Tesla gives update on Model 3 production problems, delays ramp up by 3 months

As expected with the release of its third quarter financial results, Tesla gave an update on the production status of the Model 3.

The company claims that production is “steadily increasing”, but the “bottlenecks” have caused them to delay the expected 5,000 units per week production rate to “late Q1 2018” – which means a roughly 3-month delay.

Last month, Tesla announced that it delivered only 220 Model 3 vehicles and produced 260 units during the third quarter.

At the time, the company confirmed having “production bottlenecks” – without specifying what they are but while claiming that they are not fundamental problems and they know how to resolve them.

Recent reports suggested that the bottlenecks were at the Fremont factory, where Model 3 is being built and assembled, and another report said that the production bottlenecks are due to suppliers.

Last week, Tesla CEO Elon Musk hinted that there might be issues at Tesla’s Gigafactory in Nevada, where the Model 3 battery pack and drive unit are being manufactured.

It has now been confirmed by Tesla in their shareholder’s letter:

“To date, our primary production constraint has been in the battery module assembly line at Gigafactory 1, where cells are packaged into modules. Four modules are packaged into an aluminum case to form a Model 3 battery pack. The combined complexity of module design and its automated manufacturing process has taken this line longer to ramp than expected. The biggest challenge is that the first two zones of a four zone process, key elements of which were done by manufacturing systems suppliers, had to be taken over and significantly redesigned by Tesla. We have redirected our best engineering talent to fine-tune the automated processes and related robotic programming, and we are confident that throughput will increase substantially in upcoming weeks and ultimately be capable of production rates significantly greater than the original specification.”

Based on its current understanding of the bottlenecks, Tesla updated its expected production ramp timeline:

“Based on what we know now, we currently expect to achieve a production rate of 5,000 Model 3 vehicles per week by late Q1 2018, recognizing that our production growth rate is like a stepped exponential, so there can be large forward jumps from one week to the next. We will provide an update when we announce Q4 production and delivery numbers in the first few days of January. With respect to the timing for producing 10,000 units per week, it has always been our intention to implement that capacity addition after we have achieved a 5,000 per week run rate.”

It was not all bad news. Tesla confirmed that several important manufacturing lines, “such as drive unit, seat assembly, paint shop and stamping” have demonstrated that they can already produce over 1,000 units per week “during burst builds of short duration”. according to the company.

They shared some images of those lines. Like this Model 3 body shop welding station:

And this Model 3 final assembly line:

Tesla says that the battery pack assembly, body shop welding and final vehicle assembly lines are now capable of 500 units per week, according to their short burst tests.

But even if just one line is not producing at the expected rate, it slows down the entire production no matter what lines for other components are capable of producing.

Model 3 reservation holders: it’s time to start looking at your delivery timeline estimates.