Fundamentally my question on Tesla is now: if you're priced as a "we have a fundamentally better way of doing things that will disrupt the industry" company, but the core process in your business is still fundamentally inferior, will you have a long enough runway?
I used to be a bear on Tesla for grumpy "I don't like the decisions and design choices they make" reasons, but now the business itself seems a bit underdeveloped.
My theory is Musk knows the only way he'll be able to compete is attracting the best talent through stock incentives, and to do that he needs to jack up the stock price by pushing engineers way past what they are comfortable with.
An underreported stat is the increase in TSLA outstanding shares, which I think is Elon throwing stock incentives at his employees to make them go faster, as a TPS alternative (for now?)
Tesla’s stock behavior is due to the ongoing game of “who blinks first” between TSLA shorts and TSLA short-squeezers. With $10 billion short position the company’s fundamentals are reduced to a side show.
It's primarily from equity grants. Even your article says Musk tacked on his stock option exercise as part of the secondary offering, which increased the dilution.
American carmakers didn't get it for decades. Even when they thought they did, they performed Lean rituals without real understanding. This was despite Toyota trying vigorously to teach them.
(A similar story is told of the spread of the use of Feynman diagrams in physics - I’ve read that their spread was far slower than you’d expect given their utility: For whatever reason it wasn’t enough to be told that they were an incredibly useful tool by people you trusted - it was only when non users actually worked together on problems with Feynman diagram users, or were taught by Feynman diagram users directly that their use actually spread. Both of these transfer methods required physical proximity which restricted the use of Feynman diagrams to a small number of labs for a surprisingly long time.)
There's a This American Life episode (centered around what is now Tesla's plant) that covers this well: https://www.thisamericanlife.org/radio-archives/episode/561/...
“Spreading the Tools of Theory: Feynman Diagrams in the USA, Japan, and the Soviet Union” by David Kaiser, Kenji Ito and Karl Hall
http://web.mit.edu/dikaiser/www/Kaiser.SpreadingTools.pdf
must have been the original source research.
edit: Also, there’s a book (by one of the authors of that paper): “Drawing Theories Apart: The Dispersion Of Feynman Diagrams In Postwar Physics” https://www.amazon.co.uk/dp/B002Y5W2X2
<blockquote>
... Thus, when [Freeman] Dyson arrived at the Institute for Advanced Study in September 1948, Feynman diagrams in hand, he immediately joined ten fellow ‘postdocs’ in theoretical physics, the largest cohort yet.
[J. Robert Oppenheimer had reorganized the Institute to emphasize post-doc training for physicists; he was quoted as saying that "the best way to send information is to wrap it up in a person."]
In fact, the new building that had been planned to hold offices for the newly expanded ranks had not been completed on time, so all of the postdocs wound up sharing desks in one large room for the first 6 weeks of their stay – an architectural arrangement perfectly suited for the sharing of tacit knowledge.
They huddled around large tables swapping ideas, pressing Dyson to explain the details of how to use Feynman diagrams. He delivered several sets of long lectures to the group, supplemented by constant, informal conversations.
By the winter of 1948–49, Dyson had organized them into several groups, each working on distinct diagrammatic calculations. One pair, Kenneth Watson and Joseph Lepore, worked with Dyson to calculate high-order terms in a certain model of nuclear forces, while another duo, Norman Kroll and Robert Karplus, took up Dyson’s lead to undertake similarly complex diagrammatic calculations in QED.
So effective were Dyson’s tutorials that Wolfgang Pauli wrote to another of the young Institute theorists that May, asking what Dyson and the rest of the ‘Feynman-school’ were working on.
</blockquote>
(Extra paragraphing added.)
This reminds me of a certain other industry cargo culting a certain other methodology, but I cannot put my finger on it ...
Okay so our products are cheap and simple. But our yearly totals of 50,000 to 100,000 units is comparable to the what Tesla is hoping to get out the door. Tesla's numbers for previous models weren't nearly that high. Gonna be hard to just in time that.
Personal feeling. What an automaker is doing by outsourcing parts to suppliers and then making them manage inventory is. a) they as someone mentioned, keep the inventory management away from the production line. And importantly allowing suppliers to apply higher levels of scale then you could other wise. Important because likely many of Tesla's suppliers production machinery has vastly more capacity then Tesla needs. Telsa and other automakers are thus 'renting' time on those machines.
Frankly I think Tesla is ramping to this scale for the first time, it's bound to be a mess.
Tesla wants to ramp up production as their primary goal right now; if their supply chain is preventing them from doing so then they've funamentally failed.
> I really find it hard to believe they don't understand the TPS.
I agree, but that makes this more confusing and (at least potentially) more damning for Tesla. It's not that hard a concept; if you're running a manufacturing company but you screw up your supply chain badly then...I dunno. Maybe you're bad at running a manufacturing company? Supply chains are really important when you're doing something like making cars. And people having been advocating TPS since before I was even born.
So...it's a conundrum.
It seems more likely to me their "goal" (pun intended for those readers of "The Goal") is the TPS but their particular supply chain may not currently allow for it.