Mistakes are the best teachers, they say. If so, Tesla and Elon Musk have learned well from the errors they made getting the Model X into production. Almost everyone in the world expected the start of production of the Tesla Model 3 to be late, based on the company’s track record.
Elon said late July, but the conventional wisdom said the first cars might not roll off the line until late 2017 or early 2018. Conventional wisdom was wrong. Not only will production begin in July as planned, it will start two weeks early!
If you think that is good news, Musk had more to say about the launch of the Model 3. For one thing, he says the celebration to deliver the first cars will take place on July 28 and will see 30 cars handed over to owners. After that, he expects the factory to build 100 cars in August and 1,500 in September. Then came this blockbuster announcement:
Handover party for first 30 customer Model 3's on the 28th! Production grows exponentially, so Aug should be 100 cars and Sept above 1500.
Teething pains with the Model X involved more than troubles making the iconic falcon-wing doors operate correctly. Every automobile is comprised of thousands of parts and they all have to be on hand in the right place at the right time and meet design specifications before the car can be built.
Successful supply chain management is the secret sauce that makes it all come together. With the Model X, lack of parts such as unique seats and its record-large windshield bedeviled the company for months. This time around, the company says it is prepared to manufacture critical parts in house if necessary, and it heavily vetted supply options when designing the car — if a part might be hard to get, the design needed to change.
Tesla has made it clear to the suppliers chosen for the Model 3 that the company will hold their feet to the fire both in terms of quality and on-time delivery by enforcing the penalty clauses incorporated into their contracts with the company.
Tesla had difficulty attracting interest from top tier suppliers when it came time to begin making the Model S sedan, and probably the Model X as well. Lots of people expected the company to fail. Others assumed Tesla was just building another glorified golf cart. Now, the best companies in the world are eager to work with Tesla and being a supplier to Tesla is seen as a badge of honor. Tesla has no shortage of competition among the world’s many automotive suppliers.
The key to the ramp up of Model 3 production is the word “exponential.” 30 cars the first month, 100 the second, 1,500 the third, and eventually 20,000 in the 6th month. The trajectory could be used by math teachers to illustrate to their students what “exponential” means. By this time next year, Musk expects his company will be churning out up to 500,000 cars a year, most of them Model 3s.
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