Report: Tesla’s Fremont Factory Not Efficient, Employs Too Many Workers Per Car Produced

5 months ago by Eric Loveday 129

Inside Tesla’s Fremont factory

At its peak as NUMMI, the factory could churn out some 500,000 vehicles per year, yet Tesla CEO Elon Musk says the automaker is out of space at its Fremont factory, despite production numbers that are far lower.

What gives?

Some Model S Sedans Get Assembled In Tesla’s Fremont, California Plant

Quoting Musk:

“There’s no room at Fremont. It’s bursting at the seams.”

Tesla has expansion plans to remedy this, but the automaker is looking to build other factories too.

We’ve witnessed the parking issue, so we’re aware of the fact that Tesla is running low on space, but why’s that the case with production figures far below where they stood back in the height of the NUMMI days?

Automotive News explains:

“…in this temple of lean manufacturing, Tesla uses far more workers than NUMMI employed to build far fewer cars. In 1985, its first full year of production, NUMMI had 2,470 employees and produced 64,764 vehicles — about 26 vehicles per worker per year. By 1997, it had 4,844 ​ workers and produced 357,809 vehicles — about 74 vehicles per worker per year.”

“Tesla, on the other hand, had between 6,000 and 10,000 workers in 2016 and manufactured 83,922 vehicles. That puts its vehicle-per-worker number between 8 and 14, about one-seventh the efficiency of NUMMI at its peak.”

Part of the reason Tesla employs additional work is due to the fact that the automaker makes a lot of its own parts, versus outsourcing to suppliers.

Regardless, some believe this overload of employees is at least part of the reason why Tesla fails to make money, although we tend to believe the non-profit status of Tesla is more ‘to be expected‘ with any rapid growth start-up company still in its early days. Quoting automotive manufacturing consultant, Michael Tracy, of Agile Group:

“The number of people Musk’s got in there has a great deal to do with why he doesn’t make money building vehicles. Toyota’s numbers reflect the number of people you expect to have if you were going to efficiently build vehicles for a profit.”

For whatever reason, Tesla will have to sort this out with the low-priced Model 3. At its expected sales volume, if Tesla loses money per vehicle, then we can truly say there is an issue.

Lean and mean manufacturing is where it’s at these days.

Source: Automotive News

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129 responses to "Report: Tesla’s Fremont Factory Not Efficient, Employs Too Many Workers Per Car Produced"

  1. AlanSqB says:

    More clickbait food for the shorts from Auto News. Somebody is sitting back in their chair having a laugh at how much they’re trolling these shorts into losing money.

    It’s astounding how many people think they’re smarter than the self-made billionaire who is at the center of all this.

    1. AlanSqB says:

      Furthermore, Tesla’s mission is not to “efficiently build vehicles for a profit.” It’s to “accelerate the advent of sustainable transport.” ACCELERATE – not turn on the cruise control and relax while the dividends roll in.

      1. SparkEV says:

        It’s every company’s mission to “efficiently build and profit”. Tesla isn’t a charity. I, along with all the Tesla stock holders who pushed the price well beyond “reasonable” levels, firmly believe Tesla will be highly profitable eventually.

      2. Scott Franco says:

        Exactly. Tesla is the new breed of company run for the general social good. Profit is secondary. If they make a profit, it will no doubt be used to fund an African charity.

        Elon attended the school of socially aware economics.

        1. AlphaEdge says:

          Surely you’re joking?

          1. jhm614 says:

            Don’t call me Shirley.

            1. SparkEV says:

              Surely Franco, not Shirley.

              Musk went to Wharton, the same school as Prez Dump. One turned out to be a senile old turd. Let’s hope the other one doesn’t go insane and forgo profits.

              1. SJC says:

                Bachelor of Science degree in economics from (the) Wharton School of Business

                Economics, not business.

              2. Surya says:

                You didn’t get the reference. Watch a movie called Airplane

    2. mx says:

      The profits are right there on the balance sheet, year after year, under “Plant and Equipment”.
      In the last 5 years, Tesla has increased Plant and Equipment from 1 Billion to 16 Billion dollars.

      They’re reinvesting the profit back into the business, as any good startup will do.

      1. floydboy says:

        This!

      2. Four Electrics says:

        Wrong. Liabilities are also increasing each year by almost the same amount. The difference is made up by selling stock more than cars.

        1. mx says:

          The liabilities are tied to the assets, so those are secure loans, that generate more growth. Sorry, Mary Berra CEO of GM, that’s not going to stop Tesla

        2. Nix says:

          Four Electrics — Why so lazy? Liabilities are $5 billion less than Assets. That represents $5 billion in prior earnings plowed into assets.

          These are easy numbers to find in literally hundreds of websites (maybe thousands), why do you even bother posting stuff so easy to debunk?

        3. Pushmi-Pullyu says:

          “The difference is made up by selling stock more than cars.”

          The fact that a known serial anti-Tesla FUDster like you makes that claim, is sufficient to let us be absolutely certain it’s not true, just like all the rest of your FUD.

      3. theflew says:

        Sure they are investing. The big boys do a lot of investing as well. The main point of this article is that Tesla isn’t efficient at building cars. GM/Toyota built 4x the number of cars with half the people. Yet Elon keeps telling us how efficient the plant is with automation.

        1. Michael Will says:

          Except they pretend the additional employees working on rampup are part of the existing runrate. It’s a stupid short fuel article. Fine by me, more discounted shares for me to buy that go up when the short squeeze comes.

        2. (⌐■_■) Trollnonymous says:

          “Part of the reason Tesla employs additional work is due to the fact that the automaker makes a lot of its own parts, versus outsourcing to suppliers.”

          That should answer the question.

          GM and Toyota imported parts from elsewhere.
          When they did the cars to employee count, did they include the employees that built the outsourced parts?

          These metrics in the article omitted those numbers on purpose for whatever agenda they have.

      4. Pushmi-Pullyu says:

        mx said:

        “The profits are right there on the balance sheet, year after year, under ‘Plant and Equipment’.

        “In the last 5 years, Tesla has increased Plant and Equipment from 1 Billion to 16 Billion dollars.”

        Thank you and, it’s nice to see someone who is capable of deciphering a financial statement (which I am not) point to where Tesla is investing its profits** in buying more equipment to ramp up production.

        Quibble: …but I’m guessing you mean “1.6 billion” and not “16 billion”? Either that, or Tesla is borrowing and spending a lot more money than I thought! 😀

        **Profits: Those things that anti-Tesla FUDsters keep saying Tesla isn’t making!

      5. Doggydogworld says:

        “The profits are right there on the balance sheet, year after year, under “Plant and Equipment”.

        Completely wrong. First, PPE (property, plant and equipment) is 7 billion, not 16. There’s an additional 9b+ in their car and solar panel lease portfolios, but those were funded by secured loans, not profits.

        At least the $7b of PPE was funded by profits, right? Again, the answer is no. That capital investment was (and is still being) funded primarily by $8.4 billion of shareholder contributions during Tesla’s IPO and numerous subsequent secondary stock offerings.

        The only “profit” Tesla makes is “gross profit”. This profit is used to pay employees who sell and service the cars. You can only reinvest “net profits”, which Tesla does not have.

        1. Doggydogworld says:

          Of course if you believe, as the shorts claim, that Tesla’s real business is selling stock certificates then they do have $8.4 billion of “profits” that they’ve reinvested into factories and equipment.

        2. Nix says:

          Doggy, your numbers are hopelessly out of date. They are from 9/30/2016.

          You also pretend that not a single penny brought into the company went to cash on hand or building inventory. Which is also false and throws off your numbers by around $6 Billion dollars.

          1. Doggydogworld says:

            My numbers are from 3/31/17 (obviously NOT 9/30/16 since I included the solar panel portfolio).

            Inventory is funded by accounts payable. The 4b cash came from stuff like customer deposits (cash in but nothing delivered yet), deferred revenue (cash in but features such as Autopilot not delivered yet), warranty reserves (cash in but warranty repairs not delivered yet) and the big one – debt.

            Also note that PP&E isn’t really 7b. About 1.5b is property they lease (e.g. stores) which are temporarily included in PP&E with an offsetting liability. The asset and liability both disappear when construction is finished and Tesla commences operations in the leased facility. See notes 8 and 9 in the 1Q17 10-Q.

            If you match up the assets and liabilities as best as you can, you’ll see the 5.5b of net PP&E and the net cash (after subtracting deposits, etc. listed above) are funded completely by the 8.4b of shareholder contributions and net borrowing (non-recourse, unsecured). Shareholders and lenders additionally funded the bulk of Tesla’s 3.3b in accumulated losses.

            1. Ambulator says:

              Fair points, but Tesla is rapidly growing. That’s bound to result in some inefficiency. Eventually they’ll settle down, and then we’ll see how they are really doing.

        3. Pushmi-Pullyu says:

          Doggydogworld said:

          “The only ‘profit’ Tesla makes is ‘gross profit’. This profit is used to pay employees who sell and service the cars. You can only reinvest ‘net profits’, which Tesla does not have.”

          Those who keep falsely claiming Tesla is “losing money” (what, did it blow out the window?), rather than re-investing it as Tesla actually is, certainly like to write as if the financial situation is cut-and-dried, don’t they?

          I don’t have the deep understanding to debate on this technical level of finances, but here’s a comment from someone who does:

          Last FY, Tesla spent ~$3B on property, plant and equipment (almost doubling it over the prior year), including $1.5B on construction in progress (none of which will be deprecated until the equipment/facility is put into service). If you are halfway savvy, you will want to understand that gap between gross margin and operating margin–is Tesla doing something useful with that money or are they pi$$ing it away? If you are a good little troll, you will cherry pick line items from the financial statements to make whatever point you want, but what you did is the equivalent of cucumber – walrus = purple.
          — Omar Sultan, comment at InsideEVs, March 24, 2017

  2. Peter says:

    People compare producing cheap car I large numbers with expensive cars in low numbers.
    Even at sales the just look at how many Teslas are sold against Leaf. This is irrelevant. But for sure you need to invest before you can make a profit.

    1. WARREN says:

      Well, to make that comparison, we would need to know how what the LEAF per worker ratio is.

      1. floydboy says:

        You’d need to know more than that.

        1. ffbj says:

          Yeah you need to compare how much is made on each car. Profit per man hour of work.

      2. Scott Franco says:

        Nissan Motor co 2016

        Gross revenue: 101b
        Number of employees: 145k
        Number of cars produced: 5.5m

        Gross revenue/employees: 697k
        Total cars/employees: 37

        Tesla Motors 2016:

        Gross revenue: 7b
        Number of employees: 30k
        Number of cars produced: 84k
        Gross revenue/employees: 233k
        Total cars/employees: 2.8

        These are ok numbers for a startup. There was a good quote from a conference on silicon valley startups:

        Q. What can a small company do be most successful?
        A. Get big FAST.

        1. Nix says:

          Well, you can’t really do math on those numbers and compare the two companies unless you add in all the Nissan sales and service employees at all the Nissan/Infinity dealerships. And subtract out all the Tesla Power solar and battery backup employees.

          Also, Nissan isn’t months away from a 5X ramp-up of the number of cars they plan on building over the next 2 years. So unless there is another car company that is ramping up their number of cars at the same rate as Tesla, and has their own distribution sales and service employees, comparing numbers that way is pretty meaningless.

          1. Scott Franco says:

            Nissan makes 65 cars for each car Tesla rolls out the door.

            No I get it, you are trying to give me a brain aneurysm here. Very clever.

            Have to go now, they are coming…

            1. Nix says:

              I can see why your posts get removed so often over at GCR.

  3. Someone out there says:

    What happened to making the factory 20x more efficient that any other car factory?
    http://insideevs.com/interview-elon-musk

    1. mx says:

      Read the whole article. That question is answered.
      Tesla builds, many of it’s own parts.

      So, a better analysis would have been, under Toyota to track all part, back to their abundant tier 2 and tier 3 suppliers, and count all their employees, and their accountants, and CEO’s.

      1. Four Electrics says:

        Making your own parts is generally not a good idea for the reason specified in the article: efficiency. Specialization is a benefit; trying to do everything is a curse.

        1. JBA says:

          Actually, when are in an product development mode making parts inhouse is a very good idea. It reduces production problem identification and resolution cycle times. Tesla at this point is basically a semi-production specialty car manufacturing operation with a relatively small production rate (not a commodity car manufacturer) and is by Musk’s philosophy a continuous improvement environment that lends itself to to inhouse control of parts manufacturing.

        2. Reijer says:

          Unless you are betting in making them by your self. If there or no parts available or they suck by other supplies you have to make them by yourself

        3. Mark C says:

          Some of the suppliers Musk was able to get when initially building the Models S & X made parts of quality not to the standards of their contracts, so Musk brought those items in-house. Did not do much good for the dismissed supplier, but it helped Tesla make a better final product, and helped to ensure that other suppliers knew what would happen if they tried to pass off goods that failed to meet specifications.

        4. Pushmi-Pullyu says:

          “Making your own parts is generally not a good idea for the reason specified in the article: efficiency.”

          Really? Tell us, 4E, which major auto maker buys its car bodies from a supplier? What, none of them? Well then, I guess what you’re claiming as a general rule isn’t, is it?

          Nope, it’s just one more bit of anti-Tesla FUD from a known long-time short-selling FUDster.

          Common sense says that in some cases, it’s better for an auto maker to make their own parts, and in other cases, it’s better to farm them out to suppliers. The trick, of course, is figuring out which parts are better made in-house and which are better bought from suppliers.

          We know one thing for sure: Anything and everything you claim in a post mentioning Tesla is never, ever true.

      2. theflew says:

        That’s called efficiency. Why do something that isn’t your specialty? You waste time, manpower and money. Why doesn’t Tesla open an LCD manufacturing facility? Because it’s cheaper to have someone that specializes in it do it.

        So large manufactures have parts shipped to them as they are needed so they have little onsite inventory.

        1. Pushmi-Pullyu says:

          Straw man argument. Nobody is arguing that Tesla should make all its own parts, including specialty items such as tires, computer chips, and video display screens.

          The question is whether Tesla gains more in not paying a supplier a profit margin, and eliminating the cost and time for deliveries from a distant location… gains more than it loses in inefficiency by not specializing in a particular kind of auto part.

          Obviously the equation will be different for different auto parts. Also obviously that question can’t be answered without a very detailed breakdown on cost for any particular part, other than special cases such as the aforementioned specialty items, and common fasteners.

          The idea that anybody could come up with a general rule that will apply to all parts for all auto makers, everywhere, regardless of the type of car they’re making, or the country/State in which the car is being assembled…. well, let’s just say any attempt to generalize that far doesn’t strike me as an indication of either high intelligence or a deep understanding of automotive manufacturing.

        2. mx says:

          But, building a future car, today, is their specialty.
          They don’t make the flat scree, but they write the software to run it. Making it best in class.

          The electric motor: Best in class.
          Batteries: Best in class.
          The frame: ( EPA 5 star safety rating ): Best in class.

          They outsource what doesn’t give them a competitive advantage: The seats, the steering wheel.

      3. Doggydogworld says:

        I bet Tesla purchases a higher percentage of content than the legacy ICE automakers.

        The most expensive part of an ICE car is the power train, and automakers tend to cast their own engines and transmissions from raw materials. The most expensive part of an EV is the battery cells, which Telsa buys from Panasonic.

        1. Pushmi-Pullyu says:

          “The most expensive part of an EV is the battery cells, which Telsa buys from Panasonic.”

          Gosh, I thought Gigafactory 1 was a partnership. You know, that huge building with “TESLA” on the side… not “Panasonic”.

          But I guess you’re right. It’s not that Panasonic has partnered with Tesla to produce battery cells; it’s that Panasonic will be buying the raw materials which Tesla will be shipping to Gf1, to make the battery cells, and then Tesla will buy the finished cells. Maybe they’ll have a fistfight to settle just who is gonna take the cells from Panasonic side of the factory to the Tesla side. Obviously they can’t cooperate in a true win-win partnership, right Doggydogworld? That’s out of the question.

          /snark

          1. Doggydogworld says:

            Pushmi, if you’re going to be snarky and condescending you should first do your homework. Tesla owns the building. Tesla leases space within the building to Panasonic. Pansonic manufactures the cells. Tesla buys the cells from Panasonic.

            This is all detailed in Exhibits 10.1-10.4 filed with Tesla’s 3Q14 10-Q. Some amendments were filed with the 1Q16 10-Q and perhaps others. The contract defines Panasonic as the “seller”. It also sets the terms under which Panasonic leases space inside the Gigafactory.

            All this is easy to find online. Here’s a link to the letter of intent (Ex 10.1):

            https://www.sec.gov/Archives/edgar/data/1318605/000119312514403635/d812482dex101.htm

            Also, in the Kurt Kelty talk from the other article, he says Tesla buys cells from Panasonic even in the Gigafactory.

    2. floydboy says:

      Nothing happened to it. You didn’t expect it to happen overnight, did you?

    3. Nix says:

      Someone WAY out there — So you are whining and complaining that a story 9 months ago about improving the Model 3 assembly line not resulting in improvements in the Model S and Model X assembly lines that had already been built when this story was written 9 months ago?

      The improvements Elon is talking about are for the Model 3 assembly line, and those improvements are scheduled to be moved into production by sometime in 2018 when Tesla is targeting 500K cars out the the NUMMI plant a year — and continue being optimized long after that. These are long term targets.

      What exactly are you complaining about?

  4. F150 Brian says:

    Musk has stated that electric cars are easier to build, so any comments here that Model S/X need more attention for some reason are blatantly false.

    Toyota built very different vehicles (pickup truck and small cars) in this factory at the same time. That means far more parts and different assembly steps.

    So this does not jive at all.

    Either the news is in error or the operations there are woefully inefficient.

    1. floydboy says:

      Knock it off! Musk said no such thing!

    2. Pushmi-Pullyu says:

      F150 Brian said:

      “Either the news is in error or the operations there are woefully inefficient.”

      …or maybe it’s your reasoning which is woefully ineffective.

      For example, you apparently fail to understand that Tesla making more of its parts and sub-assemblies right inside the Fremont (formerly NUMMI) auto assembly plant means less room for the final assembly lines, and more workers which, at other companies, work offsite for the suppliers, and not either directly for the auto maker nor under the same roof as the auto assembly production line.

      We’ve been reading articles for some time now that Tesla is moving a lot of operations to buildings nearby the actual Fremont assembly plant. Obviously the easiest way to free up more room for assembling the Model 3 under the same roof as the Models S & X, is to move the manufacturing of parts and sub-assemblies to nearby buildings.

  5. RM says:

    Tesla also employs thousands of software engineers, something GM didn’t have to worry about at the time, but are greatly concerned about now…

    1. theflew says:

      GM also has thousands of software. OnStar does work via gears and pulleys. Tesla is not Apple. That’s what the stock market would like to think, but Tesla will never have 70% margins.

      Tesla doesn’t have Apple’s benefit of a new market that turned over yearly. If I get a car today I will not be in the market again for 2 – 5 years at a minimum. So a company saying they will release a vehicle in 2020 is the same to me as releasing one tomorrow if I bought today. Basically Tesla is going to have competition unlike iOS and Android where they were breaking into new markets because people didn’t have phones (land lines) had basic phones that upgraded yearly. All of this is ignoring autonomous driving which might requiring fewer cars per American households.

      1. Nix says:

        Yes, Toyota and GM had engineering staff. Absolutely. They also had automotive test staff, etc.

        None of whom worked at the NUMMI factory. They worked in Japan and Detroit and elsewhere in the world. So you would have to add back in that headcount to the NUMMI numbers to make a valid comparison.

        The is just yet another example of the absurdity of comparing the headcount at one satellite assembly plant that is a small part of a larger company, to a company that operates their entire Model S+X lifecycle out of the same location the do assembly.

        So many other examples of how bogus this comparison is that it isn’t even funny…

        1. Doggydogworld says:

          Yes, that’s really the key point. It’s apples to oranges because Tesla has a lot more than just manufacturing people there.

  6. floydboy says:

    Isn’t it a good idea to have all those humans employed and making decent money, so they can reinvest some in the company and buy its products? Essentially giving a good portion of the money back?

    1. Scott Franco says:

      Exactly, the purpose of a company is to provide good employment for its workers.

      Thanks comrade.

      1. John Norris says:

        Worked for Henry Ford…

        1. Mark C says:

          They may not have wanted to hear that. Nice to know someone appreciates some of the lessons learned in the past.

          Outsourcing goods to off-shore companies (aka cheap labor from somewhere else) slowly erodes away your customer base. Unless, of course, they can afford your product on a minimum wage job.

        2. SparkEV says:

          Not many guys making $17/hr will be able to buy Tesla.

          As for Ford, he may have said such, but he also got the cream of the crop workers that he could work-them-hard (or abuse, depending on who you ask) by paying high wages. If Tesla does like Ford said, workers should be paid triple (~$96K/yr) of their current wage to be able to afford Tesla 3. That ain’t happening for car assemblers.

      2. floydboy says:

        Wow! No. Every company has its stated purpose. which tend to be far more variable than your rigid implication(perhaps an indication of your ideology?)suggests!

        I was merely pointing out the favorable situation of having many more likely consumers of your product. Well paid people buy many cars, low wage people buy few, unemployed people buy none.

    2. Pushmi-Pullyu says:

      floydboy said:

      “Isn’t it a good idea to have all those humans employed and making decent money, so they can reinvest some in the company and buy its products? Essentially giving a good portion of the money back?”

      Well said!

      Automation is ultimately self-defeating for the economy of any nation which over-uses it. Taking away good paying blue collar jobs and giving those jobs to robots does help the efficiency, the “bottom line” of any manufacturer — and concentrates more wealth into the hands of the already wealthy.

      But step back and look at the larger picture: By taking away those jobs, fewer people are able to afford to buy those products which the more efficient factories are making. Blue-collar workers who can afford to buy the cars made at the factory they work at, are being displaced to lower-paying service jobs; jobs which pay so little that they can no longer afford to buy the cars made at the factory they used to work at.

      It’s a situation similar to “The tragedy of the commons”. Each individual manufacturing company profits by using more and more automation, but the collective result is an economic disaster for the middle class.

      And, sadly, Elon wants to take automation to “the next level”. If he is successful, that’s just going to accelerate the process.

      1. jahav says:

        One day in a sawpit the topman says to his junior: ‘You know I have seen this thing, they call it lumber mill. It uses a waterwheel to push a saw up and down. There is no sawmen. And it can cut 200 boards a day, while we can cut only 12.’

        ‘Really’, said junior sawman.. ‘What about us? Our trade? It is a good, honest and qualified work. It is pretty difficult to make a precise, even board.’

        ‘Nothin. We are doomed.’

        … and they were. Just like thread spinners with their distaff. Just like 98%. of farmers and the rest.

        How is it that someone still has a work? Feel free to look it up. The short story is that there is no shortage of work to be done and they retrained themselves and got another job. The original goods got cheaper thanks to automation and original purchasers got some free money to pay for other things, things that were made or provided by retrained sawmen.

        These worries about automation are as old as humanity itself and so far they were always wrong.

      2. stan1 says:

        The more automation we have the wealthier the world becomes. It takes fewer people, less time to make the things we want or need. That is increased wealth.

        People getting paid does not make wealth at all. It just redistributes the wealth that exists. Your complaint is with wealth distribution, yet your answer is reduce wealth.

  7. Taylor S Marks says:

    This article is mixing the “Bursting at the seams” quote talking about Model 3 volume production which begins in two weeks with stats on people employed and cars made last year.

    When we know how many people worked at the Fremont Factory in 2018 and when we know how many cars they built in that year, we’ll know how well Tesla was able to utilize that factory.

  8. Alaa says:

    If Tony Seba is right
    then car sharing can be applied to the work force of Tesla thus allowing for more space to build more cars from the parking lot.

    1. mxs says:

      Whether you are a Tesla fan or not, the number of cars per employee should be an indicator to you.

      I personally think the number is killing EM inside and is probably one of the skeletons in his closet. Especially, since he speaks so often of redefining rules of manufacturing etc. …. the optics of Fremont are terrible and he knows it. Hopefully he has a plan, otherwise 500K of M3 is not happening for very long time.

  9. G2 says:

    So, if we take 500,000 (the number of cars Tesla projects they will build at Freemont) and divide that by the NUMMI historic efficiently of 73/worker, we end up at 6850 workers, or about how many work there now, doing far more of the build than NUMMI ever did.

    Sounds like Tesla is on track and ahead of the game to me.

    1. Four Electrics says:

      Some Model 3 production is taking place at the Gigafactory. We’ll see how many more are hired in both locations.

    2. Scott Franco says:

      Yes, Elons mouth is definitely on track…

      1. floydboy says:

        Well, when you walk the walk….

  10. Chris O says:

    Obviously apples and oranges if Fremont now has a very different role than it did back in the NUMMI days, now not just producing the cars but also many of the components that were previously sourced from outside. Pretty bizarre that someone who apparently advertises himself as an “automotive manufacturing consultant” fails to see that.

    He also failed to notice how that cars per worker ratio will change rather drastically once Model 3 production is gaining pace.

    .

  11. Four Electrics says:

    This article should also have counted Gigafactory workers, but it’s unclear if they restricted the count to Fremont.

    1. Scott Franco says:

      They restricted it to the factory. The numbers are far worse if you consider Tesla overall, see my post above.

      Again, though, comparing their numbers to a mature manufacturing organization is suspect. If this all makes you respect GM and other mature manufacturers, then its worth it.

    2. (⌐■_■) Trollnonymous says:

      In that case, when they did the count when GM and Toyota were occupying, they should’ve counted the employees that made their outsourced parts…..i.e bumpers, doors, etc…

      1. Pushmi-Pullyu says:

        No, because that might lead to a fair comparison. It seems the intent of the writer here was to repeat FUD about Tesla. In fact, I have seen the exact same FUD posted over on Seeking Alpha, and that was well over a year ago.

        So not only is this article FUD, it’s old and tired FUD!

    3. Nix says:

      Four Electrics — The numbers in this story don’t actually count a single Model 3 car, so what does future Model 3 manufacturing have to do with this?

      On the other hand, Toyota and GM got their engines from Canada and Model S+X motors are built in Fremont. NUMMI only did stamping and plastics. All other parts were brought in from other factories around the world.

      Also, Tesla’s R&D and engineering and HR and sales and service, etc is co-located with the factory in Fremont. While all those were done elsewhere by Toyota and GM.

      It is certainly telling that you are so quick to find outside jobs for Tesla (that don’t actually have anything to do with the current Model S+X production numbers), and yet you are willing to turn such a blind eye to the fact that NUMMI was just a satellite final assembly plant to companies who did so much of their production and other tasks elsewhere.

      That tells us a ton about you, and nothing about Tesla.

  12. Serial anti tesla troll thomas says:

    Therefore Elon spoked about up to 20 Gigafavtories he will build. That means another 10 years without profit because all money is needed for building factories. But the blind investors will still not see this.

    1. Nix says:

      No, not 10 years without profit. 10 years of plowing profits into generating equity and assets.

      I would actually say more like 15-20, because I don’t see Tesla stopping at just being a car company, or just being a heavy truck company, or just a Grid battery backup company, or just a Solar company.

      I fully expect them to expand in size for the foreseeable future.

      By the way, this is exactly how companies ALL used to operate back before Reagan cut corporate taxes.

      Boards HATED to see Revenue money wasted to book Profits that were taxed at high rates. Boards wanted Revenues plowed straight back into the company as growth in assets and investments into future products.

      This is how we built the United States from the 1950’s to the 1970’s into the manufacturing powerhouse we had become. Constant plowing of profits straight back into the company to avoid high taxes was a major key to our manufacturing expansion.

      Then the 80’s came with big tax cuts and the beginning of the looting of US manufacturing through the boom in mergers and takeovers. Profits that were invested back into the company were looted and put in the pockets of corporate takeover finance folks who liked to liquidate assets for cash and then loot the cash. Profits were paid out as dividends instead of re-invested into companies in order to satisfy the “Greed is Good” finance folks. As a society we rewarded Wall Street and the Finance industry, while collapsing the manufacturing industry.

      I can’t think of anything better than Elon plowing profits back into the company for the next decade or two. Maybe it will catch back on, and we can have another 1950’s-1970’s boom economy.

      1. floydboy says:

        It’s imperative to decrease monies paid into and increase access to take monies out of the treasury kitty for some our wealthiest citizens! You don’t want America to have some second-rate plutocracy, do you?!

        On a more serious note Nix, it’s good to see someone who has a grasp of REAL history.

        1. Pushmi-Pullyu says:

          “You don’t want America to have some second-rate plutocracy, do you?!”

          How dare you, sir! I’ll have you know that the U.S. of A is fast becoming the world’s finest plutocracy! We already have richer plutocrats here than anywhere else! We’re busy speeding up the process of transferring all the wealth of the middle class to the very wealthy. Soon that process will be complete; we’ll have nothing but the very rich and the poor, thus completing the promise of Making America Great Again! (Well, Great for the “right people”. Not so much for everyone else.)

    2. Pushmi-Pullyu says:

      “Serial anti tesla troll thomas” said:

      “That means another 10 years without profit… But the blind investors will still not see this.”

      Well, you certainly make it clear that your only interest is in the financial performance of Tesla’s stock, not the manufacturing performance of Tesla in making cars.

      What really upsets you isn’t that Tesla is “without profit”; I’m sure you know that’s not true. No, what upsets serial Tesla bashers is that Tesla is not paying its profits to its investors. It’s re-investing them in company growth instead.

      How dare Tesla do that! 🙄

      Go Tesla! Illegitimi non carborundum.

  13. Vexar says:

    This doesn’t make any sense. When I toured the factory, I passed by the desks of programmers and battery engineers, on the second floor. HQ in Palo Alto is a comparatively small building. Hawthorne is a design center. There’s factory workers, and then there’s the rest of Tesla’s employees.
    There’s no Tesla skyscraper in downtown Detroit or Tokyo. Besides, at $371 a share for TSLA today, this is hardly FUD. It is interesting, but the details are, of course, missing in action in the journalistic effort.

    1. Julio says:

      Even if only 1/3 are factory workers, still is very inefficient

  14. Scott Franco says:

    The gross revenue per employee is the first number I look at for any company. It tells you everything.

    1. Nix says:

      So you completely missed on getting into Amazon and Apple if you actually invested based on what you said. Remind me not to use your investment advice services. Your investment strategy systematically excludes ALL high growth companies.

      1. Scott Franco says:

        Try reading what I wrote.

        1. Nix says:

          I guess you didn’t read what you wrote when you wrote “tells you everything”….

          If you didn’t mean to type “everything”, just say “my mistake” and man up to your mistakes in your post.

  15. Julio says:

    To make things worse, an ICE drive system has thousands pieces to assemble. Electric car has dozens.

  16. Driverguy01 says:

    What the hell??
    Insideevs now deletes my comments if i critisize them?
    Wow!

    ***mod edit (Jay Cole)***

    Official disclaimer: If a comment has the word “clickbait” in it, and it is in reference to InsideEVs intentionally running a story to enrich itself, then that comment automatically gets removed without exception. InsideEVs reserves the right to not have to justify the stories its authors see fit to publish.

    Unofficially, and a personal note: Out of respect to yourself, and your standing in the community, and the many discussion you are/have been a part of that we all enjoy reading (myself included), I felt I should explain and respond to your follow-up comment with the hopes of the understanding that we can’t have comments that serve only to insinuate we acted solely out of self-interest when choosing to publish this, or any really any story. We/I understand your frustration with a story you don’t agree with, and it certainly is also not fun to see a comment disappear, but we’d just ask to consider the implications of such a comment from the other side of the fence.

    ***mod edit***

    1. Jason says:

      Unless it is extreme profanity or slander, I’d be interested to see what was posted. Could be a good laugh, like many of these comments on this site. Shows the ignorance, intelligence, intrigue and general range of human society, all in the space of a few lines of code.
      Only speaking for myself, I realise the comments are made by genuine people and fraudsters equally, so I take it all with a grain of salt and filter accordingly.
      In particular to this article, it is poorly written and fails to make valid comparisons AFAIK. All too often these sort of comparisons are made where one thing is compared in a limited way to another thing in a complex way. It would be like me saying that the stator in the electric motor is the same as the piston in a petrol engine, therefore they are both the same in complexity. Conceptually that is true, but reality is they are so far different there is no comparison.

      1. Jay Cole says:

        Just as a point of interest.

        Saying you don’t agree with an article, or that it is poorly formed and giving reasons why one would not like to see such pieces in the future…such as you just did. Totally fine.

        We have no aversion to be called out on something, listening and adding additional notes and facts to an article, not everything we do is perfect. We are a ~dozen or so writers, and mistakes will invariably be made. Eric straight passed a long an Automotive News report (its not Seeking Alpha, Auto News is about as mainstream as it gets), he even cast some doubt on the conclusions of that article – some people aren’t happy he chose to do that. I get that 100%.

        We do read/listen to all the comments and are open to learn from them. In fact, with the ToS here, we encourage open, adult and fair speech, regardless if we personally agree or not.

        But what we don’t do…is we don’t allow persons (whether it is their first or 10,000th post) to use our own platform to intimate we are acting in bad faith, to tell us what our motivation is, or that we have ulterior/sinister motives for publishing a particular story…in the same way you wouldn’t let someone come into your home and berate your children or try to burn your house down.

        1. Pushmi-Pullyu says:

          Jay Cole wrote:

          “Eric straight passed a long an Automotive News report (its not Seeking Alpha, Auto News is about as mainstream as it gets), he even cast some doubt on the conclusions of that article – some people aren’t happy he chose to do that.”

          But it wasn’t Automotive News who wrote “…the reason why Tesla fails to make money”. That was straight from the pen (well, keyboard) of InsideEVs writer Eric Loveday.

          That isn’t merely showing bias, that’s factually incorrect. Tesla makes a great deal of money selling its cars; billions per quarter, as I recall. Also some money selling PowerWalls and other products; maybe even some solar roof tiles.

          I hope, Jay, that in the future, when InsideEVs chooses to run an article as biased against an established EV maker as this article is, that it will be labeled “Op-Ed”. The tone here isn’t factual, it’s subjective, based on cherry-picked figures, and in my opinion shows a strong bias against Tesla.

    2. Scott Franco says:

      Cut them some slack. GCR is much more heavily censored than here (I know because they censor me all the time).

      Jay actually cared to explain to you what was going on, FWIW.

  17. mxs says:

    Whether you are a Tesla fan or not, the number of cars per employee should be an indicator to you.

    I personally think the number is killing EM inside and is probably one of the skeletons in his closet. Especially, since he speaks so often of redefining rules of manufacturing etc. …. the optics of Fremont are terrible and he knows it. Hopefully he has a plan, otherwise 500K of M3 is not happening for very long time.

    1. Pushmi-Pullyu says:

      “Whether you are a Tesla fan or not, the number of cars per employee should be an indicator to you.”

      I can’t imagine why such an overly simplistic number should be considered. Seems incredibly lazy to me, if not rather uninformed.

      To make a fair comparison, you’d have to know how many employees work indirectly for other auto makers, at dealerships and service centers and at suppliers who make parts and sub-assemblies for the auto maker.

      You’d also have to consider how many parts the cars have. More expensive cars have more parts. So we should expect a company which makes only upscale or “premium” cars, like Tesla or BMW, to need more workers per car than a company like, say, Toyota or Ford.

      Considering all the variables involved, I would think it would be quite a research project to come up with a realistic comparison. I certainly have not seen anyone making such an attempt.

      No, I think what you’re talking about is just taking the number of employees each company reports, and ignoring the great differences between how those companies conduct business. As I said: Lazy.

  18. I agree a lot of parts insourcing is part of the equation, but I think the biggest issue is they have most of the Model 3 workers there and being trained along with the engineers building out the line but the line has not yet started. This is to be expected just prior to a MAJOR line start up.

  19. speculawyer says:

    Of course! The Model S & especially Model X are pretty complicated cars. Furthermore, it is a low volume operation.

    The real test will be the more simple and higher-volume Model 3.

  20. Elon says:

    But but.. It ALIEN DREADNOUGHT! It will pump cars at 20x rate of old legacy Toyota & GM production because these dumb legacy fools didn’t now what they were doing until I showed them how to innovate! 3D production now!!!!

    Oh wait, it is “bursting at the seams” now 🙁 No problem, we will build 20 more factories, all GIGA and even TERA!!! Just buy more shares please, I need more money to create great future. You will be rewarded, I promise, I just hired computer rendering expert!

    1. Elon says:

      And Pssst, dont tell anybody that people only buy my low quality cars with incentives powered by tax payer

      https://electrek.co/2017/06/15/hong-kong-went-from-electric-vehicle-beacon-city-to-a-complete-stop-of-ev-sales-last-month/

      1. floydboy says:

        Nah! I’ll leave it alone, you are just way too easy!

        1. Pushmi-Pullyu says:

          Actually I was giving him points for his on-target satire of Elon’s frequent hype, in his first post. But his follow-up unfortunately was merely another anti-Tesla troll post. 🙁

          Some people don’t know enough to quit when they’re ahead. (Not that I’m in a position to cast stones regarding that fault…)

    2. Nix says:

      Maroon posting as “Elon”:

      The “bursting at the seams” INCLUDES the space already allocated for building 500K Model S+X+3 cars at Fremont. They don’t have room for expanding past their 2018 target of production.

      “Alien Dreadnought” isn’t planned until into 2018. How exactly do you think this has anything to do with current Model S+X production numbers?

      I see the intentionally ignorant are just lining up on this thread to make willfully ignorant comments. I see you had to hide your regular posting ID and post under “Elon” to try to avoid the inevitable embarrassment….

      1. Get Real says:

        I think you meant “Moron posting as Elon” Nix.

        Isn’t it amazing how all these anti-Tesla (and really, anti EV/CleanTech) trolls start climbing out from under their rocks in these kinds of threads?

        You know Tesla is having a big impact when all the Spiegels, tftfs, zzzzzs and other shorters, shills and haters start to desperately trying to spread their lies and FUD here

        1. Nix says:

          I spelled it the way I intended. I’m just showing my age with my cultural references…

          https://www.youtube.com/watch?v=Y8GGpYFmkYI

          https://www.youtube.com/watch?v=HuxJqIs2a-Y

          It is amazing how many hardcore Tesla haters find their way to every corner of the internet whenever the word Tesla is typed three times in any story. Like you are summoning Betelgeuse…

          1. Ambulator says:

            Watching Bugs Bunny as a child I found that confusing. It took me years to understand what they were going for.

            1. Nix says:

              All part of Mel Blanc’s genius. *smile*

        2. Pushmi-Pullyu says:

          “I think you meant ‘Moron posting as Elon’ Nix.”

          Obviously not a Bugs Bunny fan!

          I suppose if I said it was all part of Nix’s stragedy, you wouldn’t get that either. 😉

      2. Elon says:

        This is why i love you dear cult members. Lets deny all the facts. Thank you

        1. Nix says:

          I gave you the facts. I’ve posted sources for them enough times that everybody but you knows they are the facts (ibid). Sorry you are too willfully ignorant to understand.

          But if you think I’m wrong on the facts, please feel free to post your sources.

  21. Nix says:

    This is pretty silly. Toyota didn’t even build their engines at the NUMMI plant. They were built in Ontario Canada and shipped to NUMMI as complete engine/transaxle assemblies that were dropped into the cars built there. Meanwhile Tesla builds their own electric motors and controllers on-site.

    Tesla headcounts include EVERYBODY (executives, HR, sales and service, etc), while the NUMMI numbers are just the folks at the factory.

    When Elon says they are running out of space, that is because the current space is already allocated for building 500K Model S+X+3 cars, just like NUMMI did. Clearly Tesla will need more space to bring the Model Y online, which they expect will be even more popular. Maybe an additional 500K once it is at full ramp-up Of course the can’t build 1 million cars out a factory where half that number was built.

    So many other problems with this comparison it isn’t even funny.

    This is one of those apples vs. oranges comparisons that is so laughable that only the truly gullible would take it at face value without questioning the underlying facts — and then having a good laugh.

    1. Jason says:

      Actually, they could build 1mil cars in the same factory that only previously built 500k cars if the manufacturing process is either faster or takes up less room. If the same production line can run twice as fast (for whatever reason) then you can build twice as many. If the production line takes up 1/2 the space you can have twice the number of lines and build twice as many. Obviously it is more complex than that, but if the Model 3 is a simple vehicle to build then it stands to reason the production line could be smaller, and it stands to reason it could be faster, so those combinations could lead to more than the previous production records.

      I thought a saw a video last year where they showed the Freemont factory had more room than was required, even with Model 3 production lines, so I was surprised that it is now bursting at the seams. Maybe the Model 3 production lines are bigger than originally planned, or maybe there are more of them to service the anticipated demand. I just hope previous EV history doesn’t happen and the 400k reservation holders are basically the market, and then it dries up. Based on crazy numbers for Model S/X sales,I don’t think that will be the case.

      1. Nix says:

        Yes, to a certain extent speed can mitigate space. But as you say, it isn’t that simple. If you build them twice as fast, you have to take shipments and store twice the number of parts each week, and park twice as many completed cars each week for shipping out. Now you are also doubling the infrastructure utilization around the factory, like roads and rails.

        At a certain point is it simply easier to expand or build more factories.

  22. Bill Howland says:

    This must be a continuation of a former article because I remember saying the same things 4 days ago.

    1. Nix says:

      The source story is 5 days old (6/11). Other people have tried to pull this BS into other stories before. It is still as much BS as it was 4 days ago.

    2. Pushmi-Pullyu says:

      I’m with Bill on this one. This FUD is nothing new. I saw the same B.S. argument probably at least two years ago.

      I remember being fooled the first time I read over on Seeking Alpha about how low Tesla’s employee-to-cars-produced ratio was, and how “inefficient” that made Tesla. I became rather incensed when someone else pointed out the truth, that this number is skewed in two ways: (1) Tesla insources a lot of its parts that other auto makers outsource, which skews the numbers, and (2) More expensive cars — and Tesla doesn’t make any cheap cars — have more parts, which requires more workers to assemble.

      Well, that’s why I exposed myself to Seeking Alpha for several months, despite the fact that reading much of what’s there makes me feel like I need a shower. As they say: “Know thine enemy.” It was a good education in the sort of B.S. arguments that Tesla bashers like to throw out. Fortunately, they don’t come up with anything new very often.

  23. Pushmi-Pullyu says:

    Good grief, we get enough anti-Tesla FUD in comments from short-sellers and Big Oil shills here. Are we now going to get it from InsideEVs writers, too? Has there been an editorial change at InsideEVs?

    There are two reasons why Tesla has a lower than industry average ratio of cars made to workers employed:

    1. As already noted, Tesla makes more parts and sub-assemblies in-house. If you added in the workers at the suppliers those other auto makers use, then obviously you’d get a ratio much closer to Tesla’s ratio.

    2. Until the Model 3 goes into production, Tesla makes only “premium” cars. More expensive cars have more parts… DUH! It would be interesting to compare the worker-to-cars-made ratio at BMW or Mercedes-Benz to Tesla’s ratio. Again, we can be sure that the ratios would be closer.

    * * * * *

    The article says:

    “…this overload of employees is at least part of the reason why Tesla fails to make money…”

    Gosh then, I guess all those SEC filings reporting Tesla making billions of dollars every quarter are just fraud, huh?

    /sarcasm

    Honestly, I’m shocked at this level of outright anti-Tesla FUD from one of the regular InsideEVs writers. What the heck is going on?

    There is a huge difference between “not making a net profit in most quarters”, and “fails to make money”. How many times must we point out the obvious? Tesla makes lots of money, and could make a profit if it wanted to; if it stopped investing in future growth. In fact, just last year Tesla demonstrated that it could make a quarterly profit if it chose to prioritize that.

  24. Goofcat says:

    To have that many employees in a socialist anti-business state is suicidal.

    1. floydboy says:

      Your moniker is most appropriate. Why is it that the more to the right this country drifts, the more those to the far right say it’s drifting left. Perhaps a 180 perception filter? Would explain a lot of the rhetoric!

    2. Get Real says:

      Goofcat huh? You should probably get litter box trained.

      Another new username posting FUD.

      California actually leads the USA in job growth you idiot.
      http://www.latimes.com/business/hiltzik/la-fi-hiltzik-california-econ-growth-20160722-snap-story.html

      I wonder which of the existing usernames that this coward is?

  25. devroot says:

    NUMMI never ever came close to producing 500K vehicles in a year. The closest was 428K. That’s a far cry from 500K. NUMMI averaged around 300K vehicles per year and that was when it was being ran by two very experienced car makers: Toyota and GM.

  26. Omar Sultan says:

    Oh, come on Eric, please tell me you are going to apply an editorial filter at some point with some of this crap.

  27. Jason says:

    “Tesla runs factory completely autonomously!”, You can imagine the outcry of this happened.
    “Tesla employs too many people!”, Hard to imagine the outcry on this one, but there you go, it all comes down to profits and efficiency.
    So there is a sweet spot between no employees and too many employees. I’m happy for America and Tesla that they can employ too many employees and still make a vehicle people want to purchase, and actually stay in business however they can manage that. Bravo!

  28. Tom says:

    That is a very simple-minded analysis as it assumes there is no cost to reducing the number of workers, only a gain due to less wages paid. The Tesla manufacturing exec’s came from the automotive industry and its factory uses a large number of robots so I think it can be assumed is is about as automated as any other auto manufacturing line. Then the difference in employees/car produced is likely primarily due to outsourcing. If the outsourced parts cost less than the cost to manufacture them yourself its a gain, but there is no guarantee of that, especially for many special parts for Tesla vehicles not widely used in the auto industry. It’s not a slam dunk that they would save money by outsourcing to reduce employee count. The pundit has no clue of relative cost for the two cases, and seems to have not even thought it through.

    1. unlucky says:

      But the cars are mostly non-specialized parts. They make their own seats! Other cars do have seats. And the rest of the parts will become more normal as EVs and PHEVs become common.

      And you can say the plant is as automated as anyone else (and it appears to be so having been inside). But robots cost money. So you want to utilize them as much as possible to amortize the cost. And I can also say having been inside that 2/3rds of the plant seems to be shut down at any given time. If a supplier can utilize their robots more consistently they can produce for a lower price. Tesla will have trouble matching suppliers on this front. Any vertically integrated manufacturer does.

      1. Nix says:

        All seats are custom built specifically for each car. There are no “off the shelf” seats that any third party supplier can mass produce for multiple car makers. Not like air bags or blinker relays that can be identical in literally hundreds of different models and years of cars across a huge number of car makers.

  29. Scott Franco says:

    I don’t know why you guys are bellyaching about this being FUD, I have been saying this for a while, and anyone can run the numbers (as I did above). This hardly makes me anti-Tesla, I am anything but.

    So Teslas numbers are interesting. Most startups have interesting financials. This means we can’t discuss it?

    Really????

  30. unlucky says:

    Kind of a weird article. When you do more than final assembly you will have more workers. So this just isn’t that odd.

    Frankly I agree that Musk’s obsession with vertical integration is detrimental to the company’s efficiency and bottom line. But feeling that way doesn’t excuse doing poor comparisons. You have to evaluate the processes in place in context.

    They have an interesting point about parking space at the plant. Tesla will have to figure out how to get more workers into the same lot space. I do have to figure they’ll muddle through that. Bus people from remote lots or something.

  31. Martin Winlow says:

    Wouldn’t it help to compare the number of Tesla employees working on the *assembly line* (rather than anywhere else) with the NUMMI figures and then work out the car/employee ratio? This would eliminate the distorting effects of the ‘vertical integration’ aspect of Tesla’s way of building cars.

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