In a January 2019 post titled Progress or Perfection – Pick One I speculated that Tesla was simply being expedient when it built the Model 3 out of what reverse engineering firm Munro and Associates described as a crazy patchwork of parts and assembly processes.
My claim was that if haste makes waste, then in some cases the corollary is true – that waste can make haste. At the time Tesla was in a life or death struggle to get cars built fast enough to cover costs. If that meant that their cars were built out of a large number of inexpensive to produce components, then so be it.
I also speculated that in time Tesla would begin rationalizing their production methods in favour of larger parts that require less final assembly and reduce the chances of the poor fit and finish many examples of Model 3 were criticized for.
In a recent Youtube video, Elon Musk revealed that Tesla was preparing to build almost the entire rear third of the Model Y body-in-white with a single aluminum casting. This is a prohibitively expensive undertaking requiring some of the largest casting machines in the world. This expense is offset by dramatically simpler final assembly (reducing assembly cost, time and space required within the factory). It also creates a product that will have uniform panel gaps and reduced likelihood of squeaks, rattles and leaks.
So how does relate to design thinking?
Design thinking reminds us to seek feedback and avoid big swings. Tesla built their Model 3 in a hurry, essentially designing it while it was still being bought and sold. Making design changes to large parts would have been slow and expensive.
Now the opposite is true. The Model Y is being built with the lessons learned building the Model 3 – lessons forged in what Elon Musk described as “production hell”. Since the design of the Model Y is far more “final” than that of the Model 3, Tesla can comfortably make a big bet on larger pieces.
With certainty they are switching from opex to capex, i.e. they are investing in production facilities – making capital investments – that make the marginal cost of each car lower – reducing operating expenses.
The lesson for all of us is that flexibility comes with a cost. In Tesla’s case this cost was subpar production quality. The upside was the ability to come to market with a product that set the standard for mass market electric cars.
In short, Tesla chose progress when they built their Model 3, and now that they know they have a winning design on their hands they are choosing perfection for the closely related Model Y.
