IBM did when it started making mainframe computers in the 1940s, it developed and manufactured everything itself, from transistors to punched components.
When designing the Model S, Tesla had to develop its own special fuses to enable faster acceleration so that the vehicle could withstand short spikes in current. Tesla also became more deeply involved in the supplier development process. in mid-2013, Tesla discovered that a component of the battery cooling system was costly and had a low yield because manufacturing it required the processing and welding of two separate aluminum products. Tesla later asked Chinese cast aluminum parts supplier Sunrise to remanufacture the part through one-piece die-casting, eliminating the welding process.
Reducing the number of parts was also Musk's subjective intention.
The Model S has a 17-inch touch screen embedded in the car, integrating the functions originally found in the car, such as air conditioning adjustment and in-car entertainment device adjustment, into one screen. Dozens of buttons have been eliminated, except for physical switches that are required by law to remain, such as emergency lights.
Musk was outraged when engineers wanted to put another light switch outside the steering wheel of the Model S: "How dare they try to get a damn switch, write software to fix it, and have the lights turn on automatically when it gets dark, it's that simple."
The Model S is followed by the Model X, an SUV that began development in 2012 and is not among the "easy to build" cars. The Model X, with its eagle-wing door design, is more of a work of art and extremely difficult to manufacture. during the Q1 2017 earnings call, Musk admitted that the biggest mistake Tesla made with the Model X was designing too many complex features.
After this, the first Tesla model to shoulder the goal of mass production was the Model 3, which began development in 2015.
The Model 3 has even fewer parts. When owners sit in the Model S, they can still see the dashboard in addition to the center console. The Model 3, however, completely removes the dashboard and puts all controls and car status displays, including speed, on the center screen.
There is a "super kettle" on the Model 3, which is responsible for cooling all three systems - battery, motor and air conditioning - at the same time. The Chevy Bolt EV, which came out the same year as the Model 3 and has an initial price tag of $35,000, performs these functions with three separate kettles.
Building on the Model S and X, a more integral change to the Model 3 is the centralization of the electrical and electronic architecture, which uses fewer ECUs (electronic control units) and shorter wiring harnesses.
In a conventional car, separate ECUs are needed to control functions such as turning on lights and air conditioning, and a wiring harness is needed to connect these ECUs. cars before Model 3 typically had about 80 ECUs and wiring harnesses that could be miles long. For example, the new Volkswagen Golf coming in 2019 has 70 ECUs behind more than two hundred suppliers; the Audi A8 has a harness that is more than 6 kilometers long.
The Model 3 replaces the large number of ECU controllers in other cars with one integrated computing module and three body control modules. Each module is responsible for the data processing of multiple ECUs in its immediate area, enabling the same or even more functionality with fewer ECUs, fewer chips, and a shorter wiring harness.
In the end, the Model 3 has more than a dozen ECUs, down from dozens in previous cars, more than 10,000 parts, down from more than 30,000 in the Model S, and a harness half the length of the Model S, at 1.5 kilometers.
The centralization of the electrical and electronic architecture requires a strong software capability, and in traditional car companies, the software for the ECU is written by the supplier. Tesla's reduction in the number of ECUs meant redeveloping software that could control multiple functions, relying on software to ensure that less hardware could perform the same function. Tesla's software and hardware capabilities allow it to reduce its dependence on the supply chain. In times of chip shortages, engineers at traditional car companies are waiting for suppliers to send chips over, while Tesla engineers are rewriting code to replace shortages with generic chips.
The Model Y's electrical and electronic architecture design is largely a carryover from the Model 3. Its advancements include a combination of new technologies such as one-piece die-casting, CTC (Cell to Chassis), and 4680 cells to improve the efficiency of manufacturing and assembly of the body and triple electric powertrain.
According to Wired Magazine, the one-piece die-casting technology used in the Model Y was inspired by a zinc toy car on Musk's desk. British toy factories used die-casting to make such toy cars in the 1950s, with workers loading molds into casting machines, scooping spoonfuls of melted zinc alloy into the machines and building a toy car in seconds, with one casting machine capable of building 7,000 cars a day.
Musk wants to build cars in this way of building toy cars, which requires finding the right materials and equipment.
In 2016, Space X, founded by Elon Musk, tapped Apple's alloy expert Charles Koyman, the designer of the metal case for the MacBook, to head Space X's materials engineering team. Two years later, Koyman developed an aluminum alloy material suitable for high-strength die casting, and Space X transferred the technology to Tesla.
With the specialized metal material, Tesla approached the Hong Kong-based Likin Group in 2019, which built the world's first die-casting machine with a clamping force of 6,000 tons (the clamping force applied to the die by the die-casting machine).
In June 2020, Tesla tore down a spare shop at its California plant and built a vaulted metal factory. Two months later, a 19.5-meter-long, 5.3-meter-high, 410-ton die-casting machine was erected there.
Pour the melted aluminum alloy into the die-casting machine, and in 90 seconds, a new Model Y rear underbody comes off the line. The original 700-800 welds on the rear underbody are reduced to 50, the 70 parts are reduced to two, and the body-in-white manufacturing time is reduced from 1-2 hours for the traditional process of welding various sheet metal parts into the car's steel frame to 3-5 minutes.
Tesla next plans to replace the entire lower body assembly of 370 parts with 2-3 large die-cast parts, which will reduce the total vehicle weight by 10% and increase the range of the vehicle by 14%.
In addition to the one-piece die-casting, Tesla also tried to reduce the number of parts when developing the battery technology.
The original power cell production process was to pack the cell module and then put it in the car, Tesla integrated the cell module directly into the chassis, which is CTC technology, an improvement inspired by the fuel tank of an airplane wing, "the wing is the fuel tank, rather than stuffing another fuel tank in the wing." Elon Musk said.
With CTC technology, the Model Y has 370 fewer parts, 30% less weight in the lower body assembly, and a 40% reduction in manufacturing costs.
Other car companies are copying Tesla's moves, but it's hard to copy the way it thinks
Tesla is a company where the CEO's personal will is very strong. Elon Musk's way of thinking determines the way Tesla improves its manufacturing capabilities and solves other problems.
Elon Musk pursues the principle of firstness, where the solution to a problem constitutes the basic elements of the solution, finding the optimal solution from scratch and not easily trusting what has already been done. The first sentence of the Tesla employee handbook is: We are Tesla, we are changing the world, and we are willing to rethink everything.
In the early days of Tesla, investors thought lithium batteries were too costly, selling for $600 per kilowatt hour at the time, and costing $42,000 for a battery in a 70-kilowatt-hour electric car. Elon Musk's way of thinking was to break down the lithium battery into lithium, cobalt, nickel and other metal materials to get the price of $82 per kilowatt-hour of lithium battery materials, and he thought that in principle, the cost of lithium batteries could be reduced through mass manufacturing. after 2010, the cost of lithium batteries declined by about 10% per year, and in 2022, lithium batteries will sell for about $170 per kilowatt-hour.
Another example is that when Tesla was building a high-current fuse in 2012, engineers thought it could not be built with existing processes, but Elon Musk thought it could be built as long as the design of the fuse did not exceed the physical limits of the material. Tesla did end up designing and building the fuse.
Try fast fail fast and repeat the process over and over again is the methodology of the Silicon Valley software industry, and Elon Musk brought that philosophy to Tesla.
Tesla has an internal "333" working mechanism. When an engineer has a new idea or encounters a problem, he has three days to think about the research, three days to collect the materials needed to solve the problem, and three days to make a sample or demonstrate the feasibility of the idea. After that, Tesla gives the engineer 10-90 days to turn the idea into a demo (prototype), and then iterate gradually.
At Tesla, a failure in technology development is not really a failure. One Tesla engineer said that when R&D staff asked Musk what he wanted to deliver, Elon Musk would say, "I don't care if you succeed, what's important is the complete documentation of the development process."
Tesla had designed a snake-like robot that could charge the car early in the development of the Model S, but the robot was too inefficient at opening the charging cover. The solution, which was abandoned at the time, was later used at the end of an unmanned forklift in Tesla's factories to give the forklift more flexibility in picking up pallets and materials. Elon Musk runs several high-tech companies at the same time, and technology will circulate among them, and a technology that fails at Tesla may be applied in other directions as well.
Tesla next plans to replace the entire lower body assembly of 370 parts with 2-3 large die-cast parts, which will reduce the total vehicle weight by 10% and increase the range of the vehicle by 14%.
In addition to the one-piece die-casting, Tesla also tried to reduce the number of parts when developing the battery technology.
The original power cell production process was to pack the cell module and then put it in the car, Tesla integrated the cell module directly into the chassis, which is CTC technology, an improvement inspired by the fuel tank of an airplane wing, "the wing is the fuel tank, rather than stuffing another fuel tank in the wing." Elon Musk said.
With CTC technology, the Model Y has 370 fewer parts, 30% less weight in the lower body assembly, and a 40% reduction in manufacturing costs.
Other car companies are copying Tesla's moves, but it's hard to copy the way it thinks
Tesla is a company where the CEO's personal will is very strong. Elon Musk's way of thinking determines the way Tesla improves its manufacturing capabilities and solves other problems.
Elon Musk pursues the principle of firstness, where the solution to a problem constitutes the basic elements of the solution, finding the optimal solution from scratch and not easily trusting what has already been done. The first sentence of the Tesla employee handbook is: We are Tesla, we are changing the world, and we are willing to rethink everything.
In the early days of Tesla, investors thought lithium batteries were too costly, selling for $600 per kilowatt hour at the time, and costing $42,000 for a battery in a 70-kilowatt-hour electric car. Elon Musk's way of thinking was to break down the lithium battery into lithium, cobalt, nickel and other metal materials to get the price of $82 per kilowatt-hour of lithium battery materials, and he thought that in principle, the cost of lithium batteries could be reduced through mass manufacturing. after 2010, the cost of lithium batteries declined by about 10% per year, and in 2022, lithium batteries will sell for about $170 per kilowatt-hour.
Another example is that when Tesla was building a high-current fuse in 2012, engineers thought it could not be built with existing processes, but Elon Musk thought it could be built as long as the design of the fuse did not exceed the physical limits of the material. Tesla did end up designing and building the fuse.
Try fast fail fast and repeat the process over and over again is the methodology of the Silicon Valley software industry, and Elon Musk brought that philosophy to Tesla.
Tesla has an internal "333" working mechanism. When an engineer has a new idea or encounters a problem, he has three days to think about the research, three days to collect the materials needed to solve the problem, and three days to make a sample or demonstrate the feasibility of the idea. After that, Tesla gives the engineer 10-90 days to turn the idea into a demo (prototype), and then iterate gradually.
At Tesla, a failure in technology development is not really a failure. One Tesla engineer said that when R&D staff asked Musk what he wanted to deliver, Elon Musk would say, "I don't care if you succeed, what's important is the complete documentation of the development process."
Tesla had designed a snake-like robot that could charge the car early in the development of the Model S, but the robot was too inefficient at opening the charging cover. The solution, which was abandoned at the time, was later used at the end of an unmanned forklift in Tesla's factories to give the forklift more flexibility in picking up pallets and materials. Elon Musk runs several high-tech companies at the same time, and technology will circulate among them, and a technology that fails at Tesla may be applied in other directions as well.
Many car companies are copying Tesla's moves. Cars like VW are focusing on software capabilities and releasing centrally integrated electrical and electronic architectures similar to Tesla. Volvo has announced it will use one-piece die-cast technology by 2025.
Elon Musk is not resting on his laurels. Even in the face of seemingly solved problems, Tesla is considering other solutions, such as exploring unibody molding solutions other than one-piece die-casting, and better unibody molding solutions that could be used to build the Space X rocket in the future.
By transforming factories and cars, and by treating factories as products to be polished, Tesla has become the leader of a new generation of manufacturing methods from a layman of mass production cars. Tesla's most important product is not the car, but the method of making the car, and the ability to invent that method.
Elon Musk is not resting on his laurels. Even in the face of seemingly solved problems, Tesla is considering other solutions, such as exploring unibody molding solutions other than one-piece die-casting, and better unibody molding solutions that could be used to build the Space X rocket in the future.
By transforming factories and cars, and by treating factories as products to be polished, Tesla has become the leader of a new generation of manufacturing methods from a layman of mass production cars. Tesla's most important product is not the car, but the method of making the car, and the ability to invent that method.
