Tesla's German car plant attempts to raise manufacturing bar

Tesla chief executive Elon Musk gives a statement at the construction site of the Tesla Giga Factory in Gruenheide near Berlin last year. EPA-EFE

Two years after Elon Musk elicited audible gasps from an awards show audience with his surprise announcement that Tesla would build a factory outside Berlin, the project is nearing fruition and the hype has never been more palpable.

One analyst recently compared the series of innovations Mr Musk is pursuing at the plant to Henry Ford’s revolutionary moving assembly line, while Volkswagen's chief executive this month expressed concern that Tesla will be able to crank out an electric car in a third of the time it is taking his company — a disparity that would jeopardise jobs.

Mr Musk has billed the novelties Tesla is working on as transformative to the structural design of its vehicles. He wants to use massive machines — as long as a semi-trailer and tall as a two-story home — to produce front and rear body parts using single pieces of metal. Pulling this off would save time and cost, reduce weight and improve driving range.

All this buzz will sound familiar to those who followed the launch of the Model 3 a few years back. The perennially promotional Mr Musk touted an effort to build a highly automated “alien dreadnought” manufacturing system that went disastrously awry and nearly bankrupted Tesla. Today, the company has vastly more resources to support its chief executive's desire to push the envelope with regard to how cars are made.

“The big picture here is that Tesla has the opportunity to completely reinvent the car manufacturing process for vehicle production and factories,” Adam Jonas, Morgan Stanley’s top car analyst, wrote in a report last month. “Tesla is building the car factory of the future.”

Mr Musk has summed up Tesla’s pursuit in a simple way, writing on Twitter in January: “With our giant casting machines, we are literally trying to make full-sized cars in the same way that toy cars are made”.

On billboards strewn about Tesla’s factory when it opened to the public for a day last month, Tesla said it would inject aluminium into the world’s largest die-casting machines, which will then clamp the metal using 6,100 tonnes of pressure — a force equivalent to 1,020 African elephants standing on the tool to form parts.

The plant will house eight of these machines, with Mr Musk aiming to eventually stamp out the two biggest parts of its Model Y sport utility vehicles — the front and rear underbodies — with just one piece of metal. The current Model 3, by contrast, comprises 70 metal pieces, just for the rear underbody.

While Mr Musk has used the term “Giga press” for these machines, that suggests Tesla conjured them in-house, this is not the case. The company has been buying them from Idra Group, a closely held Italian company that has sold them to three customers on three continents and is in talks with other car makers and major suppliers.

The front and rear castings will interface with frames beneath Model Ys that will house batteries built into the structure of the vehicle. This, too, could be a step change — Tesla and other EV makers have to this point been housing their batteries in sheet metal, then sealing those coverings to separate floor plans.

Mr Musk touted the ramifications of simpler and more integrated battery and body manufacturing during Tesla’s “Battery Day” event last year. He claimed the company could reduce investment per gigawatt hour of battery output by 55 per cent and shrink the amount of plant-floor space needed by 35 per cent.

For all the upside Mr Musk has described, he has also acknowledged Tesla will be gambling in Gruenheide, a town about an hour’s drive east of the German capital.

“Lot of new technology will happen in Berlin, which means significant production risk,” Mr Musk tweeted in October last year. Tesla’s plants in Shanghai and Fremont, California, will attempt the same transitions in about two years, when the new tech is proven, he wrote at the time.

Germany’s car makers are watching Tesla’s progress closely. VW may build a new EV factory near its sprawling Wolfsburg headquarters in direct response to Mr Musk’s foray.

Earlier this month, VW’s chief executive Herbert Diess sought to rally his workers for the challenge. He warned Tesla may manage to make an EV in just 10 hours, versus the more than 30 hours VW needs at its plant in Zwickau. VW’s new factory would make 250,000 EVs a year and aim to catch up with Tesla on production time.

Morgan Stanley’s Mr Jonas last month increased his forecast for how many cars Tesla will crank out annually by the end of the decade by 2.35 million, citing his expectation that Tesla will produce an average of more than 800,000 vehicles per plant by 2030. That is far greater than the capacity for 500,000 units the company currently claims for its Fremont factory.

“We have yet to see the ‘moving assembly line moment’ in the EV industry,” Mr Jonas wrote, referring to Henry Ford’s 1913 breakthrough. “We believe the time is approaching for that moment. And we believe Tesla is uniquely positioned to push the boundaries at the epicentre of a manufacturing change in auto making.”

BMW's production chief Milan Nedeljkovic told reporters at an event last month that the car maker has not worked with big casting components like Tesla, in part because this would reduce the flexibility it needs to produce several different kinds of models on the same assembly lines. Tesla’s new approaches intrigue him, nonetheless.

“If it works, maybe it’s something we’d consider,” Mr Nedeljkovic said.