Who am I to criticize Elon Musk, but several things in this interview seemed puzzling to me, and concerning if I were an investor in Tesla. And I'm not even talking about the explicit discussions of their corporate finances.
> ... deliver cars to customers who have been waiting for a long time
If the demand for Tesla cars at a given price point exceeds their supply, shouldn't they be charging more?
> Q: Have you had cars come back from customers, where you noticed a mistake ... A: No.
If the CEO is inspecting every single car, sending lots of them back for (what in some cases sound like) extremely minor tweaks, despite the fact that they haven't had any real complaints about quality, while potential customers are on long waiting lists -- might the CEO's well-intentioned perfectionism be hurting them?
I mean, it's great to see someone obsessed about quality, but I want to see Tesla turn a profit and become an established force in the market, and this article makes me continue to wonder if they'll make it.
He is doing the right thing. They start out low volume and are ramping up. Little issues that are ignored can end up being really big issues (and expensive) once combined with all the other little issues at higher volumes. Additionally every single one of them can be learned from. Maybe you need to tweak the design to improve things, maybe a new machine will help, perhaps a supplier is having issues which will blow up as volume ramps.
When you are doing manufacturing there is something they call the learning curve which is roughly the rate at which efficiency improves. The more attention and learning you can do earlier on, the steeper that curve can be which will also affect your profitability. http://en.wikipedia.org/wiki/Experience_curve_effects
For example current estimates are that Boeing are losing $100m on each 787 manufactured. They expect that their learning curve will bring them into profitability down the road, which much debate as to how steep the curve is, whether it will be better than prior planes (eg 777), and if Boeing was the capital to keep this up.
Minor imperfections are very often indicative of bigger underlying problems. We're talking about a physical product here. Variations in the output demonstrate a need to tighten up the process. You can't just redeploy, like with software. I think it makes all kinds of sense to get it right before you ship on a massive scale. Recalls and warranty work erode margins.
How perfect a product is might have an impact on brand perception.
Example: I recently bought a MacBook Pro Retina. From time to time (rarely) it makes creaking sounds. The bottom plate doesn’t sit quite perfectly on the chassis. Do I send it back because of that? No. Does that impact my perception of Apple as a brand negatively? Absolutely.
He creates culture of perfectionism. A car doesn't have to perfect to drive from point A to B. But it has to perfect if they want to build valuable brand.
> ... deliver cars to customers who have been waiting for a long time
If the demand for Tesla cars at a given price point exceeds their supply, shouldn't they be charging more?
> Q: Have you had cars come back from customers, where you noticed a mistake ... A: No.
If the CEO is inspecting every single car, sending lots of them back for (what in some cases sound like) extremely minor tweaks, despite the fact that they haven't had any real complaints about quality, while potential customers are on long waiting lists -- might the CEO's well-intentioned perfectionism be hurting them?
I mean, it's great to see someone obsessed about quality, but I want to see Tesla turn a profit and become an established force in the market, and this article makes me continue to wonder if they'll make it.