T<\/span>esla’s factory in California has a theoretical manufacturing capacity of 500,000 annually. Toyota and GM built almost that many there in 2006.<\/span><\/strong><\/span><\/p>\n Tesla<\/a>\u00a0is deep in what CEO\u00a0Elon Musk called “production hell”<\/a>\u00a0on its new and hotly anticipated\u00a0Model 3<\/a>.<\/span><\/p>\n The vehicle is currently selling for $44,000, but base-priced at $35,000 for a version that doesn’t have all-wheel-drive and premium appointments. Tesla has about 500,000 pre-order in the books, at $1,000 a pop,\u00a0but production is troubled.<\/a><\/span><\/p>\n Tesla said it would build 1,500 Model 3s in September, but in the entire third-quarter,\u00a0it managed only 260 vehicles<\/a>. It’s unlikely that\u00a020,000 Model 3s will roll off the assembly line in December<\/a>, as Musk predicted.<\/span><\/p>\n Meanwhile, Tesla has a good chance of building about 100,000 Model S and Model X luxury vehicles in 2017 \u2014 more than ever before.<\/span><\/p>\n Interestingly, Tesla’s factory in Fremont, CA, has a theoretical manufacturing capacity of 500,000 vehicles annually. That’s because back in the 1980s, it was called New United Motor Manufacturing, Inc. (NUMMI) and was run as a partnership between General Motors and Toyota.<\/span><\/p>\n If Tesla has an Achilles’ heel, it’s that it can’t build cars with the same relative ease as other major automakers. The contrast between what was happening at NUMMI in the ’80s and what’s happening now highlights this problem.<\/span><\/p>\n Here’s a photo of NUMMI from back in the day. It looks very much like an old-school car factory.<\/strong><\/span><\/p>\n Looks can be deceiving. NUMMI was perhaps the most important plant in automotive history, after\u00a0Ford’s legendary River Rouge factory<\/a>.<\/span><\/p>\n It actually dated to the early 1960s, when GM opened it as Fremont Assembly. By the mid-1980s, it had been revamped through a joint venture between GM and Toyota. In fact, NUMMI was essentially a separate manufacturing company.<\/span><\/p>\n <\/p>\n The goal for GM, in particular, was ambitious: learn the by-then famous Toyota production method, which combined continuous improvement\u00a0of manufacturing (the Japanese concept of “kaizen”) with so-called “lean” or “just in time” production.<\/span><\/p>\n Follow us on Twitter for more Logistics News<\/a><\/strong><\/span><\/p>\n The idea was that much greater efficiency, cost savings, and quality control could be achieved if parts inventories were kept light; materials would arrive “just in time” at the assembly lines.<\/span><\/p>\n Sounds good, but it required a very high level of supply chain management and workforce training. It’s the opposite of “vertical integration,” the system of doing everything in one place that defined the auto industry before Toyota disrupted the paradigm.<\/span><\/p>\n Ironically, Tesla CEO Elon Musk now wants to take\u00a0Tesla’s production back to the vertical model<\/a>.<\/span><\/p>\n NUMMI was closed down in 2010.<\/span><\/p>\n And here’s the same factory, rebranded by Tesla.<\/strong><\/span><\/p>\n I’ve visited the Fremont, CA plant and there’s no doubt about it \u2014 it’s a cool place.<\/span><\/p>\n But the contrast between what two big car companies were able to do with the factory in its heyday and Tesla in 2017 is vivid. With an annual manufacturing capacity of 500,000, NUMMI topped out at about 430,000 in\u00a0<\/span>2006, before GM and Toyota, shuttered the plant. (The numbers come from\u00a0IHS\u00a0Markit,\u00a0cited by Bloomberg<\/a>.)<\/span><\/p>\n\n
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