The "production capacity hell" that almost made Musk finish, it was Yu Chengdong's turn

Yu Chengdong, who was stimulated by the surge of orders and shouted "come back from the dead", is still one delivery distance away from leading the world to really come back to life.

The alphabet list learned that since its launch on September 12, as of the end of October, the cumulative number of new M7 has reached 80,000. Compared with the car sales data of 75,000 units in 2022, this means that the performance of the new M7 in more than a month has surpassed the sales performance of the whole year last year.

The unexpected outbreak of orders caught Cialis and Huawei behind the question world off guard. According to 36Kr PowerOn, at the beginning of the new M7 launch, the expectation sent to the supply chain by Wenjie was only about 8,000 vehicles per month, and the average daily output was less than 300.

A planned surge in production capacity was temporarily deployed to the Wenjie production line. According to a document leaked internally, the new M7 is required to complete the first phase of production capacity upgrade by October 5, and the daily production capacity is expected to reach 450 vehicles; The second phase of the production capacity upgrade will be completed by November 1, and the daily production capacity is expected to reach 750 vehicles. According to this calculation, Yu Chengdong needs to lead Wenjie to gradually reach the threshold of 5,000 vehicles per week.

In the electric vehicle industry, a weekly output of 5,000 vehicles is becoming an important indicator to measure whether a car company can be profitable at scale. After the start of mass production of the Model 3 in 2017, Tesla was dragged into a "capacity hell" crisis by the frenzied influx of orders. Under Musk's leadership, Tesla became the first electric car company to achieve a weekly output of 5,000 units, and began to embark on the road of scale profitability.

Judging from the data released by the third-party platform, after entering October, the weekly production of Wenjie is gradually climbing, from 1,300 vehicles in the first week of October to 3,900 vehicles in the fourth week of the month.

However, the speed of increasing the production capacity of Wenjie is still far from meeting the current accumulated order delivery demand. Even if the maximum daily production capacity is 750 units, it will take at least 3 months to complete a large order of 80,000 units. According to a list of the delivery date of the new M7 learned by the alphabet list, users who are scheduled before October 16 will have a waiting period of 4-6 weeks to pick up the car; Users who pay from October 17th to November 30th will have to wait 8-10 weeks. This means that customers who order a new M7 now will have to wait until mid-January 2024 to expect to pick up the car.

Compared with the production capacity hell encountered by Musk five years ago, in the face of the current situation where orders are in short supply, Yu Chengdong needs to face a lot more challenges.

A

Musk has come up with a path for a number of electric vehicle companies to improve production capacity, which boils down to three axes - deploying troops, optimizing production processes, and expanding production capacity.

Musk introduced his favorite "hardcore" concept into the automotive field, and in solving the Model S production capacity ramp-up, Musk deliberately told all employees, "Please be prepared for the super high work intensity, which most of you have never endured before." People who are not strong enough in psychology cannot subvert an industry. ”

After the Model 3 started mass production in July 2017, Musk took the lead in practicing the "hardcore" working method and lived directly on the factory floor after setting an aggressive goal of producing 5,000 Model 3s per week.

When the director in charge of the battery pack production line told Musk that it would take another year to expand production, Musk immediately transferred him and found a new person in charge, and even Doug Field, senior vice president of engineering, who was once seen as a strong contender for Tesla's future CEO, was stripped of his authority by Musk during the mass production hell.

In the process of ramp-up the production capacity of the new M7, Yu Chengdong also came to the field to dispatch troops within the world: before the National Day holiday, Wang Yanmin, president of Huawei Smart Car, was sent to Cialis to personally monitor the delivery; The product director of the old M7 model was also directly replaced by Yu Chengdong.

At the time of the replacement of the new production line leader, Musk also began to keep an eye on the production process in detail, trying to solve the unnecessary links that hindered efficiency.

Throughout the spring and early summer of 2018, Musk walked back and forth in the Fremont factory and made various decisions on the fly. Musk himself has calculated that when the situation is good, he can give 100 orders a day in the factory. "At least 20 percent of the orders are wrong, and we have to correct them later." Musk said, "But if I don't make these decisions, Tesla is finished." ”

Elon Musk

This is a concrete manifestation of the "first principles" that Musk has always advocated. In Musk's view, everyone should first question each requirement before starting their work, "The only rules to follow are the rules that can be derived from the laws of physics, everything else is just suggestions." Guided by these principles, Musk has taken the initiative to correct his mistakes in relying too heavily on automation.

Yu Chengdong is also looking for ways to optimize the product performance of the new M7. According to 36Kr PowerOn, after receiving product feedback from relatives and friends, Yu Chengdong will ask the product department and the quality department to carefully sort out, "If it doesn't work, improve it immediately, and whoever doesn't implement it will kill whom." ”

But the deployment of troops and process optimization alone will not be enough to achieve the aggressive goal of producing 5,000 vehicles per week. By the end of May 2018, the weekly production capacity of the Model 3 reached 3,500 units, which is less than a month and a half away from Musk's promise to Wall Street to reach 5,000 units per week by the end of June.

To make matters worse, at that time, Tesla's two Fremont assembly lines were already running at full capacity, and Tesla would not be able to build another factory for at least a year, or even get a permit to start work.

Musk has found a way to break the game using unconventional thinking methods. On May 22, 2018, at a meeting at the Fremont factory, Musk said to his subordinates, "Go get a permit, and then let's set up a huge tent and come out, and then we'll pay the fine." ”

Two weeks later, Tesla erected a tent 1,000 feet long and 150 feet wide, enough to accommodate a makeshift assembly line. At 1:53 a.m. on July 1, 2018, a black Model 3 with a paper banner reading "5,000th Car" on its windshield rolled off the assembly line.

The tricks to expand production capacity were also used by Yu Chengdong in the new M7. During the National Day, the second factory of Cialis, which is responsible for the production of the new M7, opened an emergency recruitment and changed the production line from the original single-shift system to the two-shift production of day shift and evening shift. After the National Day holiday, Yu Chengdong said that in order to catch up with production capacity, he will invest an additional 1 billion yuan in the entire industrial chain and supply chain, and recruit 20,000 new workers.

B

The consequences of delivery delays caused by the inability to successfully solve the production capacity problem have also made a lesson for Yu Chengdong and Wenjie.

In December 2021, when NIO released the electric coupe ET5, the surging orders once paralyzed the NIO APP for up to 10 minutes.

However, the scenery of NIO ET5 when it was launched did not last long. The well-received and well-received NIO ET5 is stuck in the delivery link. Deliveries of the NIO ET5 did not begin until the end of September 2022, nearly a year after the launch of the new car. A first-line sales person said, "The order in October last year can be delivered until April of the following year, which is equivalent to waiting for half a year." ”

By 2023, NIO ET5, which solves the problem of capacity ramp-up, has already missed the opportunity to sell hotly, and under the backlog of inventory, NIO has to help ET5 clear its inventory by repeatedly subsidizing and reducing prices.

Li Bin reflected at the internal event of NIO's eighth anniversary, "The biggest cost in business is not money, but opportunity cost. ”

Also missing opportunities because of the difficulty of delivery is Xiaopeng. When the Xpeng G9 was launched in 2022, He Xiaopeng once hoped that the G9 could surpass the Audi Q5 and sell more than 10,000 per month. However, a year later, the cumulative total sales of Xpeng G9 are less than 10,000 units.

At the 2024 Xpeng G9 re-launch conference in September this year, He Xiaopeng summarized the seven major problems encountered when the G9 was listed, one of which was delivery, "The delivery is not timely, and the refund is serious." ”

Source: Xpeng official website - Xpeng G9

If the problem of capacity ramp-up is not solved, the delivery tragedy that happened to NIO ET5 and Xpeng G9 may not be repeated on the new M7.

Aside from the halo blessing of the Huawei brand, the new M7 did not show a faulty lead in terms of product strength, as the follow-up competitors came up with more cost-effective models, it is not excluded that those users who like the new M7 will switch to the new embrace, such as the ideal L6 that will be launched next year, will be the ideal first model below 300,000 yuan, and its price range will be consistent with the new M7.

In order to attract new users as much as possible and maintain the waiting patience of the next user, on the one hand, the question continues to extend the right to buy a car, after the expiration of the first batch of users' car purchase rights of 33,000 yuan on October 7, on October 8, the world launched a new round of preferential policies, as of November 30, new users will be able to enjoy the highest value of 27,000 yuan of rights. On the other hand, Wenjie has also launched an overdue subsidy. Once the user fails to pick up the car within the specified time, the compensation will be 200 yuan for each day overdue, and the cap of 10,000 yuan will be paid.

C

The bigger capacity challenge for Yu Chengdong and Wenjie is that as the number of model lineups increases, the pressure on delivery will become greater.

Even if it is as strong as Tesla, when its models increase to 6, it is still difficult to escape the production capacity hell crisis.

As Tesla's sixth car to be delivered, the Cybertruck electric pickup truck, which was unveiled in August 2019, was finally scheduled for delivery on November 30 this year after several delays, but the production hell that the Model 3 experienced once again befell the Cybertruck.

At the Q3 earnings conference, Musk explained, "Prototypes are easy, production is difficult, and achieving mass production is 10,000 times more difficult than making prototypes at the beginning." And believes that Tesla is "digging its own grave" with the Cybertruck.

Source: Cybertruck's official Twitter

In the four years since its debut, the Cybertruck has collected more than 1 million orders, but according to Musk, the annual production capacity of the Cybertruck will not reach 250,000 units until 2025. In a recent interview with a podcast, Musk revised the figure to only about 200,000 Cybertrucks could be produced in 2025. According to this calculation, it will take at least 5 years to complete the original million orders, not counting the subsequent influx of new orders.

Musk's pain may soon be shared by Yu Chengdong. After announcing in September that the large-size SUV Wenjie M9 will be launched in December, according to the official introduction, by the end of October, the blind order for Wenjie M9 has exceeded 15,000 units.

In order to solve the ramp-up of the new M7 production capacity and ensure the timely delivery of the M9, it was revealed that Cialis was negotiating the acquisition of Beijing Hyundai's Chongqing factory to expand the production capacity of the new M7 and cope with a large number of orders after the launch of the M9.

In October this year, Beijing Hyundai's Chongqing factory was listed for transfer for the third time, and the latest selling price was reduced to 1.917 billion yuan, a price reduction of 1.767 billion yuan from the first listing of 3.684 billion yuan, and a price reduction of 663 million yuan from the second listing of 2.58 billion yuan. The plant, which was completed and put into operation in August 2017, is expected to have an annual production capacity of 300,000 vehicles.

The "barrel effect" is becoming a new competitive element for Chinese electric vehicle companies. In addition to catching up with competitors in terms of products and technology, delivery is also not to be missed.

Resources:

"Elon Musk Biography", CITIC Publishing Group

"Asking the World to Come Back to Life, Huawei Shocks the Car Circle" 36 Krypton

"Cialis makes cars, Huawei "spot checks"" car pixels

"NIO, Cyclical Crisis and Self-Help" launched PowerOn

"Xiaopeng's "Sweet Troubles": The explosive G6 is sad to pass the delivery level? 》Tech Planet