Bernstein analysts Max Warburton and Toni Sacconaghi argue Elon Musk is overusing automation, Business Insider reports, and that’s why Tesla is unable to scale as fast as it would like.
“Tesla has tried to hyper-automate final assembly,” the report states. “We believe Tesla has been too ambitious with automation on the Model 3 line. Few have seen it (the plant is off-limits at present), but we know this: Tesla has spent c.2x what a traditional OEM spends per unit on capacity.”
In addition to automating stamping, paint and welding, the report states, Tesla is also trying to automate the final assembly process, which entails the actual placement of parts into the cars.
“It talks of two-level final lines with robots automating parts sequencing,” the report states. “This is where Tesla seems to be facing problems (as well as in welding & battery pack assembly).”
The report describes how automation is expensive and “statistically inversely correlated to quality.” It goes on to note how if Tesla tries to automate 50 percent of the tasks in final assembly, it would only cut out about five hours of human labor. Warburton and Sacconaghi later write,
But while all that exotic capital might allow Tesla to remove 5 workers, it will then need to hire a skilled engineer to manage, programme and maintain robots for $100 an hour (our estimate of a robotic engineers’ hourly rate).
So the net labour saving may be only $50 per unit. Yet putting the automation into the plant seems to involve an apparent capital cost that’s $4,000 higher per unit of capacity than for a normal plant. If the product is built for 7 years, that’s over US$550 of additional depreciation per unit built. It’s hard to see an economic case even if somehow the Fremont Model 3 line can be made to work. So why exactly has Tesla taken this route? It’s unclear.
TechCrunch has reached out to the folks over at Bernstein, as well as at Tesla. I’ll update this story if I hear back from either parties.