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Rock!...oopsie.
Trad climber
the pitch above you
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Dood puts the ‘A’ IN Arrogant.
No argument there.
Moody's
Uh, they're also a bunch of arrogant tools that make things like the '08 meltdown possible through willful and self-serving selective blindness.
Anyone involved at high levels of any corporation or high finance is de facto an as#@&%e to some degree. That's how they got there.
I took today as a buying opportunity. Yeah, he may be a tool, but he does have a vision and has made some previously untenable things a reality (viable electric cars / reusable space technology at a fraction of NASA prices).
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Reilly
Mountain climber
The Other Monrovia- CA
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Gotta love a devoted contrarian. Tesla is the poster chile for the big time
shorters after that séance of a conference call. Actually, they've been
upping their short antes for a while. Oopsie, ya gonna snap up some Tesla
junk bonds when they come calling with their hat in hand in the third quarter
when the cash runs out? BwaHaHaHa! I know, Henry Ford declared bankruptcy
a few times before he got it right. You do know Elon lied all along about
producing a $30K 'affordable' Model S, right? Did I mention they're losing
over $22K on EVERY MODEL 3 THEY SELL? Helluva business plan that.
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MikeL
Social climber
Southern Arizona
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Tooth: So what benefits are there to cutting people down and being condescending or pointing out the negative with every post?
I don’t think that’s what people here mean to do.
I think we’re fascinated by visionaries who create new communities or who have considerable talent--but who fall from grace. It’s a form of dramatic tragedy: characters who over-reach; hubris; Daedelus (the punished innovator) and his son Icarus (flying too close to the sun); etc.
There are also romantic heroes (where most everything goes right); comedic heroes (where everything goes well enough and is mildly funny); or ironic heroes (where good things come from the bad and vice versa).
Which story do you feel attracted to? Which one do you think is "most truthful?"
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Reilly
Mountain climber
The Other Monrovia- CA
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o what benefits are there to...pointing out the negative with every post?
Because, to coin a phrase, the market climbs a wall of worry. Yer welcome!
Idolatry is fine, but not for an investor.
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FRUMY
Trad climber
Bishop,CA
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For a smart guy, he's not to smart.
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brotherbbock
climber
So-Cal
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^^^ too.....
;)
Don't cast stones.
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FRUMY
Trad climber
Bishop,CA
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I never claimed to be smart.
But I did manage to retired at 50.
LMAO
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skitch
Gym climber
Bend Or
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I heard E-Musk is building a life size replica of earth, and will put it in the same orbit...and tesla owners get to live there for half price.
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brotherbbock
climber
So-Cal
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I think you meant "retire". LOL
Glad you never claimed to be smart Frumy, but you did bash someone else for not being smart.
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Reilly
Mountain climber
The Other Monrovia- CA
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How many Tesla/miles does it take to offset the carbon footprint of one rocket launch?
That’s some big time hypocrisy! Oh, I forgot, the Teslas are just buying us time to move to Mars.
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MikeL
Social climber
Southern Arizona
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SomebodyAnybody: If not for the existing launch infrastructure he essentially rents, courtesy of the US taxpayer, he wouldn't be doing jack sh#t at a fraction of NASA prices.
True, but irrelevant.
Organizations with big fixed costs are obsessed with making breakeven. Any firm can take a loss for a while from not covering variable costs, but if they can’t make breakeven, they will be out of business very soon. Organizations in industries that require heavy fixed assets (e.g., infrastructure) will find ways to make up for what they don’t use (excess capacity when demand is low). They’ll sell off their excess capacity at bargain basement prices. It’s common. Little specialized players will show up, buy up excess capacity, and serve niche buyers at good prices. Some companies took this idea to the bank; IKEA bought up excess capacity in Eastern Europe long ago, and over time turned those little manufacturers into very competent producers.
Some industries require HUGE investment (like telecom) but cannot develop a unique product from it (for higher prices). They’ll sell excess capacity if they get the chance.
I hope the Federal Government does something useful with its excess capacity.
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healyje
Trad climber
Portland, Oregon
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I think he currently cares more about how Grimes rates him than Moody's.
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Roger Breedlove
climber
Cleveland Heights, Ohio
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I spent many years working in the automotive manufacturing business. The issues that Tesla is having producing the Model 3 are predictable for a newbie manufacturer of a mass-produced car. The positive side of Musk's approach is that he can start over on all designs and simplify them to get better engineering solutions. This is a huge advantage in complex systems which have otherwise been built up over time with compromises to accommodate prior decisions. This is the reason Musk is so successful. But low-cost mass production relies on suppliers to make components which are assembled into Tesla cars. While cars are large, almost all of their many parts must be precisely made for the vehicle to work, for both fit and function.
Another important, associated issue is the degree of component precision required to use automation: the more automation you use, the tighter all of the tolerance have to be in the components. Robots are pretty dumb; they do exactly what you tell them to do. They do not have much capability to make adjustments for variation in the parts. This is an enormous driver in the need for very tight tolerances. As parts are assembled, the tolerance stack-ups get wider. They may be centered on a mean value, but the tails of the distribution get longer. In an automated system, a one-in-a-thousand chance will shut you down. There are too many chances. One-in-a-million chance with lots of chances built into component interactions can be too much and can cause constant shut-downs: the odds are low, but the number of tries can be very high.
Clearly the Model 3 has assembly issues because the parts are not being delivered on time or parts are slightly off and cannot be assembled, or, while less likely in my opinion, there are technical issues with the actual function of parts. I think that the Model 3 manufacturing system is automated from end-to-end, there is no sensible way to intervene if something goes wrong.
I don't know the details, but a normal procedure is to assume the worst and build many buffers between blocks of automation. Electronics are made this way because small components can be taken on and off the line. For big stuff, you have to build gaps to create a time buffer by making the line longer and to design for human interaction. There is probably not room to make the line longer at the old Nummi plant in Fremont, and it doesn't help much to have room for humans to intervene if there are no humans.
From an odds perspective, a rocket ship launch is less likely to go wrong than a continuous string of autos on an automated line. A rocket may or may not be more complicated than an auto--I don't know--but doing anything exactly right multiple times in quick succession is very hard.
Fixing these issues after a design is set is very expensive and very time consuming. Mass production requires that parts are made using high-speed tooling. Changing tooling is expensive. Everything is connected, so a solution here creates a problem there. Deciding what to do is contentious. Heads roll. My guess is that Tesla is discovering that they were not as precise as they needed to be when designing for manufacturing, picking vendors, and approving tooling. The smallest details can create havoc.
My experience with this comes from being a supplier to GM GMT-800 program in 1999 when GM completely redesigned their SUVs and Pickups from the ground-up, so to speak, just as Tesla has done with the Model 3. I was hired to launch the supplier's new $75mm per year business.
My business career is based on figuring out how to make stuff that has not been made. I know many, many ways to be 98% correct and fail %100 of the time. I even know a few ways to be 99.9% correct and fail %100 of the time.
The company I ran had the contract to produce the engine mounts for all of GMs SUVs and Pickups, about 800,000 vehicles per year in about 20 different pairs. Unlike the Model 3, the volume of production with a vehicle change-over is pretty much instantaneous--you stop making last year's model, shutdown the assembly plant for a couple of weeks and then start making the new model. If you cannot make the vehicles, the customers buy a different vehicle from another supplier. There are complicated processes to make sure that everything is ready.
Engine mounts are bolted to the frame and must match to mounts bolted to the engine. The engine is 'dropped' onto the frame side engine mounts and three holes on two different surfaces and different planes on each side must match the holes in the mating bracket bolted onto the engine. This is not rocket science: simple design as automotive designs go.
But, the frame is moving on the assembly line. There are only about 60 seconds to get this done. The holes are deep within the engine well and are hard to see. The engine is heavy. Jerking it around to get the holes to match takes time and can cause damage. It only works if the tolerances and the fit-up are very precise. It didn't work. It is worth pointing out that the cost of a line stoppage at a GM plant is about $20,000 per minute.
GM was convinced that we had messed up the tooling, for which we had charged GM about $2,000,000. We had not messed up, and our parts were precisely made to GM's specifications, but we jumped through hoops to find a solution. It turned out that GM's engineering team had designed the engine mounts assuming that the slope of the metal between the mating surfaces would guide the engine into place and all six holes would line up, but they did not tell anyone their assumption. It was a flaky idea borne of the engineering team's lack of relevant experience: they did not know how metal was formed, did not understand that we followed the tolerances shown on the design prints, and they had not worked on an assembly line. They also did not know how all the small misalignments would interact to hang-up the engine on one side or the other.
On their computer models everything was perfect, but in real life, the sheet metal thins out as you bend it: it does not stay where the computer models says it will be. We had software which showed us how the metal would thin out. But GM did not have this sort of software; they didn't need it: they knew everything they needed to know. I doubt they thought about it very hard. In any case, it was not a sensible design criterion.
To get them back into production, our quick-witted sales and engineering managers suggested that we take our engine mounts and weld a little button on each side of the upper nose mount, ground down to a precise dimension, to guide the mating of the two parts. The sales manager picked a number out of the air--a very high number, more than doubling the part's cost--to charge GM until we could change the tools and fix the issue. Within a day we had a solution and about three days later were shipping parts with this fix. It cost GM millions of dollars, but relative to not building vehicles it was a bargain. Out little company made a lot of money. GM appreciated our can-do effort.
It took many months to rebuild the original tools to add this guiding feature into the metal itself. We had to add cost to the newly designed parts which GM then added to our price. This was just one of many issues that GM faced in launching the new SUV and Pickup designs. After a year or two they had worked out the issues and could build good vehicles and they eventually made money on them. But they pretty much soured on the idea of blank-slate designs. As an aside, Toyota, which for many years was the best at vehicle manufacturing, never designed from a blank slate. Their first Lexus was a Toyota on which they upgraded the engine, cabin surfaces, and a few other components. Over many years, they eventually upgraded everything so that it became a completely different car. Toyota knows what they don't know.
This sort of manufacturing humility is probably frowned upon at Tesla. It is hard to change the world. It is also normal for pretty much everyone to underestimate the issues someone else will have with our best ideas.
I would guess that since Tesla's model 3 is brand new, the potential for these sorts of issues is magnified many times. It is also likely that they lack the sort of experience that is needed: how do you evaluate someone's ability to do something they and you have never done. Finding solutions is generally not easy because the team must both understand all the old ways of doing things and map this into a new world they are creating, anticipate problems their suppliers will have without being able to rely on their supplier fully understanding how the parts will be used, and work from a clean slate to achieve the promise of the new vehicle. There is just not enough horsepower to get it all figured out. It is as if everyone suddenly finds themselves promoted into a job they cannot do, living the Peter Principle, including Musk. That said, I would guess that Musk is probably personally involved in sorting out all the issues. Otherwise there is no one around with enough authority and know-how to break the logjams.
This story is the same for Boeing and its Dreamliner a few years ago. What could possibly go wrong with a brand new design, new materials, with all of the components outsourced to suppliers around the world who had never made them before?
From a business perspective, Musk is probably right to say that they will fix the issues. However, he is like everyone else in over-estimating how quickly he can get it done. He is also probably correct in lying to the press and shareholders about how easy it will be work out the issues. Otherwise, it just looks like they are stupid--they are not. They just underestimated how hard it is to figure out really complex systems. That said, they should, as techies, have taken a lesson from Steve Jobs, who had more misses than successes in his new products.
One fall-out of these sorts of great-designs-meet-the-real-world-of-manufacturing is that the initial cost targets cannot be reached. Some mistakes can be addressed with a one-time cost, but many of these sorts of issues can only be addressed by adding cost and complexity: the very things that Musk is very good at eliminating.
I hope he succeeds. But I would not buy a Model 3 for a couple of years.
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MikeL
Social climber
Southern Arizona
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Nice write-up, Roger.
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Roger Breedlove
climber
Cleveland Heights, Ohio
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Thanks, Mike. Life after climbing, part 3.
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Roger Breedlove
climber
Cleveland Heights, Ohio
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May 14, 2018 - 09:26am PT
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After my thread-killing post above, I am hesitant to post anything else on Tesla's Model 3 assembly issues. That said, I have had several conversations with friends over the weekend, one of whom is considering buying a Tesla. I suggested that he not buy a Model 3 for a few years. He urged me to look a the videos of Tesla's robotic assembly, so I read a few things and watched a few videos.
Monro and Associates takes new cars apart and details all of the technology and estimates the cost of the vehicle and all of its components. It has been doing this for many years. They purchased two Model 3 and took them apart. The upshot: the battery, the electronics, the drive of the Model 3 is fantastic. The fit and finish of the mechanical assembly is very low quality. Keep this dichotomy in mind as you read the this post.
The talk is about the automation being the source of the delays, but in my experience, the robotic automation and the fit and finish are related. Robots are blind, one-handed, and dumb (BOB), Monro's term. Anything done by a robot has to be very precise. As parts are added to the vehicle structure, the "skateboard" in this case, the tolerances become more and more of a problem. Bad fit and finish, and halting assembly, are natural out-growths of this.
In the Monro interview, Tesla Model 3 Teardown Analysis, its CEO, Sandy Monro, articulates what is great about the Model 3 and what is very bad. (The video interview is long and I am not sure how well it will translate to non-automotive viewers. I found it interesting and informative, but I could follow the threads of the conversations.) The question is how did they get it so wrong?
In 2016, Tesla hired a manufacturing executive, Peter Hochholdinger, from Audi, as vice president of vehicle production, filling a critical position as the automaker tries to make more Model X crossover SUVs, introduce a new version of the Model S sedan, and develop its mass-market car, the Model 3.
The head of engineering, is Doug Field, formerly from Apple. Apparently Field was in charge of both engineering and production, so as to avoid the sorts of problems they are currently having. Field is now taking a 6-week sabbatical, right in the middle of a meld-down, and Musk is taking control of the assembly issues.
As an automotive guy, I think that what is happening could be foreseen: there is no reason to think that even a stellar electronic products engineering executive would know what corners to look around in automotive assembly. If you are in doubt about this assertion, think about what you would have thought if Apple had replaced Mr. Field with a stellar automotive engineer from Detroit?
From the WSJ:
Tesla’s Engineering Chief Takes Leave of Absence at Pivotal Moment
Doug Field is stepping away for several weeks, according to people familiar with the matter
Tesla Inc.’s top engineer overseeing vehicle development is taking a leave of absence from the company at a crucial moment when the electric-car maker is struggling to boost production of the Model 3 sedan, according to people familiar with the matter.
Doug Field, Tesla’s senior vice president of engineering, is stepping away from the company for several weeks, these people said. One person described the absence as a “six-week sabbatical,” and Tesla declined to say when he would come back.
Mr. Field has been a key leader at the Silicon Valley auto maker since joining in 2013 from Apple Inc. He oversees the engineering of Tesla’s vehicles, and last year he was also given oversight of production to better align the two efforts. That changed this spring when Chief Executive Elon Musk said he retook control of production.
In April, Mr. Musk wrote on Twitter that he would handle direct oversight of production and was back to sleeping on the factory floor. At the time, he praised Mr. Field as “one of the world’s most talented engineering execs.”
In a little over a year, Tesla has seen many of its senior leaders leave, including its chief financial officer and sales president.
The hiring of Mr. Field from Apple, where he was vice president of Mac hardware engineering, was touted as a win for Mr. Musk, who had big ambitions for Tesla. Mr. Field had also worked at Ford Motor Co. and Segway, giving him unique experience in both the tech and autos industry.
“Tesla’s future depends on engineers who can create the most innovative, technologically advanced vehicles in the world,” Mr. Musk said in a statement at the time. “Doug’s experience in both consumer electronics and traditional automotive makes him an important addition to our leadership team.”
Write to Tim Higgins at Tim.Higgins@WSJ.com
Did you notice the Mr. Field was credited with having automotive experience from Ford? He worked at Ford for six years right after he graduated from college in 1987. In 1997, ten years later, how to integrate components was still not understood by Ford, GM, or Chrysler or most of their suppliers.
Where in all of this the Audi executive is not clear: there is a good chance that he knows what should have been done, but there is also a good chance, in my opinion, that he would not have a clue. Knowing how to manage a business as well organized as Audi is not anywhere close to knowing what has to be done to create it from whole cloth.
I also believe that Musk is probably the only person who can figure this out. I am not speaking as a fan; these sorts of issues are always figured out by someone like Musk.
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Reilly
Mountain climber
The Other Monrovia- CA
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May 14, 2018 - 10:30am PT
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I thought Hochholdinger was a design guy? If so putting him in charge of production is strange.
Two Teslas crashed last werk. One ran into the back of a fire truck! Clearly, the kool-aid
drinkers buying Teslas are blind with infatuation, or just plain blind.
Meanwhile Musk has announced a “thorough reorganization’. Boy’s got a lot on his plate.
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Roger Breedlove
climber
Cleveland Heights, Ohio
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May 14, 2018 - 10:50am PT
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Hochholdinger was a straight-up production guy in all his positions at Audi. In my experience with American, German, Japanese, and Chinese automotive executives, none were good bets to launch something brand new. That said it is very hard to figure out who will be good at large project management, new tecnology, and nuts-and-bolts manufacuting. I think that propably the only thing that should have been done and wasn't is Musk living at the factory for the past three years. Investors invested in Musk, not Hochholdinger or Field. In this regard, Musk and Tesla's board screwed up. Aside from Musk, the board doesn't look to bring much to the party. Shareholders should be upset. Hubris is an ancient frame of mind.
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miker12
Boulder climber
Us
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May 14, 2018 - 01:44pm PT
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Why the hell only reach people will fly to Mars?
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