Tesla Assembled Like Lego... Affordable Chinese Cars Have Changed 100 Years of Manufacturing Processes

Ford Conveyor Belt Process → 'Lego Block' Assembly
Tesla "Production Cost Halved"

Tesla is drastically changing a 100-year-old manufacturing process to compete on price with affordable Chinese electric vehicles.

On the 28th of last month (local time), Bloomberg reported that Tesla plans to introduce a new manufacturing process.

[Image source=Reuters Yonhap News]

Tesla stated that changing the production method would reduce the process by more than 40% and cut production costs in half. Bloomberg Intelligence estimated that adopting the new modular manufacturing process could reduce manufacturing costs by about 33%.

Currently, most automobile factories, including Tesla's, follow the linear conveyor belt method created by Henry Ford 100 years ago. Steel plates are welded to form the car body, which is then placed on a conveyor belt to assemble various parts along the process.

Tesla's new production method, called the 'Unboxed' process, is similar to assembling Lego blocks. First, workers are divided into small groups and assemble key components in dedicated spaces, then assemble the completed major parts all at once in one place without moving the car body.

Elon Musk, Tesla's CEO, referred to the new manufacturing method as a "revolutionary manufacturing system" during the company's earnings announcement in January. He said, "It is far more advanced than any automotive manufacturing system in the world."

[Image source=Yonhap News]

Matthew Bachaparamphil, CEO of CareSoft, said that if Tesla's manufacturing innovation succeeds, it will have tremendous financial significance. CEO Bachaparamphil predicted at least a 50% cost reduction in the painting process alone.

However, some critics point out that Tesla's new process has not yet been proven and that inefficiencies and risks may exist.

If Tesla's process innovation succeeds, it could lower vehicle prices, stimulate demand, and positively impact the stock price. Although the S&P 500 index has risen 10% this year, Tesla's stock price has fallen 28% during the same period.