Is Telsa Manufacturing Really Better?

Is Telsa Manufacturing Really Better?

This toy is the closest we’ll come to having a Tesla any time soon, but my daughter loves hers  I won’t be buying a Tesla any time soon, because I still see some serious problems. While I hear a lot of Tesla fanboys talk about how great Teslas are, it feels like a religion. I’m not a climate change denier, and I like the idea of electric cars, so this criticism is strictly about the massive faith we put in Tesla and Elon Musk even though the quality is meh.

The Paint

First, let’s start with the quality of the car itself. The paint on Teslas is abysmal. I hate looking at them, it’s worse than a Kia. A quick google search will return pages and pages of forum entries discussing paint problems on the Model 3 and Model Y. Sure, every car manufacturer has problems like this, but Tesla actually faces class action lawsuits. But, surf the Tesla forum, and you will find any number of fanboys denying that it’s real. It’s complete insanity. To be fair, you can search google and find similar issues with any car manufacturer, but this is something that as a car guy, you just know. You look at the paint, and it looks like crap. It has orange peel. I first noticed this on Model S cars, but apparently it’s even worse on Model 3s. Supposedly, they even had some shop fire that caused more problems than Elon lets on.

 

 

 

Autopilot

Next, talk about Autopilot. Some of my friends say that it’s amazing, life changing and safer. I get it. I have no qualms with that. I’ve rented Mercedes and Nissans around the world with level two automation. I’ve driven them thousands of miles in crazy places like Greece, Italy, and Ireland. In a vacuum, I would say both of these cars were the best I’ve ever driven. The tech is great, I’m not disputing it. I’m disputing the moral, ethical and technical superiority of Tesla. There’s been some Autopilot crash incidences since 2016, but if you pay attention and use it right, I think it’s undeniably safer than not having it. I’m just not sold that Elon has got some secret sauce to full self driving before everyone else.

Elon musk says he can do it with cameras and ultrasonic sensors – he says, anyone relying on Lidar is doomed.  That’s pretty bold considering that the size and cost of Lidar is coming down quickly. No offense to Elon, but not very “visionary” (pun intended). Well, I guess they might have been doomed if he had gotten Full Self Driving working back in 2018 when he confidently claimed that he would have over a million robotaxis on the road by the end of 2020. That hasn’t happened and doesn’t look like it will any time soon. Level 5 automation seems like a ways away, but he’s raised the price to $8000 for Autopilot while constantly committing and failing to deliver. He’s convinced a bunch of buyers of a depreciating asset that they are investors. It’s genius, exciting, and insane. There’s no way a used Telas will be more than a new one unless he restricts supply.

Worse, in my opinion, is that selling the Autopilot feature before it’s ready puts an unhealthy, even unethical, pressure on the company to release something that has life and death consequences. Not to mention that Tesla is the only major car company not to have good safety controls on it which force you to pay attention. The Nissan I drove in Ireland would slow down after a few seconds if I took my hands off the steering wheel, same with the Mercedes. And, believe me it was very tempting to take my hands off the wheel. The level 2 self driving worked great. Many major car companies have similar level 2 capabilities with better safety.

But what about about Level 5?

Have you ever tried driving in the mountains, in fog, with a mix of a rain & snow storm, with people all around you that are doing stupid things like trying to take a brand new, rear wheel drive Mustang up the mountain with summer tires on it (and then has to turn around)? I have, it’s a cluster $&#@. Level 5 automation in many different weather conditions and edge cases is very difficult, in fact much more difficult than the auto pilot on airplanes.

Autopilot on a Tesla is a deceptive name. I’ve been in the front seat of an Embraer Phonom 100 when the autopilot kicks in. IT IS AMAZING. I mean seriously amazing. Right after takeoff, you can feel the auto pilot kick in and the flight instantly becomes smoother. The computer knows how to use the controls to counteract every little wind gust. Again, it is amazing. But, with airplanes, you set a flight path, you pick an altitude, and you go. There’s edge cases for sure, but you’ve got a highly trained pilot.

I could be wrong, but level 5 feels like it’s really 3-5 years away from being real. Not a good thing when you have a depreciating asset like a car. Or, maybe it will be just in time that the Tesla fans will upgrade. Who knows. These aren’t the kinds of games I like to play. Risky, at the least.

Process Engineering

Process engineering is about how the cars are produced. The big car manufacturers are really good at this part. In fact, i might call it their competitive advantage. The Tesla fans ignore that Volkswagen, GM, and Toyota are literally amazing at automation. Lest we forget that Toyota basically invented Lean manufacturing. Lest we forget that the Fremont California Tesla plant was originally a GM plant, and later, the NUMMI plant built by GM and Toyota.

When I toured GM plant at Lake Orion in 2012 or 2013, it was producing 900 cars a day. They targeted 160,000 cars a day [1], in 2012 with on quarter of the plant, which is clearly under capacity. At capacity, that plant would have had four lines all producing that much, but they didn’t need the capacity Lake Orion builds multiple different cars on the same line, and they can swap orders live. If somebody orders a new car, and the dealer pulls strings, or the customer pays more, they can put them first in line. For example, if there’s a black car with leather seats on the assembly line, but it’s not far enough to deviate from the new order, they can literally swap it out live. That’s right, the track features on multiple cars on the same line live, and they can branch cars dinamically to fill different order.  When I visited, they were building Chevy Aveos and mid sized Buicks on the same line when I saw. They were building two completely different cars of different sizes on the same line.

Elon Musk talked a good game about automation, but struggled with manual processes in 2018. Meanwhile, Skoda which is made fun of by Germans fore being low tech, is setting world records, producing more than 300,000 cars in one plant. As an aside, here’s a video of that Skoda plant and it looks a lot like the lake GM Lake Orion plant I saw. Also, rest assured, ever manual process you see has been cost analyzed and will be replaced by robots as soon as it’s cheap enough. They literally only use humans because they are cheaper. Oh, and in 2019, Skoda produced 590,000 cars in the Mlada Boleslav plant. Tesla better damn well be able to build 300,000 cars in one plant, 8 years after I saw the Lake Orion plant, especially when the lines are separated.

From a production perspective, there is literally on comparison between Volkswagen, Toyota, GM versus Tesla. They are on another scale and dimmension of automation. Here’s a video of the Volkswagen plant in the Czech Replublic. Finally, the big autos have been doing learning systems for a while now. I saw these in 2012 at lake Orion, they put the motors in [5]. Also, if you think Elon is onto something with “learning factories” – yeah, Skoda is doing that too. For those that don’t know, Skoda is part of Volkswagen. I suspect GM, Toyota, BMW, and Mercedes are all doing the same.

Financial Engineering

The $100M in profit this quarter is really just a small percentage of the $428M in tax credits sold to competitors.  That’s hot! Sounds like a good plan to create profit for a forth quarter and get onto the S&P 500. This will then suck the Tesla stock into countless ETF and Mutual funds which track the S&P. That should buy him a few more quarters to get self driving to level 5. Err, wait what? That’s right. 

Freelon Musk

Finally, let’s talk about his handling of the Fremont factory when it was closed? I mean, I hate bureaucracy as much as the next guy, but I mean, I thought the factories were so automated? Why do they even need workers? I’m confused. Nuff said. He talks a good game on automation.

I love what Elon has done with electric cars, he’s made them sexy again. I also love what he’s done with Space X. He’s clearly a smart, and he reads an audience well. He’s figured out how to attract a massive fan following. He’s not wholly unlike Trump before he was elected. In fact, he reminds me of a much craftier version. Maybe we’ll see him run for president some day?

I’m not sure if he’s a genius or a grifter. Maybe both? That said, Tesla cars are undeniably more green that traditional cars, and for that I give him credit. They are still pretty cool, and also the future. Personally though, I’m waiting for used ones which will NOT be worth more money as Elon Musk claims (that’s happy horse shit). I’m also waiting for some of the competitors to come out with better safety systems. Finally, I’m also waiting for the culture war to go into full effect with people from the country going to war over them.

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