Tesla employees say Model 3 parts need substantial rework after production

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2018 Tesla Model 3

2018 Tesla Model 3

Electric-car maker Tesla is known for troubled launches, at least for the four products it's offered since the first Roadster in 2008.

But the launch of the Tesla Model 3, its lower-priced electric sedan, may be the most challenging yet—and it may be the Tesla with the highest expectations.

The first 30 cars, now accepted to be largely hand-built, were delivered to their buyers at the end of July 2017.

CHECK OUT: 2018 Tesla Model 3 - full review

At that point, Tesla CEO Elon Musk said he expected to be building 5,000 electric cars a week by the end of December—a target now pushed back six months to this coming June.

But last week the company acknowledged it had stopped Model 3 production entirely for a week in late February, which it said had been planned to allow it to update parts of the car's assembly process for greater volumes.

Whether Tesla will make its goal of 2,500 Model 3s a week by the end of this month seems debatable. Musk has referred repeatedly to the "production hell" the company and the car were suffering.

2018 Tesla Model 3

2018 Tesla Model 3

The company has not provided production number for the car since early February, but the build quality of Model 3 cars appears to be highly variable at best.

Some owners say their cars are fine, with no discernible flaws. Others, including this site, have observed multiple fit-and-finish issues on multiple Model 3s.

The Model 3 tested by Green Car Reports had not only panel-fit issues but was delivered with a malfunctioning touchscreen and a loose anti-roll bar, but exhibited numerous creaks, groans, and rattles during our 100-mile test drive.

DON'T MISS: Tesla Model 3 quality is terrible, but will it matter to buyers?

Nine months after the first deliveries, what has gone wrong?

A report from CNBC published Wednesday quotes "several current and former employees" (at least one an engineer) saying that the defect ratio of both parts and completed vehicles built by Tesla is "surprisingly high."

Some of those sources told CNBC the company has had to ship high volumes of flawed parts from its Fremont, California, assembly plant to remanufacturing facilities 50 miles away in Lathrop. The usual practice would be simply to scrap defective parts.

2017 Tesla Model 3 in Tesla assembly plant parking lot, Fremont, CA, November 2017

2017 Tesla Model 3 in Tesla assembly plant parking lot, Fremont, CA, November 2017

Tesla denied those reports, suggesting the employees were confusing "remanufacturing" with "rework," and pointing out more than 500 steps it took to ensure quality in all Model 3s.

A current Tesla engineer said that as many as 40 percent of certain parts made in Fremont were defective; another said the defect rates were high enough that it has become very difficult for the company to scale up production to reach its targets.

Overall, the sources suggested, the defect rates and the resulting inability to produce high-quality vehicles and meet production goals has led to a tired and disspirited workforce.

READ THIS: Tesla expects 200,000th U.S. sale this year, electric-car tax credits to start phaseout

The Model 3 battery packs, made at Tesla's giant battery "gigafactory" outside Reno, Nevada, have similarly been plagued by production issues.

The company's original design for a highly robotized pack-assembly line could not be scaled up to operate sufficiently quickly.

That led the company instead to substitute human workers for assembly tasks, including many pulled from other functions and other areas of the company.

2018 Tesla Model 3

2018 Tesla Model 3

On the financial-results call in February, CEO Musk described the substitution of human workers for the automated line (for which a new design is in process):

We have what we call a semi-automatic line, which is a series of small automated stations manned by people and they've actually been remarkably effective.

It has to some degree renewed my faith in humanity that the rapid evolution of progress and the ability of people to adapt rapidly is quite remarkable.

 
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