The point in question: "About 100,000 Model S and X deliveries projected for 2017."
Certainly, there is time between now and the end of the year, so the company can't be specific. But it sets the tone for a certain amount of blurriness about what is actually going to be accomplished at Tesla in the next several months, which seems strange for something that is ostensibly a financial document.
This "about" thinking is manifested in the discussion of the Model 3 production ramp.
According to the document, "Several manufacturing lines, such as the drive unit, seat assembly, paint shop and stamping, have demonstrated a manufacturing ability in excess of 1,000 per week during burst builds of short duration."
Those "burst builds" bring to mind the grenade. Boom, and they're done. Unfortunately for them, to fulfill the 500,000 or so Model 3 orders (we can fudge numbers, too), they need sustained production.
But let's look at that 1,000 number for a moment. Assuming 52 weeks in a year, that's no more than 52,000 units per year. Which is certainly not a line rate that is going to meet demand.
There is another factor that really makes the 1,000 somewhat irrelevant: "Other lines, such as battery pack assembly, body shop welding and final vehicle assembly, have demonstrated burst builds of about 500 units per week and are ramping up quickly."
Look, stamping presses can bang out body panels at a pace similar to that of a supercharged metronome. Unless those panels can be welded into a car, and unless the car is fully assembled, then the Fremont plant is going to have piles of stampings and seats clogging up the aisles. And people will continue to wait for their cars. Or maybe they won't. Those deposits, after all, are refundable.
According to Musk, the real bottleneck has been at the Gigafactory 1, where they produce battery modules, so the earnings call was made from there. Musk said, "I always move my desk to wherever—well, I don't really have a desk, actually. I move myself to wherever the biggest problem is in Tesla, so I'm at — I really believe that one should lead from the front lines, and that's why I'm here."
In the world of the Toyota Production System, that would be described as being at the gemba, the place where the real action — or inaction — is occurring. Maybe the people in the factory would be better off if the boss wasn't constantly looking over their shoulders.
Musk said, "It's remarkable how much can be done by just beating up robots, shortening the path, intensifying the factory, adding additional robots at choke points and just making lines go really, really fast. Speed is the ultimate weapon."
Sure. Add more robots, make them work faster and voila! — more output. If it were that simple, every vehicle manufacturer in the world would never have any capacity constraints. Just turn it up to 11.
There has been some criticism of late that apparently Tesla didn't have its automation suppliers run their equipment off at their factories before having it shipped to Tesla. This is said to be breaking with how things are done in the auto industry. Which is sort of true. It is how things are done now, but traditionally, equipment suppliers would ship their lines in pieces as it was being built straight to the customer.
Of course, that was when assembly plants were down for months so the equipment could be installed and integrated piece by piece, and engineers from the suppliers were at the OEMs' plants for so long that they could join the local bowling league. Which is to say that Tesla isn't advancing the state of production in the auto industry, but actually going backward.
In the Q3 letter, it says, "Based on what we know now, we currently expect to achieve a production rate of 5,000 Model 3 vehicles per week by late Q1 2018." That is approximately six months from now, so lots can happen between now and then.
One of the most absurd sentences in the history of the auto industry has to be this: "With respect to the timing for producing 10,000 units per week, it has always been our intention to implement that capacity addition after we have achieved a 5,000-per-week rate." Does that make anyone feel any more confident knowing that they'll build more after they build some?
Here's a simple fact that ought to make Tesla investors and fanboys alike feel more than slightly nervous: In October, Chevrolet sold 2,781 Bolt EVs. That means that the GM Orion Assembly plant is making more than 500 per week — consistently, not in burst production.
How soon before the Tesla bubble is burst?
Gary S. Vasilash is editor-in-chief of Automotive Design & Production , co-host of Autoline After Hours and a juror for the North American Car and Truck of the Year awards.