Elon Musk wanted to create the factory of the future. But some Tesla workers say the car plant was better when Toyota and GM ran it 20 years ago.
Sjoerd van der Wal/Getty Images; Samantha Lee/Business Insider
- Tesla has pushed the boundaries of electric-vehicle engineering and technology, but it has struggled with manufacturing.
- Interviews with 42 current and former Tesla employees depicted the company as one that has cared more about production numbers and engineering than quality and safety.
- Some of those employees said that despite Tesla's ambitions to reinvent auto manufacturing, its Fremont, California, car factory ran better under NUMMI, a joint venture between Toyota and General Motors that used the facility before Tesla bought it.
- Tesla did not respond to multiple requests for comment on this story, but it has described safety and manufacturing improvements in blog posts and earnings statements.
- Recent developments suggest the company is making progress on some of its weak spots, but workers have said production issues have not gone away entirely.
- Visit Business Insider's homepage for more stories.
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A Tesla battery-pack assembly worker thought a fight had broken out when he looked up from a pack he was testing at about midnight on a Saturday in September 2018 to see his coworkers running by him. He soon realized part of a battery pack had caught fire less than 100 feet away. The flames reached so high, he said, it appeared as if they were shooting down from a ceiling fan just above his head.
The flames were extinguished in under two minutes, but it took about three minutes for the floor's production leads to direct their workers to evacuate Tesla's Fremont, California, car factory, and there was confusion about which exit route they should take, the worker said. No alarms went off before or after the fire was put out, and no fire trucks arrived during the hour the workers spent waiting outside the factory.
When they returned to the third floor, it smelled like burnt plastic, but more than a half-hour passed before the employee and his coworkers were offered ventilation masks. They were instructed to stay an extra hour to make up for lost time, leaving at 4:30 a.m. instead of 3:30.
"We shouldn't even be back in here working," the battery-pack assembly employee recalled a few coworkers who had asthma as saying.
While Tesla's cars have garnered praise for their engineering and technology, the same can't be said for the manufacturing process the company uses to make those cars, some current and former employees told Business Insider. Each of the four vehicles Tesla has released since 2008 has been plagued by production delays, and the company has a history of safety issues at its Fremont factory, though it has shown improvement on both fronts in recent years.
The manufacturing difficulties Tesla has faced in Fremont paint a stark contrast against the operations at the auto plant that previously occupied the space Tesla now uses. From 1984 to 2010, the assembly plant was known as New United Motor Manufacturing Inc., or NUMMI, and run by a joint venture between Toyota and General Motors with the same name.
Paul Sakuma/Associated Press
Through the NUMMI joint venture, Toyota taught GM how to execute its famed production process in a facility that was one of GM's worst. After Toyota installed its production system, the Fremont plant became one of the leading automotive factories in the US, industry experts said. But after the financial crisis, GM went bankrupt and Toyota shut the factory down. Tesla then bought the plant at a discount in 2010.
But Tesla didn't embrace Toyota's renowned production methods. Interviews with 42 people who have worked for Tesla in a role involving vehicle manufacturing between 2008 and the present day depicted the company as one that has favored production quantity and engineering over production quality and safety. Fifteen of those people have also worked for NUMMI, and four have worked for Toyota outside of the NUMMI joint venture. (Most of the Tesla, NUMMI, and Toyota employees spoke on condition of anonymity for fear of reprisal from their current or former employers. Their identities are known to Business Insider.)
Many of those who worked for Tesla and NUMMI said that, despite Tesla's ambitions to reinvent auto manufacturing, the Fremont plant ran better under NUMMI in the years before Tesla took over.
Tesla did not respond to requests for comment on this story.
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Quantity, not quality, reigns supreme
AP Photo/Paul Sakuma, File
One of the biggest differences between Toyota and Tesla, according to five people who have worked for both companies, is Tesla's focus on quantity over quality. Seven current and former Tesla employees who have not worked for Toyota also said Tesla tends to care more about hitting output goals than making sure vehicles are built without flaws.
"As a quality inspector, I was told to overlook missing welds, missing mounting brackets," said Dennis Cruz, who has held positions at Tesla in assembly and quality control but has not worked at the company since he injured his shoulder last May. "A car with no liftgate, we would send to paint. They would fix it with a service part later."
Tesla's quality control hasn't gone unnoticed by owners.
For example, during the first nine months of last year, a group of Model 3 customers reported to Bloomberg an average of 61 defects per 100 vehicles in the first 30 days of ownership. The survey included about 5,000 people who bought the Model 3 between January 2018 and September 2019, though Bloomberg didn't specify the percentage who received their Model 3 last year.
At NUMMI, though, there would be no issues in 97% of the vehicles produced, said two former employees who each spent about 20 years at the joint venture.
Toyota has built its reputation on production quality and efficiency while becoming one of the world's biggest and most profitable car companies. Nearly every other automaker's production system is now modeled on Toyota's, but none has surpassed it, said Jeffrey Liker, a professor at the University of Michigan and the author of several books about Toyota's culture and production system.
Tesla, though, has shunned Toyota's methods and paid a price, people who have worked for Tesla and either NUMMI or Toyota, said. In fact, the first three vehicles Tesla built in Fremont - the Model S, Model X, and Model 3 sedan - all suffered expensive production delays. (Production for a fourth, the Model Y SUV, began in January, though Tesla has not yet delivered it to customers.)
Tesla's quality issues have resulted partly from the speed of its production process, employees said. Some said they've felt pressure to keep quiet about problems out of fear that pointing them out would stop the production line and draw attention to themselves. That tendency violates a core tenet of Toyota's production system, which places an emphasis on workers fixing defects before they move from their section to the next one, even if that means stopping the line.
A former assembly-line employee who worked at Tesla in 2019 said that, more often than not, his coworkers wouldn't flag minor issues like scratches and dents, instead betting that someone on the next part of the production line would catch them. Sometimes, the employee said his supervisor would tell him not to draw attention to an issue he noticed. A current employee and a former employee who last worked at Tesla in 2019 shared similar accounts.
Toyota, whether by itself or with GM, paid greater attention to detail in its production process than Tesla did, nine employees who formerly worked at Toyota or NUMMI said. Toyota was more willing to stop the production line if a defect was identified or randomly pull parts from the line to measure their quality, and designed vehicles that were easier to build than Tesla's cars, the former workers said.
It's not that Tesla employees didn't want to fix quality issues, said a former senior manager who oversaw production and left the company in 2018, but the electric-car maker was under immense pressure to produce enough vehicles to bring in the revenue necessary to avoid bankruptcy.
"The principles were there, but the ability to implement them was not there," he said.
Other Tesla employees had positive impressions of Tesla's production quality, and the Bloomberg survey indicated that quality control has started to improve. In fact, defects reported in the first 30 days of ownership fell to their lowest level in September 2019, the survey's final month.
And despite their reports of reliability issues, Tesla owners have said in Consumer Reports surveys that they're more satisfied with their cars than any other brand's customers, which speaks to Tesla's ability to push the boundaries of electric-vehicle performance and technology.
Shayanne Gal/Business Insider
Broken robots and Band-Aid fixes
Before Model 3 production began in 2017, Musk laid out a vision to make the Fremont plant the factory of the future by replacing human labor with machines that would reduce costs and improve efficiency. But so far, Tesla's robots have been less reliable than NUMMI's were, workers said.
Auto factories require frequent interactions between humans and machines that make, carry, and install parts. When a machine on one part of the production line stops working, it can shut down the line while workers look for a fix.
Current and former employees who worked at Tesla from 2017 to the present described frequent breakdowns from a wide variety of machines involved in areas like paint application, assembly, welding, and conveyance. Production issues were widely reported during the rollout of the Model 3, and workers say manufacturing hiccups are ongoing.
Two current production employees said that in December a machine at the Fremont factory would break down about twice a day. And a former Model 3 assembly-line worker, who left Tesla during the fourth quarter of last year, said that in the months before his departure, a machine that lifted wheel-well liners to the production line would break down four times a week, while a robot that inserted the Model 3's front seats broke down as many as five times in a single day.
Those numbers are much higher than at a typical auto factory, which may go over a month between machine breakdowns, said Sandy Munro, CEO of the manufacturing consulting firm Munro & Associates and a former Ford executive.
"The machines almost never go down," he said.
Toyota aims to have its factory equipment working 99% of the time it is needed, and is usually able to do so, Liker, the University of Michigan professor, said.
Tesla does not perform a lot of preventive maintenance on machines in the Fremont factory so that it can maximize production numbers, five current and former Tesla employees, some of whom also worked for NUMMI or Toyota, said. The lack of built-in maintenance time has meant repairs amount to Band-Aids, rather than long-term fixes, workers said.
"Tesla does not push for super highly-skilled maintenance people to be there on the spot like Toyota did," said Richard Kellner, who worked in quality control at NUMMI and Tesla until 2017. At Tesla "they would measure their downtime in hours, if not days, per year, where Toyota would measure their downtime in minutes per year, because Toyota would do preventive maintenance regularly."
Other current and former Tesla employees who also worked at NUMMI and Toyota shared similar impressions, saying each company could do more preventive maintenance since it gave its production line more downtime.
"It was a lot more organized," a current Tesla production lead said of NUMMI. "You didn't have a lot of managers or team leads running around trying to get the machines working. On the weekends, the maintenance personnel would have a lot of time to correct a lot of robot issues."
Tesla did not respond to requests for comment.
Tesla has improved on NUMMI's safety record, but concerns remain
Ben Margot/Associated Press
There is a human cost to the pressure Tesla faces to show steady production and sales growth. While workers will get injured at even the safest manufacturing facility, Tesla employees said they felt as if production numbers were a greater priority than their safety.
"It seems like it's always quantity before quality, quantity before safety," the current production lead said.
Worker safety was also a problem NUMMI struggled with, as its injury and illness rates were worse than the industry average in its final eight years. In each of those years, its injury rate was worse than Tesla's between 2017 and 2019, though Bloomberg reported that Tesla has sent incomplete annual injury reports to California's Occupational Safety and Health Administration (Cal/OSHA) in recent years. Tesla was also cited by OSHA for more safety violations (45) and received more in fines ($277,955) related to vehicle manufacturing than GM (6; $22,411), Ford (18; $90,162), or Fiat Chrysler (23; $90,797) from 2017 through the end of 2019.
Shayanne Gal/Business Insider
And Tesla has struggled to match NUMMI in one key part of worker safety: making sure processes are designed in a way that minimizes the amount of strain put on workers' bodies, 15 current and former employees said.
Employees described having to move and bend at awkward angles, pick up heavy objects above their heads, and perform the same task all day - rather than rotating jobs - putting strain on the same parts of their bodies repeatedly.
In 2017, Tesla hired Laurie Shelby to lead its workplace environment, health, and safety team. Shelby wrote a blog post on Tesla's website in 2018 outlining some of the steps the company has taken to improve workplace safety and medical care, like encouraging employees to report safety risks and sending athletic trainers to the production line to improve their ergonomic characteristics.
But three current employees Business Insider spoke with said not much has changed. A current assembly-line worker said Tesla emphasized ergonomics during training, but when he's raised issues about the stress caused by repetitive motions to his supervisor and ergonomics coaches from the company Work Right, which Tesla first hired in 2018, he's been brushed off. Work Right did not respond to requests for comment.
An account shared by a former assembly-line supervisor who left Tesla in 2019 suggests Shelby has made some progress, but perhaps not as much as she's indicated. Workers in the former supervisor's area would complain about a range of ergonomic issues, like having to lift 10-pound motor mounts over their heads, though they sometimes wouldn't report them to anyone else because they felt pressure to keep working, the former supervisor said. At one point, the supervisor spent a day working on the line. His hands were aching by the end of it. "I don't know how these people do it," he said.
But the supervisor said he noticed some improvements in early 2019, when Tesla's safety team encouraged workers to let someone know when they were in pain. That led to a rise in reports.
Shayanne Gal/Business Insider
Work processes at NUMMI were more ergonomically friendly, former employees said. That stemmed in part from Toyota's emphasis on having production-line workers find ways to improve the company's production process and make their jobs less taxing. While most automotive companies rely on engineers to solve production issues, Toyota trains production-line workers to do so themselves, Liker said.
"Why would you want to have a handful of industrial engineers running around trying to fix all these processes when you've got people right there at each process?" he said.
Kenny, who asked to use only his first name, consulted Tesla on worker safety, ergonomics, production quality, and efficiency in 2014 and 2015 after spending two decades at NUMMI. He said that during his time at NUMMI, supervisors were instructed to make one improvement to production quality, safety, efficiency, or cost every week. It was difficult for him and other supervisors to come up with an idea that frequently, so they had no choice but to seek input from the production-line workers they oversaw.
Suggestions from production-line workers were more actively encouraged and more likely to be implemented at NUMMI than at Tesla, current and former employees said. NUMMI offered better incentives to workers whose suggestions were put into action, like gift cards or monetary awards that could, in some cases, be worth as much as $9,000.
While Tesla has sought feedback from production-line workers, the company has not done a good job of implementing it, employees said. Some said they eventually lost the motivation to suggest improvements.
Both current and former Tesla employees who worked on the production line or as managers described a much different experience at the company than that of former Tesla engineers.
Engineers said they had more autonomy at Tesla than at NUMMI or Toyota, and they praised Tesla as a workplace that was faster-paced and more engaging.
A former engineering manager, who worked at NUMMI during its final years and at Tesla until 2017, said while working at Tesla was harder, it was more fulfilling, as the electric-car maker allowed for more creativity than NUMMI did.
"The challenge was so much more intense, but so much more rewarding," he said.
Tesla workers don't have a union
Another thing NUMMI workers had that Tesla employees don't is a union. NUMMI's workforce was represented by the United Auto Workers, and, since 2017, some Tesla employees have advocated for its return, though they have not yet been successful.
Four current or former employees who have worked at Tesla in the past year said they wish they were or had been represented by the UAW to help them negotiate for better compensation and make it easier to file a grievance against the company if they felt mistreated. A former employee who worked at Tesla until 2016 said he'd consider returning to the company if it were unionized.
"We want what we deserve, a safe place to work and a good living for us and our kids," a current production lead said. "I pay a monthly rent because I can't afford a mortgage out here."
Not everyone believes the Fremont factory would be better off with a union. Two former NUMMI employees, who also worked for Tesla, said they were at times frustrated by the UAW, which they said sometimes limited the company's flexibility and slowed down its decision-making.
As for Musk, he's argued that union representation didn't help NUMMI employees when they lost their jobs following the joint venture's dissolution, and that it was Tesla, not the UAW, that brought jobs back to the Fremont plant.
Tesla did not respond to requests for comment.
Tesla faces 2 tests that will shape its manufacturing legacy
Jae C. Hong/Associated Press
Tesla's manufacturing division has two major tests ahead of it that will show how much the company has learned from past mistakes: the Model Y and a new factory in Shanghai.
The early results have been promising. Tesla started production of the Model Y in January, months ahead of schedule, and began delivering Model 3s made in Shanghai less than a year after breaking ground on the factory. (The coronavirus has blunted some of Tesla's momentum in Shanghai, forcing the company to briefly close the factory earlier this year and install old hardware in Model 3s due to supply-chain disruptions.)
But Musk has made clear that he aspires to more than competence. Even in early 2018, as Tesla was failing to reach its Model 3 production goals, Musk said the company's advantage over its rivals would one day lie in how it built cars, rather than the cars themselves. That would mean overtaking Toyota which, according to Liker, still has the world's best automotive production system.
The core of Toyota's advantage over its competitors lies in its focus on developing workers so they can consistently make its production process better, Liker said.
Tesla, though, has had a tendency to fire workers who made mistakes instead of helping them improve, the former assembly-line supervisor who left Tesla last year said, a point echoed by the current assembly-line worker. The former supervisor had studied Toyota's production system and felt Tesla didn't understand how to create an environment that allowed for consistent progress.
"It's like they took [Toyota's production system] and did the opposite," he said.
When the former supervisor joined Tesla in 2018, he saw a whiteboard with the names and photos of three workers who had made production improvements. When he left the company a little over a year later, those same three names were the only ones on the board.
"A lot of these people don't seem to have a voice," he said.
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