When Tesla Inc. (TSLA.O) introduced its new vehicle-assembly system in March, auto industry experts debated whether CEO Elon Musk’s “unboxed” technique was radical, revisionist, derivative, or above.
Musk believes the company must completely rethink conventional manufacturing methods to develop more economical and profitable electric vehicles in bigger volumes.
The world’s most valuable automaker has been waiting to unveil its holy grail, a sub-$30,000 electric vehicle. The cheapest Tesla costs almost $40,000. Tesla hopes to meet its price goal with unboxed assembly.
One expert called the procedure “revolutionary,” saying it might disrupt the auto industry’s moving production line. However, others doubted that modular assembly and other proven methods could significantly cut production costs.
At Tesla’s March 1 Investor Day, officials stated the new technique will make next-generation vehicles “significantly simpler and more affordable.”
Officials said the unboxed approach might slash production costs in half and the factory footprint by 40%. As a result, the corporation wants to “build more vehicles at lower cost.”
Tesla’s new $5 billion facility in Monterrey, Mexico, aiming to make sub-$30,000 EVs, will install the equipment in late 2024 to test the new processes.
Big questions include: Will Tesla’s process affect the auto industry? Will it obsolete the widely imitated Toyota Production System? Given Tesla’s history of missed production targets and failed attempts to deploy unproven technology, can Musk deliver?
Martin French, managing director at consultancy firm Berylls, which focuses on the industry’s rapid electric and smart mobility change, wondered if Tesla’s strategy may replace decades-old lean production processes pioneered by industry leader Toyota Motor Corp (7203.T).
“I got the feeling when I watched the Tesla (presentation) that the Toyota Production System handbook has just been thrown up in the air and machine-gunned down,” French added.
Tesla’s new approach is “revolutionary,” according to Free University of Dortmund expert Jan-Philipp Büchler: “This is considerably more than modular production… It eliminates conventional stages, creates new work patterns, speeds up, and simplifies.”
Tesla is evaluating big front and rear subassemblies built on single-piece underbody castings and linked to a structural battery pack. Body panels are painted separately and assembled later.
Some manufacturing experts think the unboxed technique might eliminate stamping, welding, and painting unfinished car bodies and send them down a long assembly line where seats, engines, and other components are added.
If successful, the unboxed method might change the industry’s playbook. Tesla has missed several grandiose goals, from the Cybertruck to its “Full Self Driving” software.
James Womack and Hide Oba, lean experts, find major disparities between Tesla’s intended makeover and Toyota’s.
Womack, a professor at MIT and co-author of “The Machine That Changed the World,” said the Tesla method “is an assembly process,.” At the same time, Toyota has developed a broader “production management system” to help automakers run assembly processes and related operations more efficiently.
Oba, an independent lean-manufacturing expert, says the unboxed system’s “rigidity” is a problem. Oba worked for the Toyota Production System Support Center, which assists suppliers and others in implementing TPS.
“The Tesla process won’t work unless production of these big, high-content unboxed vehicle modules are completely synchronized, and finished blocks arrive for a final put-together just-in-time,” he stated.
The unboxed approach may allow Tesla to build many vehicle models of varying sizes and body designs on the same production line.
Oba said that was unlikely. The way Tesla has “unboxed” the vehicle into multiple large blocks is so radical, and the dimensions of those blocks don’t seem to leave much opportunity for manufacturing uncertainties.
“That could become a drag on the company’s overall efficiency since Tesla’s model lineup is sure to become more varied and complex,” he said.
