Tesla Hopes Acquisition Can Solve Production Bottlenecks

Tesla Showroom

Nov 08, 2017

It’s been a tough couple of weeks for Elon Musk and Tesla.

First, the company had to announce that it was well behind third quarter production goals of 10,000 vehicles/week, a.k.a. the “production hell” Musk had prophesied at the Model 3 launch this summer. In reality, Tesla has produced fewer than 300 of a rumored 400,000 Model 3 pre-orders, which Musk attributed to production bottlenecks at the company’s Fremont, California facility.

Then, the company announced it had lost $619 million in the third quarter, after back-to-back quarters of $400 million losses. Faced with daunting production and financial obstacles, Tesla stated it would be reducing production levels of their X and S models by 10 percent in the fourth quarter to catch up on Model 3 pre-orders.

Tesla made another move to help rectify these production issues by acquiring Perbix, a designer, builder, and integrator of high-volume automation equipment and systems. The Minnesota-based company was founded in 1976 and has been working with Tesla for more than three years. Terms of the deal were not disclosed.

The bottlenecks referenced by Musk are rumored to center on the assembly process for the Model 3’s battery. Most, if not all, of the equipment in the Fremont factory has been custom-made, which makes troubleshooting more complex as off-the-shelf parts and traditional troubleshooting approaches won’t work. Both the software and mechanicals of the system have been built from scratch, with Perbix presumably playing a significant role.

Musk recently announced new production goals targeting 5,000 vehicles/week by the latter part of the first quarter of 2018. Ideally, for those still eagerly awaiting their Model 3, this acquisition will help expedite those efforts.