Report: Tesla 'Wasting Jaw-Dropping Amount' of Materials, Cash to Make Model 3

Tesla is reportedly “wasting a jaw-dropping amount” of materials and cash to produce its Model 3 cars.

After reviewing internal documents from Tesla, Business Insider described the amount of resourced dedicated to Model 3 production as “jaw-dropping,” wasteful, and claimed that “the company expects that as much as 40% of the raw materials used to produce batteries and driving units manufactured at Tesla’s Gigafactory in Nevada need to be scrapped or reworked by employees before they are sent to Tesla’s factory in Fremont, California, and assembled into Model 3s.”

“That is to say, for every 2,500 battery packs and driving units that leave the Gigafactory, an additional 1,000 pieces of ‘nonconforming material’ are created,” they explained. “Half of that will be reworked and put into other car parts. The other half becomes scrap.”

Business Insider gave a specific example of how Tesla produced bad parts. “In February, a misprogrammed robot that handles battery modules repeatedly punctured through the plastic housing (called a clamshell) and into some battery cells, the employee said, adding that instead of scrapping all the modules, some were fixed with adhesive and put back on the manufacturing line. According to internal documents Business Insider reviewed, this foible affected more than 1,000 pieces.”

In a statement to Business Insider, Tesla claimed the inefficiency was “something we planned for,” and was a “normal part of a production ramp.”

“As is expected with any new manufacturing process, we had high scrap rates earlier in the Model 3 ramp. This is something we planned for and is a normal part of a production ramp,” the company declared. “Indeed, we have always explained that Model 3 margins would increase after costs begin to fall from elevated scrap and other early ramp issues — and they have.”

“Our scrap rate for batteries has decreased by almost 60% since January as we have improved our manufacturing processes. It’s also important to remember the reason we scrap parts: because we want to ensure that only the highest-quality parts are used to create the best vehicles for our customers,” Tesla continued. “This is a part of the reason why Tesla’s customer-satisfaction scores for Model 3 vehicle quality and condition are at an all-time high of 93%.”

In March, Tesla employees claimed a similar percentage of parts were flawed and requiring rework before use in cars.