Can Manufacturers Skip Beta Testing?

Tesla is taking a bold risk to take its new vehicle to market faster by skipping a critical beta phase. Can the bet pay off? And if it does, what lessons does that offer for other CEOs?

As manufacturers seek new and better ways to increase their speed to market, they’re making more extensive use of advanced modeling. While this modeling is improving beta designs and reducing defects, auto manufacturer Tesla is taking a bold risk to reduce speed to production by eliminating beta testing altogether.

Tesla already has been known as a company to take risks, but this experiment is considered the first of its kind. Most auto manufacturers now test new model production lines by building vehicles with cheap prototypes. They use this system to ensure that parts and components fit and don’t have defects before they move ahead with full-scale production. Tesla is skipping the entire step and ordering permanent, more expensive equipment to outfit its Model 3 sedan with the actual components from the start.

The company is racing to meet a self-imposed deadline of September and has an ambitious target of selling 500,000 vehicles per year by 2018. “He’s pushing the envelope to see how much time and cost he can take out of the process,” said Ron Harbour, a manufacturing consultant at Oliver Wyman.

Musk hasn’t released many details about the production strategy, but has said it uses “advanced analytical techniques” such as computer simulations. He also previously told investors about his vision of a “alien dreadnought” factory that uses robots and AI to build cars faster than human workers.

“ The experiment may work if Tesla can tap into its ability to fix problems, or they [could] have unsuspected problems they’ll have a hard time dealing with.”

Industry experts said the production equipment to produce large numbers of vehicles can be expensive to fix or replace if its doesn’t work. Because plants are often designed and constructed around the design of the vehicle, addressing design problems later in the process can be more expensive to solve. Tesla already has had quality issues on its existing cars. The company’s Model X production was complicated in 2015 by its use of “soft tooling” that relied on lower grade, disposable tools being used in the final phases of production. When Tesla ran out of time to fully resolve the errors during the switch to permanent production, it had to address a number of challenges after product launch.

Audi tried a similar technique at a production plant in Mexico by using computer simulations of the production tools, assembly line and factory. Audi said it enabled them to launch production of the vehicle 30 percent faster.

While manufacturers that produce lower-cost commoditized products can play loose more easily with the prototyping and beta phase, it’s unheard of in the auto industry. Due to regulations, there are boundaries as to how far manufacturers can go. For example, Tesla still will be required to use real cars in crash tests required by the federal government.

Consumer Reports’ Jake Fisher said the experiment may work if Tesla can tap into its ability to fix problems, or “they [could] have unsuspected problems they’ll have a hard time dealing with.”


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