Tesla Dials Back on Factory Automation

Tesla Inc. CEO Elon Musk says his push for “excessive automation” at the company’s electric-car factory in California was a mistake.

Musk blames the factory’s now-discarded “crazy, complex network of conveyor belts” for hampering the launch of Tesla’s $35,000 Model 3 electric sedan. “Humans,” he concedes, “are underrated.”

Tesla originally assumed that a highly automated factory—including robotic final assembly—would drive down production costs. But the opposite has been the case, as the company struggles to meet its own production targets for the Model 3.

Analysts aren’t surprised at the revelation. Bloomberg News points to an analysis last month by Sanford C. Bernstein & Co. that declares automated final assembly “a fallacy.” The report notes that many carmakers, including General Motors and Volkswagen, have tried and failed to do the same.

Musk says that scaling up less automated production of the company’s Model S cars and Model X crossovers is easier because Tesla can simply add more labor hours. Bernstein points to a rule of lean manufacturing: stabilize the process first, then automate. “If you automate first,” it adds, “you get automated errors.”