
Analysts argue that over-automation is to blame for Tesla problems - kristianp
http://www.businessinsider.com/tesla-robots-are-killing-it-2018-3
======
thisisit
Original and expanded story here:

[http://www.businessinsider.com/tesla-robots-are-killing-
it-2...](http://www.businessinsider.com/tesla-robots-are-killing-it-2018-3)

Can we please replace the link with this article?

It answers why the analyst think Tesla's way of doing things is an issue:

> the Japanese, try to limit automation because it "is expensive and is
> statistically inversely correlated to quality." Their approach is to get the
> process right first, then bring in the robots — the opposite of Musk's.

And, a hypothetical but expansive example on why Tesla's automation strategy
might not achieve the desired cost savings.

~~~
Johnny555
_the Japanese, try to limit automation because it "is expensive and is
statistically inversely correlated to quality." Their approach is to get the
process right first, then bring in the robots — the opposite of Musk's._

Of course, they use Japanese workers, which have a completely different work
ethic than American workers.

I say that having worked in an American assembly line (not automotive though).
I haven't worked in Japan myself, but the attention to detail of Japanese
workers in even the most menial of jobs is amazing.

~~~
kchoudhu
> Of course, they use Japanese workers, which have a completely different work
> ethic than American workers.

The Japanese manufacture most of their American market cars in America, using
American labor.

Take your biases somewhere else, this isn't the place for them.

~~~
jacquesm
The big differences are union versus non-union and quality control, not
necessarily the nationality of the workers.

~~~
masklinn
So why did Johnny555 specifically bring up a purported relationship between
nationality and work ethics?

~~~
jacquesm
Because he's prone to stereotyping based on nationality?

~~~
masklinn
Then why are you chiding kchoudhu who's simply pointing _that_ out?

~~~
jacquesm
I wasn't chiding kchoudhu, I agreed with him.

------
et2o
Just a short time ago there were negative headlines about Tesla parts being
built by hand [1].

[https://www.google.com/amp/s/www.wsj.com/amp/articles/behind...](https://www.google.com/amp/s/www.wsj.com/amp/articles/behind-
teslas-production-delays-parts-of-model-3-were-being-made-by-hand-1507321057)

~~~
3327
wallstreet analysts don't know jack shit and come out with statements whenever
the wind blows their way from the woodwork. Wallstreet is short Tesla, bonds
are trading new lows... Goodluck - so basically you are shorting the guy that
is landing fucking rockets back down on this planet? great thesis. I will take
the other side of that bet.

~~~
jcranmer
What does landing rockets have to do with building cars?

~~~
aerovistae
Let's rephrase that: what does creating the world's finest space program in a
mere decade and a half have to do with succeeding at profoundly difficult
technological ventures where you have no prior experience? Quite a lot.

~~~
soVeryTired
"He did this one hard thing, therefore he can do all hard things"?

~~~
aerovistae
Ah, so now SpaceX has been designated a "single achievement" (not a vast range
of achievements over 16 years), and the singular "SpaceX" is apparently also
the only thing Elon Musk has ever done. Is that what you're saying?

------
throwaway84742
Hmm, who do I trust, the guy who figured out how to land rockets onto a barge,
or some “analyst” desk jockey who has been consistently wrong his entire
career? Tough question. I think I’ll go with the rocket guy. He has a pretty
good track record.

~~~
pretendscholar
Does he really have a good track record? If I recall correctly the Falcon 9
has a terrible success rate for a modern rocket. Something like 94 percent.

~~~
arrrg
Falcon 9

51 launches

48 completely successful

49 partially successful

94% success rate (complete success)

96% success rate (partial success)

Ariane 5

97 launches

92 completely successful

95 partially successful

95% success rate (complete success)

98% success rate (partial success)

Atlas V

76 launches

75 completely successful

76 partially successful

99% success rate (complete success)

100% success rate (partial success)

Delta IV (including Heavy)

36 launches

35 completely successful

36 partially successful

97% success rate (complete success)

100% success rate (partial success)

Proton (since 2010 as an arbitrary cutoff)

65 launches

58 completely successful

59 partially successful

89% success rate (complete success)

91% success rate (partial success)

I don’t really think there is any way in which the adjective “terrible” would
be an appropriate use of the word here. Also note the low numbers involved
here, the different contexts and the plain arbitrariness of such comparisons.
One failure more or less can make a world of difference here, despite maybe
not being the most reliable indicator.

94% is about the long term ballpark figure for successful orbital launches but
it is true that some newer rocket families may have ever so slightly higher
reliabilities.

~~~
toufka
Now divide that failure rate from dollars invested in each project to truly
see the differences.

~~~
qubex
(Adjusted for inflation etc and remove the arbitrary cutoff for Proton.)

------
princeb
well maybe tesla really thinks the existing automation research is outdated
and maybe they think it will massively pay off. but they surely must recognize
that there are learning pains involved in this especially when it sounds like
no other auto manufacturer is involved in this level of process automation,
there's no one with relevant knowledge to simply poach, and therefore the cost
of learning has to be borne completely by tesla... for what kind of
improvement over tried-and-true existing processes in the short and medium
term? for a new auto company that by many accounts is running out of money,
this is a silly gamble to take. it might be a good bet 10 years down the road
when Tesla is pumping out 1m autos/yr in line with BMW and MB but not right
now when they are bleeding cash out of every orifice and failing to make
deliveries.

sounds like one of those sad stories where the engineers fell in love with the
stack and forgot about the product.

~~~
IBM
>sounds like one of those sad stories where the engineers fell in love with
the stack and forgot about the product.

Sounds like Steve Jobs... in 1986.

[https://www.youtube.com/watch?v=dSj6kvv7_Sg](https://www.youtube.com/watch?v=dSj6kvv7_Sg)

------
qaq
There is running theme of Tesla "not knowing" specifics of mass producing
cars. The head of prod for Tesla Peter Hochholdinger was at Audi for 20 years.
He led the manufacturing programs of the Audi A4, A5 and Q5 vehicles.

~~~
dingaling
Modern Audi production is an interesting example of horizontal integration
which might not map cleanly to Tesla.

Chassis, drivetrains and minor parts-bin components are developed group-wide
by VAG. Putting them together in the desired pattern and adding premium
components and materials is what makes an Audi.

All Audi A, Q and TT models are examples of this. They are built in shared
plants with other VAG models which use the same platform. Even the R8 has a
shared platform.

In contrast AFAIK Tesla does everything bespoke without the advantages of
volume and standardisation.

~~~
qaq
I would imaging Peter is aware of this difference and they are trying to
mitigate the risks.

------
csours
My previous comment on this subject (reproduced below):

[https://news.ycombinator.com/item?id=16614247](https://news.ycombinator.com/item?id=16614247)

\----

Disclaimer up front: I work for a Tesla competitor.

Tesla is making several very interesting bets on the Model 3.

Bet 1: Model 3 mix - Tesla is betting that the ratio of expensive, high-
content Model 3s to cheap, low-content Model 3s will be sufficient to make
enough money to offset investments and pay back loans.

It will not be sufficient to make a small profit on each Model 3 sold given
the debt load that Tesla has accrued, so they will want to sell a good ratio
of expensive Model 3s.

If it takes to long to produce the cheaper Model 3s, Tesla will lose some
potential customers. Many investors are looking at that "top line" right now -
the number of customers and potential customers. If the top line moves too
much, investors may get spooked.

Bet 2: Vertical Integration - Most automakers rely on a web of parts
suppliers, who are under enormous pressure to reduce costs, but Tesla produces
most of its components in-house. The contract with an external parts suppliers
ensures that the supplier is responsible for any re-work or replacement of
defective parts. This allows the automaker to concentrate on internal
production issues.

Tesla's bet is that internal production of parts will lead to better and
cheaper components. This has not worked for any other automaker.

Traditional OEMs shoot for a mix of components where the internally produced
components are part of the company's core competence: Body Shells, Engines,
Transmissions - and externally produced components may be generic - switches,
latches, seats, frames, tires, wheels, etc.

If Tesla spends too much capital on component manufacturing, they will be
inefficient and investors pressure them.

Additionally and probably more importantly, if Tesla is not able to spend the
time and attention to iterate on cost and quality of these parts, it will also
lose this bet.

Personal opinion: I think Tesla has learned the wrong lesson from previous
dealings with suppliers. For instance, the original Roadster was designed with
a two speed transmission. A supplier claimed they could make it, but it never
really worked. Tesla learned the lesson that suppliers are stupid and suck at
making new things - I think they should have learned that lesson that it is
really really hard to make new things.

Bet 3: Automation - But first a detour - There are 3 main areas of auto
assembly, and most manufacturers have already fully or almost fully automated
2 of them: Body Shop (welding and assembly of the body shell) and Paint Shop.
The 3rd area is General Assembly.

General Assembly is the bloody, thorny, devilish poster child for multiple
single points of failure. A high feature vehicle may have on the order of 1000
assembly stations (aka footprints) in General Assembly. The Model 3 is
designed with much lower complexity in mind, and may only have 100 footprints.

If and when any of those 100 footprints has an equipment failure or parts
issue, ALL 100 stop running in a short amount of time. Human assembly workers
are rather resilient and can figure out a multitude of small issues on each
and every operation. This may allow for a hypothetical variation of 5% in non-
critical parts.

Automated assembly may only allow for a 1% variation.

Additionally, automated assembly only runs well when EVERYTHING is designed
for automation. That is not impossible, but it is expensive and time
consuming.

\---

Most importantly, these three bets are linked:

If not enough base models are sold, the cost of design and equipment spending
will be excessive on a per vehicle basis.

If internally produced parts are too far out of spec, you have strong negative
impacts on automation.

If automation fails, you cannot produce enough vehicles at a low enough price
to satisfy your low-end customers.

But, if Tesla wins all three bets, they win big time.

~~~
grecy
> _Tesla 's bet is that internal production of parts will lead to better and
> cheaper components. This has not worked for any other automaker._

It's working well for SpaceX who are doing just that while the incumbents in
the rocket industry are not and the prices reflect how well it can work.

> _Traditional OEMs shoot for a mix of components where the internally
> produced components are part of the company 's core competence: Body Shells,
> Engines, Transmissions - and externally produced components may be generic -
> switches, latches, seats, frames, tires, wheels, etc._

Ummm, which automaker makes it's own transmissions anymore? Quite a few don't
even make their own engines either (Dodge with Cummins engines, Jeep with VM
engines, etc. etc.)

~~~
erk__
I don't think you can really compare a 10's each year assembly line Winther
one that has to do 10's each hour.

------
z92
I heard the same thing in the 80-90s. Toyota has over automated and is
spending more on robots, than it would have, had they used manual labour.

~~~
csours
The funny thing about that is that GM (and others) assumed Toyota had more
automation than GM in the 80s, but Toyota had LESS automation!

Toyota simply used their people more effectively.

~~~
curun1r
One of the things I remember from the plant tour at the facility in Toyota
City was being impressed with the logistics they had to enable a heterogenous
assembly line. One car rolled off every minute, but they were different models
with different options. Most of the assembly steps were performed by humans,
but all the parts needed for each step, which differed based on model/options,
always arrived at the right station at the right time. There was a massive
computer-controlled overhead distribution system that shuttled parts
(including large/heavy parts like engines) around the factory that was damn
impressive. With as many steps as were needed to assemble a car, that system
was at least as impressive as the robotic welding arms and other fully-
mechanized assembly steps.

Automation isn't necessarily just about replacing people. It can also be used
to make the people you have a lot more productive.

------
reacweb
My 2p guess: maybe traditional automakers have a very good, experienced and
cheap workforce where Tesla has many very smart and costly engineers. Focusing
on what makes Tesla different instead of mimicking concurrence is risky, bold,
but also very ambitious and promising (sorry for my bad english, I hope you
see what I mean).

~~~
shasheene
Your English is fine, except I think you meant 'competitors', not
'concurrence'

~~~
muthdra
Yes. In portuguese, "[the] concurrence" is also a false-cognate for "[all the]
competitors".

------
lmilcin
In my expierience with automation the last mile to full automation is biggest
hurdles for little rewards. But when you finally reach 100% new possibilieties
open that are just not available if your process is even in a very small part
manual. I believe Tesla set their eyes on a bigger prize.

------
natch
Automation pays off over time. I'm rooting for them.

------
j15e
Optimistically, those over-the-industry-ratio of line investments in
automation will be profitable after more models are introduced for the
mainstream audience.

Other car makers take no risk in the short term by not investing to automate
more final assembly. But 2 times more is not like 10 times more. It is very
probable that Tesla will get to have lower production cost & better capacity
than other car makers in just a few more years.

Yeah I know they may need more cash very soon and are way under their targeted
rate, but Musk still has lot of money in the bank I think?

I always think of Tesla of a company with a more long-term vision than other
car makers. I think analysts sometimes just want a lower the price so they can
get more of it.

~~~
erk__
There is a reason most big car makers have not been selling electric cars yet,
it is not very profitable, they believe that around 2020 batteries are
becoming cheap enough to sell them. And if those companies can produce more
and cheaper cars than Tesla they are going to have a problem.

~~~
ggm
There are only four or five significant old school car manufacturers and India
and China bought some technology and are ramping up. The complex non linear
investment decisions they have to make are just that: complex. If Tata or
somebody succeeds in stealing mindshare and then market share leaving their
run until after 2020 could turn out to be as suicidal as investing in cocaine
to make the Delorean

------
cjoelrun
Hopefully he can generalize their automation developments. Seems like this
would have to be a bigger play then just the Model 3 at this point.

------
OrganicMSG
> 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).

These analysts, what are they analysts in?

~~~
baking
More context:

"Let's say there are 10 hours of labour in final assembly (the part of the
production line where parts, interiors and the powertrain are installed in a
painted bodyshell). In a regular plant, final assembly typically has less than
5% of tasks automated. If Tesla attempts to automate 50% of these tasks, it
could cut out 5 or so hours of labour. This might save $150 per car (assuming
wage rates, all in, of $30 per worker, per hour).

"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."

[http://www.businessinsider.com/tesla-robots-are-killing-
it-2...](http://www.businessinsider.com/tesla-robots-are-killing-
it-2018-3?r=UK&IR=T)

~~~
tokipin
The point is that that skilled engineer can manage and maintain robots across
many factories. That's an aspect of Musk's "the machine that builds the
machine" goal. It does have a high up front cost, but the long term advantage
is real. Namely the ability to print factories, roughly speaking. Tesla is
aiming for production volumes that are much higher than any current automaker.

~~~
jacquesm
That skilled engineer is not something you easily clone and when you are
trying to debug 250 stations at once you will need many of those engineers,
not one that can maintain robots across many factories. That's for when things
are working.

------
antpls
Meta-comment : I personally don't trust any information coming from
businessinsider / wsj / theverge. Everytime I open one of their articles, I
feel like it wasn't really worth reading. I only read the HN comments. At the
end of the day, it's always tiring to analyze their articles to get the truth
from the buzz and ove-generalization eg "the robot are killing Tesla". They
are probably good starters for discussions on HN. By the way, the title on HN
is way better than the actual title of the article.

------
amarant
It's funny how exactly everything Tesla does deserves a scandalous sounding
headline..a couple of weeks ago they didn't have enough automation, now
they're overusing it..

~~~
carlmr
You can't make money on stocks that don't move. You can make money on stocks
rising or falling.

------
cm2187
This is a rule that can been extended and which in my opinion is the main
objection to "AI will replace [ _insert any profession here_ ]".

Even if you have sufficient data to train an algorithm, you still need AI
experts who understand the domain (another big obstacle) and the cost of these
AI experts creating and maintaining the algorithm needs to be less than the
cost of the workers who's jobs you want to automate.

------
kgc
One thing this article fails to consider, is with more automation, there are
fewer human limitations. For example, if a human is able to perhaps join a
weld per minute, it's possible a machine could go 10x that speed.

~~~
sdrothrock
Or make mistakes at 10x the speed.

If it were as simple as being able to perfectly replicate a skilled human and
do everything 10x faster, then this should really be simple. The fact that
automation is so problematic suggests to me that there are a lot more
variables and problems.

~~~
kgc
I would argue that they are not simply repeating the same motions over and
over again, but adjusting with real time feedback, making the speed and error
rates dynamic rather than static numbers.

------
dotsh
Great thing about Elon is that he believes in everything so much he is
probably laughing reading those articles. I understand that myself, would
lough too. There will be no future without 100% automation and for me this is
the best bet you can make. We have so many areas of life that need to be
automated and someone has to be first. Companies that have ancient roots are
too unreformable and don't want to change what already works well for them,
which is why BMW is lagging behind, despite the fact that it can produce
millions of cars a year.

People will go crazy, say that he lost everything, he is stupid, etc... But he
will not give a f%#k just to return with double power and hit like no other.

~~~
jacquesm
The devil is in the details. Automation is all about part variance, if they
can't control that it will be a huge problem. Humans are flexible, robots much
less so.

------
neo4sure
Didn't someone tel musk he cant reuse rockets and that was a silly and
expensive idea. I wonder where those guys are hiding now?

------
ENGNR
One benefit of automation they also failed to consider is customization. All
sorts of exotic designs, configurations, adjustments and test iterations could
be made. Hopefully with a standard base so they can be repaired or swapped out
later, but the less human training that's required to get an assembly line up
the faster you can change and improve it

Another aspect is potentially repairs itself. If every part can be added by a
machine, they could later be removed and swapped out as part of the
maintenance cycle too

~~~
URSpider94
Those don’t make much sense.

Programming an automated line to build a car (or any other product) in a
different way is a tremendous amount of work, since all of the motions have to
be exactly right. Usually customization weighs heavily in the favor of humans,
who can adapt much more easily to parts that are different.

Also, an automated production line isn’t going to be any use for repairing
cars, all it can do is bolt them together.

These aren’t some kind of AI robots. They are mechatronics that are programmed
to follow very specific toolpaths. Reprogramming them by even a few
millimeters is a monumental task, and to test them, you have to try to build a
car ...

~~~
ENGNR
Do you know this for a fact?

They already have advanced computer vision, for a new facility surely they'd
be building this in at least partially

------
exelius
Is it just me, or is there suddenly a _lot_ of media backlash against the
wunderkind of yesteryear? Holmes, Zuckerberg, Musk — all sold impossible
visions but they were just crazy enough to think they could pull them off
because they were trying something _new_.

Was the whole innovation economy all snake oil? How many of the “Unicorns”
will be left in the middle of the next decade?

~~~
jacquesm
Holmes and Zuckerberg are not even in the same league as Musk. The first is a
fraud, the second the sneaky CEO of one of the worst online entities (a
perfect example of a fish rotting from the head) the third a visionary that
tends to deliver long shots with alarming regularity. If Tesla gets its house
in order it will survive and prosper, if it _can 't_ get its house in order
Musk's personal brand will definitely be damaged, let's hope that SpaceX won't
end up suffering from that.

------
hosh
With the cash crunch, this is going to be interesting to watch Tesla try to
thread the eye of the needle.

I can easily see building out and proving the final assembly automation being
related to Elon Musk's Mars colonization ambitions.

------
John_KZ
Sometimes optimization is not the optimal solution. They should have optimized
their optimization methods first. Or should they?

~~~
baking
Someone doesn't like your comment, but when I searched to find context for a
quote from the article, I found this expanded paragraph from the Bernstein
Research report:

"What is the inspiration behind Tesla's automation? Tesla has bought German
robots and a German automation company (Grohmann). But the German OEMs –
traditionally the most enthusiastic proponents of automation – have actually
been rowing back on it in recent years. The best producers – still the
Japanese - try to limit automation. It is expensive and is statistically
inversely correlated to quality. One tenet of lean production is “stabilise
the process, and only then automate”. If you automate first, you get automated
errors. We believe Tesla may be learning this to its cost."

[https://ftalphaville.ft.com/2018/03/28/1522248619000/No-
one-...](https://ftalphaville.ft.com/2018/03/28/1522248619000/No-one-needs-to-
buy-Tesla--redux/)

~~~
jacquesm
The Grohmann acquisition was mostly botched, they got far less out of that
than they would have if they had properly managed that.

[https://www.theverge.com/2017/4/27/15457472/tesla-
grohmann-e...](https://www.theverge.com/2017/4/27/15457472/tesla-grohmann-
engineering-germany-ousted-elon-musk)

Couple that with a couple of Tesla bigshots walking when they heard Elons
plans for fixing the Model 3 production schedule and you can see why things
are not looking all that rosy right now.

[https://www.google.com/search?q=tesla+execs+leaving](https://www.google.com/search?q=tesla+execs+leaving)

------
snvzz
An example of: No pain, no gain.

------
oneman
LOL. Analysts are correct, but musk is more correct! (intuition!) Its like
uno, automations not perfect yet, gaps in process, missing feedback signals
and other signals on various fails. Solution! Densify all of the problems and
hundred dollar hour guys in your super factory, raise TC, phase transition to
factories making factories as a service, earth conquered, again. We are just
getting to the full spectrum buildup, next.. red alert, its a tank rush!

------
buvanshak
Yea. I wouldn't be surprised if this was Tesla's PR itself. Make a bunch of
people say you can't do something and then do it.

10x the PR and the you have successfully projected the illusion of capable of
doing the impossible in front of the naive public...Worked well for Elon till
now..

~~~
kgwgk
It didn’t work so well for Theranos.

~~~
buvanshak
Well, of course, you should have some sort of assurance that you ll be able to
pull it. The PR tactics is just to give 10x PR when you actually do it...

And I think Theranos did much more than make people say what they are doing is
not really feasible...

------
oneman
Imagine, LOL, this headline (now or >) "Slump in automation developments"
almost as joked out as "Useful home robot, that while remaining totally and
completely useful, is totally unable to kill the shit out of you by meerly
having a series of unfortunate electric field states rise in its
transistorized brain nugget" yeh laff

