Last year employee parking lots overflowed at Tesla’s Fremont, California, plant. By comparing the headcount of Tesla's factory at present versus historically, it’s easy to grasp why the facility has seemed so crowded.

At its heyday, Toyota and GM needed 4,400 people at Fremont. Tesla has an on-site workforce estimated to be 10,000—including some administrative staff, according to Tesla—although that's for a pace of maybe 250,000 cars annually (versus Toyota and GM's 450,000 vehicles).

Even at that, not every Model 3 is assembled under the roof of the assembly plant. In June, Tesla set up a third assembly line for Model 3 final assembly, outside (under a tent) in an adjacent parking lot.

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One of the most surprising findings by a teardown analysis earlier this year by the consulting firm Munro & Associates—and the reason for Green Car Reports to check back regarding the firm's conclusions—was that the Model 3’s core body structure, which requires many individual weld points and rivets, didn’t appear to be designed for what the Tesla chief executive officer had described in October 2016 as an “alien dreadnought” of automation that would signal the factory was ready for mass production.
Tesla's attitude toward assembly automation changed abruptly this spring. Following seasons of mishaps and “production hell”—outlined in calls with financial analysts and over Twitter, during which not enough automation was up and running yet—Tesla CEO Elon Musk conceded that too much automation was slowing production. 

Munro & Associates teardown of Tesla Model 3 [Autoline]

Munro & Associates teardown of Tesla Model 3 [Autoline]

After the 6,600-hour teardown, it became more apparent what was happening. Munro pointed out a technology edge forfeited to serious issues with quality and manufacturing consistency. According to Bloomberg, Munro’s chief executive officer, Sandy Munro, sent Tesla a list of 227 possible improvements, pro bono.

The complexity of the body is one point illustrating that. The Model 3’s rear wheel well, for instance, has nine pieces of sheet metal that are riveted, sealed, or welded together, according to Munro, while the Chevrolet Bolt EV has just one stamped piece.

In May, Musk responded via Twitter that “on the higher body/chassis weight front, [Munro] wasn’t fully appreciating that we were going for much higher crash safety levels than other cars.”

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Dreadnought or not, the deeper point the teardown may end up making is the viability of the Model 3 in turning a profit. Munro has pointed to two reasons why Tesla is having such manufacturing hurdles. He summed it up to GCR: “One, they didn’t hire a good body design engineering team, and, two, they thought that robots were their savior, when in reality, robots have been disappointing dreamers since da Vinci…literally!”

Munro, a longtime manufacturing consultant, says that he went through a similar recalibration of expectations with American carmakers in the 1980s and '90s. “If Mr. Musk does what I suggested above (the robots and redesigning the body-in-white), his company will be rolling in cash in no time,” he told us. “It worked for GM.”

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Munro acknowledges that with its level of on-site vertical integration—the seats are assembled nearby—Tesla will continue to need more people. There was no criticism of that strategy, which Musk sees as a strength, potentially allowing the company to adapt more easily for production ramp-up.

2018 Tesla Model 3

2018 Tesla Model 3

A German firm this past summer assessed the Model 3 as costing $18,000 in materials and $10,000 in production costs. The catch: That analysis was based on a weekly production rate of 10,000—a rate that Tesla hopes to achieve in 2019. Munro's analysis assumed an annual production of less than half that—150,000 to 250,000 vehicles. 

With the changes Munro suggested, he claims Tesla could still cut 30 percent of its labor hours on the Model 3. Completely reengineering a body structure, even fast-tracked, takes so much time and money that it probably wouldn't make much sense at this stage. But these aren't all missed opportunities; in an August earnings call, Musk admitted that the body was a pinch point, noting the potential to ease the stage of production by simplifying some of the joining processes.

Munro's advice could be quite handy as Tesla develops its Model 3-based Model Y crossover. Reducing the labor and improving the efficiency of assembly could help push the company to a more stable, viable place in the market—and steer the Model 3 toward its original $35,000 premise.