Did Tesla Stealthily Disclose Model 3 Ramp Issues?

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Controversy has haunted Tesla at every step of its extraordinary journey, making it hands-down the most argued-over automaker in the world. These controversies have touched on nearly every aspect of the California-based car company’s business, but they also share one core commonality: at their core, every Tesla controversy has been about disclosure.

Countless issues that might have been easily forgivable if disclosed early and fully have escalated into major controversies because of how the company communicates (or doesn’t) about the challenges they face. Never has this been more true than it is in the case of the most recent controversy about Model 3 production, which was kicked off last week by a Daily Kanban report. [Continue Reading]

Source: Tesla’s “Pilot” Model 3 Body Line Still In Development Near Detroit

Photos, apparently of a Model 3 “pilot team” in “Area 51,” were subsequently deleted by a now-private Instagram account.

Three months ago Tesla CEO Elon Musk tweeted that production of the new Model 3 in “Aug[ust] should be 100 cars and Sept[ember] above 1500.” But over the following quarter Tesla ended up delivering only 220 of its new more-affordable electric cars, or just 15% of Musk’s guidance. Though Tesla’s delivery press release didn’t identify the cause for this dramatic miss, it did state that

“It is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain. We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near-term.”

What does and does not constitute a “fundamental issue” with the Model 3 production ramp is open to debate, but a source tells Daily Kanban that elements of the Model 3 body line are still in development at the Michigan-based supplier Thai Summit America and not yet installed at Tesla’s Fremont facility.

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Tesla: Production Capacity Of Model 3 To Average 226,563 Units Per Year Over Next Five Years

George Orwell famously wrote that “to see what is front of ones nose takes a constant struggle,” and it turns out that the answer to one of the biggest mysteries in the auto industry has been hanging out directly in front of the public’s nose for some time. In a January 2017 application [PDF] for sales tax exemption (STE) from the CAEATFA program, the California Treasurer revealed that

“Tesla represents the Project will launch the Model 3 and provide the capacity to produce and deliver an average of 226,563 units per year over a five year period, in addition to its Model S and Model X production.”

This revelation provides an unprecedented clarity about Tesla’s production ambitions for its “more-affordable” Model 3 sedan, and contradicts representations that Tesla executives have made in quarterly conference calls with analysts and the media.

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Waymo Retires Iconic “Firefly” Vehicles

Google’s self-driving car company Waymo is retiring its iconic “Firefly” self-driving vehicles from testing fleets after three years in service. The Firefly, which were widely known as “the koala cars,” are being replaced by Waymo’s expanding fleet of Chrysler Pacifica plug-in hybrid autonomous minivans. This transition comes as Waymo moves toward commercial availability, including an “early rider program” in Phoenix, Arizona.

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Does Autosteer Actually Deserve Credit For a 40% Reduction In Tesla Crashes?

Tesla’s high-flying image, which had been moving from strength to strength since early 2013, hit its biggest speed bump last year when its Autopilot semi-autonomous/Advanced Driver Assist System (ADAS) came under scrutiny in the wake of Joshua Brown’s death. Suddenly Tesla’s pioneering Autopilot system went from being one of the company’s key strengths to being a serious liability that raised troubling questions about the company’s safety culture. Tesla CEO Elon Musk tried to swat away these concerns with what proved to be a set of highly misleading statistics about Autopilot safety, but the issue was not laid to rest until NHTSA closed its investigation with a report that seemed to exonerate Autopilot as a safety risk. With a single sentence, NHTSA shut down the most dangerous PR problem in Tesla’s history:

The data show that the Tesla vehicles crash rate dropped by almost 40 percent after Autosteer installation.

Because NHTSA is the federal authority on automotive safety, with unparalleled resources to assess and investigate safety risks, this single sentence effectively shut down public concerns about Autopilot’s safety. In a terse statement on its company blog, Tesla noted

we appreciate the thoroughness of NHTSA’s report and its conclusion

But how thorough was NHTSA’s investigation, and how accurate was its conclusion? As it turns out, the questions around Autopilot’s safety may not be as settled as Tesla and NHTSA would have you believe.

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Model 3 Reservation Holder Survey Underlines Tesla’s Mass Market Challenge

 

They waited for reservations… will they also wait for service? (image courtesy Investors Business Daily)

Much of the critical coverage of Tesla Motors, both here at Daily Kanban and elsewhere, has focused on issues that Tesla is able to get away with as a small-volume manufacturer serving an affluent, early-adopter market segment. From manufacturing bottlenecks to quality control problems, from inconsistent, hype-happy communication to poor service, Tesla has been able to weather a storm of problems because its customers and fans are so patient with and passionate about the company. But as Tesla moves from expensive, low-volume cars to the mass market Model 3 these problems are taking on a new significance. In part this is because higher volumes increase the likelihood of quality and service problems, and in part it is because mass market customers who depend on a single car for their daily routine are more demanding than luxury car buyers who can always take the Lexus to work if their Tesla is broken.

Given Tesla’s pattern of releasing cars with insufficient testing as well as its chronic quality problems, it’s safe to assume that the Model 3 will face its fair share of issues. Thus, investing in service infrastructure that will allow Tesla to promptly and affordably repair and upgrade high volumes of Model 3 is extremely important. As Bertel has written about at Forbes, Tesla is behind the curve on those investments and it will cost billions to catch them up. Just yesterday a piece by former Tesla employee Evan Niu dramatically illustrated just how far Tesla has to go to improve its service time, which has dragged on for 8 long months in Niu’s case. Now an exclusive study of about 800 Tesla Model 3 reservation holders, EV owners and luxury brand car owners conducted last year on behalf of a major automaker and provided to Daily Kanban by an industry source, reveals why Tesla’s quality and service woes are so critical to the success or failure of the Model 3.

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CA DMV Report Sheds New Light On Misleading Tesla Autonomous Drive Video

On October 20th of last year Tesla Motors published an official blog post announcing an important development:

“as of today, all Tesla vehicles produced in our factory – including Model 3 – will have the hardware needed for full self-driving capability at a safety level substantially greater than that of a human driver.”

Tesla backed up this bold claim with a slick video, set to The Rolling Stones’ “Paint It Black,” which depicted one of the company’s Model X SUVs driving itself from a home in the Bay Area to the company’s headquarters near the Stanford University campus, apparently with no driver input. In a tweet linking to the video, Tesla’s CEO Elon Musk described this demonstration in no uncertain terms:

“Tesla drives itself (no human input at all) thru urban streets to highway to streets, then finds a parking spot”

After months of negative news about Tesla’s Autopilot in the wake of a deadly crash that the system had failed to prevent, the video prompted a return to the fawning, uncritical media coverage that characterized the initial launch of Autopilot. And by advertising a new sensor suite that made all existing Teslas obsolete, the company was able to bolster demand for its cars even as it discontinued the discounts that had driven sales in the third quarter. Like so many of Tesla’s publicity stunts, the video was a masterpiece of viral marketing that drove the company’s image to new heights… but like so many of Tesla’s publicity stunts it also turns out to have been extremely misleading.

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CAEATFA Approves 48% Of Record Tesla Model 3 STE Request

Since 2009, the California Alternative Energy And Advanced Transportation Financing Authority (CAEATFA) has handed out more than $100 million in sales tax exemption (STE) tax relief to Tesla Motors, the main beneficiary of the state government program.  Tesla’s latest application, which requested about $100 million in STE on the purchase of more than a billion dollars worth of equipment that the automaker will use to develop and build its Model 3 sedan [previous coverage here], was by far the biggest application in the program’s history and comes as the program faces record demand for tax relief. As a result of this high demand and Tesla’s historical domination of the program, CAEATFA approved just 48% of Tesla’s massive Model 3 request at its December 13 meeting, leaving more than half of its latest request unfunded.

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