Dive Brief:

• Tesla Motors is going straight to launch for its Model 3 sedan in order to achieve a September production deadline, Newsweek reported Monday. The company will skip the usual prototype step after a mishap involving soft tooling delayed the premiere of the Model X SUV in 2015.
• The company is under pressure to deliver the new vehicle by September to the 373,000 customers who have pledged to purchase the vehicle. The sooner it does this, the sooner it can collect an estimated $13 billion to help continue to fund projects. 
• Skipping the prototype stage will help the automaker meet this deadline, with CEO Elon Musk promising computer simulations will replace the process. Yet, Newseek reports this could involve significant risk of expensive part replacements if something goes wrong.

Dive Insight:

Tesla's decision to skip the prototype phase of production is an intriguing experiment, but also not completely out of line with recent trends in automotive manufacturing.

When the financial crisis hit in 2008, auto supply chains were forced to adopt lean strategies to slim costs while maintaining production. The automotive industry requires hundreds if not thousands of parts to be sourced from dozens of suppliers worldwide; but if inventory is to remain low, all the products must arrive at the same time. This strategy requires tight control of logistics and pristine communication.

This just-in-time manufacturing strategy is now both common and an accepted practice within the industry. Other related practices include incentivizing suppliers to move production closer to assembly plants, thereby reducing transportation time and costs while increasing agility in case of emergencies.

Now, Tesla is pushing the envelope by suggesting technology may have rendered the prototyping stage outdated. Some major automotive makers are already experimenting with 3-D printing technology to help speed the process, which relies on cheap material anyway to test and alter designs. Tesla, however, believes the time and material costs can be avoided altogether with software.

Yet, prototyping exists not just for design purposes but also to minimize the risk of recalls. As several major brands faced major recalls in the past years, lean cultures and speed-to-market strategies were heavily scrutinized as a potential risk to the quality assurance process. 

Tesla itself faced this problem last year, when an allegedly faulty microchip led to a fatal crash as the company tested its autopiloted vehicle. Similarly, but in the electronics industry, Samsung was scrutinized last year for its spontaneously-combusting Samsung Galaxy Note 7, whose quality and design defects may have been overlooked (twice) in a rush to produce, recall and remanufacture the smartphone. 

While no lives were lost, the debacle cost Samsung roughly $3 billion dollars, enough to teach it, and other industries, a good hard lesson. If Tesla succeeds in scrapping the prototype stage without issues, it may prove as game-changing for the industry as just-in-time did. But will such savings eventually come at a cost to quality, design and safety? Only time will tell.