Docs Reveal: Tesla’s Production Capacity Limited To Less Than Half Of Its 500,000 Vehicle Target

Capacity constrained: Monitors at Eisenmann paint shop in Volkswagen's Chattanooga plant (Picture: Bertel Schmitt)

Capacity constrained: Monitors at Eisenmann paint shop in Volkswagen’s Chattanooga plant. A similar shop is at Tesla (Picture: Bertel Schmitt)

When Tesla CEO Elon Musk announced plans to produce 500,000 electric vehicles per year by 2018 and a million units per year by 2020, he set his young company on the most ambitious course of expansion the auto industry has ever seen. Without a clear historical precedent for Tesla’s meteoric trajectory and unconventional methods, it can be quite difficult to predict all the challenges this unique automaker might face or how it might approach them. Only one such challenge stands out as being as foreseeable as it is implacable: the environmental regulations that Tesla must navigate as it seeks to expand its Fremont, CA plant.

Because Tesla’s only factory is located in California’s densely-populated San Francisco Bay Area, the electric automaker’s manufacturing operations are subject to some of the toughest environmental regulations found anywhere in the US auto industry. The Daily Kanban has already reported on one instance of environmental permit non-compliance at Tesla’s Fremont plant, and our ongoing investigation in consultation with air quality permitting professionals reveals that Tesla’s unprecedented expansion plans will create equally unprecedented regulatory challenges. [Continue Reading]

The Salt Is Real

SaltFlat

In the eight and a half years since I began studying and writing about the auto industry in a professional capacity, my positions on the topics of the day have rarely failed to cause some level of controversy. I’ve long since lost count of the number of enraged comments, emails and tweets my writing has inspired, and I’ve even had my last name mocked by the White House press secretary during a press gaggle on Air Force One after an Op-Ed I wrote for the New York Times was misquoted by Rush Limbaugh. Once the spokesman of the leader of the free world has made an “Animal House” joke at your expense, every subsequent howl of outrage tends to fade into the background a bit … at least until the most influential automaker in the world smears you with the baseless innuendo and outright lies.

Ever since Tesla Motors wrote a salty blog post responding to my investigation of its use of non-disclosure agreements in return for “goodwill repairs,” a thousand flowers of anger, hatred and slander have bloomed across the internet. An online lynch mob, seemingly unleashed by Tesla and its CEO Elon Musk, has flooded social media, forums and comment sections with false and defamatory statements about me, my motivations and my reporting. Were these attacks in any way fact-based or substantive, we might be able to have an interesting and illuminating debate about the issue at hand. But because Tesla apparently chose to attack me personally, in vicious, indiscriminate terms seemingly calculated to cause as much harm to my professional credibility as possible, it’s time to get truly salty. In fact, if you’re following a low-sodium diet, you may want to go ahead and stop reading now.

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Tesla Suspension Breakage: It’s Not The Crime, It’s The Coverup

TeslaBallJoint

For several months now, reports have circulated in comment sections and forum threads about a possible defect in Tesla’s vehicles that may cause suspension control arms to break. Many of those reports appeared to come from a single, highly-motivated and potentially unreliable source, a fact which led many to dismiss them as crankery. But as more reports of suspension failure in Teslas have come in, Daily Kanban has investigated the matter and can now report on this deeply troubling issue.

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GM’s Fuel Economy “Misprint” Somehow Shows Up At EPA Website

The correct fuel economy rating for this vehicle, from the EPA's website today.

The correct fuel economy rating for this vehicle, from the EPA’s website today.

GM has told its US dealerships to stop selling 2016 model-year large crossovers while it replaces Monroney stickers that show incorrect fuel economy ratings, according to a huge Automotive News [sub] scoop.  The stop-sale documents obtained by AN call the mislabeling an “inadvertent error,” and a GM spokesman tells them “an ‘inadvertent data transmission’ was responsible for the mistake.” This excuse would be thin under any circumstances, but two factors make it seem especially implausible. The first is the timing: GM was just caught using an apparent “defeat device” in Europe after months of allegations of emissions cheating. The second is the nature of the misprint: the incorrect ratings were just 1-2 MPG better than the correct numbers, strongly indicating GM was trying to get away with slightly too-good-to-be-true numbers.

But there’s even more direct evidence that GM’s “misprint” story isn’t true: a Daily Kanban review of the EPA website using the archive.org Wayback Machine shows that those (higher) incorrect numbers were displayed on the EPA website before being changed sometime this year. In other words, the fuel economy ratings that GM says were a “misprint” were submitted to the EPA and listed as the official rating before being changed to the new, lower rating.

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Why Are These Teslas Gathering Dust?

Tesla's Ghost City?

Tesla’s Ghost City?

Tesla has taken a beating in recent months for the quality problems that are affecting the Model X (and to a lesser extent, Model S) as the California electric automaker struggles to scale up. And with Tesla’s production and manufacturing VPs leaving the company and a massive production ramp looming which aims to take the company from 50,000 annual units of production to 500,000 units in a few short years. As Bertel explains over at Forbes, Tesla’s ambitious plans deepen the gulf between it and the real world of automotive manufacturing. But even if Musk can turn a century of automotive expertise on its ear, another challenge awaits that I lay out in my most recent Bloomberg View post: [Continue Reading]

DailyKanban Behind The Great Firewall of China

Bertel1

DailyKanban’s Bertel Schmitt is headed to Beijing for the auto show, and will not be posting daily news briefs for the next few days while stuck behind the Great Firewall. While he is away gathering the latest news from the world’s largest car market, you can stay up to date on the latest by following E.W. Niedermeyer on Twitter.

Tesla’s Model 3 Is A Challenge That Has Only Just Begun

Here we are now, entertain us

Way back in 2006, Tesla Motors CEO Elon Musk laid out his vision for his electric-car company in a blog post promising that its six-figure luxury cars would be succeeded by increasingly affordable vehicles. Ten years later, it’s here in the form of the Model 3.

Musk described the vehicle at its unveiling in California on Thursday night as “the final step in the master plan, which is a mass-market, affordable car.” Already, 115,000 people have plunked down $1,000 deposits to order the car two years before it’s available.

Public enthusiasm and anticipation are once again being driven up to levels the rest of the auto industry could only hope to generate.

Beyond the hype there are a number of warning signs that indicate this intense excitement may ultimately lead to disappointment and even Tesla’s ruin.

Read more at The Daily Beast

Where’s The Outrage Over GM & Chrysler?

Closer than you think...

Closer than you think…

In my latest post at BloombergView, I look at Donald Trump and Hillary Clinton’s attempts to tap into the populist anger over the auto industry and am left wondering why neither is willing to attack the automakers who actually received bailout money. Trump has taken on Ford’s decision to double production capacity in Mexico and Clinton has attacked the supplier Johnson Controls for relocating to the UK in an “inversion” deal with Tyco, yet neither of these alleged automotive evildoers come close to matching the perfidy of the two bailed-out automakers. To wit:

General Motors, which received a $50 billion bailout, has received a net federal tax advantage of $52 million over the last three years in spite of billion-dollar profits, thanks to a controversial government decision allowing it to carry tens of billions of dollars in operating-loss credits through bankruptcy. GM is also leading the way on importing vehicles from China, and has focused its global export and R&D strategies around that huge potential market in the years since taxpayers bailed it out. Just like Ford, GM is doubling its Mexican production capacity, spending $5 billion on new assembly jobs south of the border.

Meanwhile, FCA isn’t even based in the U.S., having fled to a U.K. tax domicile after receiving more than $10 billion in bailout funds. Putting Fiat’s Italian plants in front of the line for new production, FCA anticipates that its North American production will remain flat through 2018 while imports from outside North America will expand to more than 10 times 2013 levels

This is at the heart of populist anger over the auto industry: Even if the bailout was necessary as an emergency measure, it’s failed to change the behavior of the firms who benefited from it or to deliver any reversal in the fortune for U.S. workers. Fiat-Chrysler survived to become a foreign firm by every possible metric, and GM became a tax-dodging Trojan horse for Chinese cars. And yet no American politician — Democrat or Republican, establishment or renegade — seems able to even identify these real culprits.

Not convinced that the automakers we bailed out are bad corporate citizens of the US? Read on…

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