The Crucial Role of Quality Management in Tesla's Giga Shanghai Factory

Tesla Gigafactory in Shanghai is an example of efficiency, technological innovation and manufacturing quality, at a world level. The person largely responsible for this significant achievement is Tom Zhu, its Head of Operations, who just recently visited two US Tesla plants.

Analyzing the history of the car industry, we find that W. Edward Deming was an American engineer and consultant, broadly recognized as the father of total quality management in automotive manufacturing. He is considered one of those responsible for the progress of the industry, thanks to the development of a series of functional and economic theories that, for years, have supervised the production of vehicles that are manufactured in almost the entire world.

Deming's theories were far ahead of his time: he claimed that organizations that focus on reducing only production costs automatically lower the quality of their products. Conversely, those that focus on improving quality automatically lower costs. This is - in part - the basis for the success of the Giga Shanghai's operations. Reducing costs without reducing quality, based on the principles of quality management formulated by Deming, has enabled Tesla to become the successful global company it is today.

The manufacturing quality of a vehicle is key in the automotive industry. The systems that monitor the entire assembly line ensure that 99.9% of the units coming out production lines meet the specified quality (and therefore also safety) requirements. For vehicle owners, this basically means there is a high probability of receiving a unit that will not have problems in the future.

But achieving this standard is in fact not so easy: the entire system is based on statistical methods that reveal the efficiency of all a company's procedures and its ability to create a quality product. By relating these results with its administration at an economic level, the long-awaited increase in productivity is achieved.

This is the basic reason why Tesla has made the Giga Shanghai an important part of its long-term strategy. This factory produces some of the highest quality electric cars produced by Tesla, while also keeping production costs to a minimum. In addition to the Gigafactory, Tesla has been able to benefit from China's advanced industrial base that is well-suited to its manufacturing needs: from intelligent robots and advanced machines, to well-developed supply chains and technology, Tesla has been able to leverage the Chinese manufacturing industry to significantly increase the quality of its vehicles.

Although Tesla has already been making electric cars for more than 10 years, it is still a newcomer to the industry, somehow. The problems of youth have become palpable in its first vehicles, which - in some specific cases - still suffer from defects that are not found in legacy car brands that have been in this sector for many more years.

Tesla has worked on its production processes and on the training of its operators to fight against this scourge. Every time production of a new model or operations of a new plant start up, reservation holders, new customers and the media in general look for these quality issues. The latest episode in this story is the arrival in the United States of Tom Zhu, head of operations for the Shanghai Gigafactory in China, to assess and fix Fremont's procedures.

Zhu is largely credited with resurrecting Giga Shanghai after multiple lockdowns caused by the Covid-19 pandemic. The results speak for themselves. With a workforce of 20,000, the plant increased Model 3 and Model Y production by more than 70% in the third quarter of 2022, accounting for more than half of Tesla's production. Giga Shanghai's success has been a bright spot in Tesla's otherwise complicated manufacturing history.

The Gigafactory and the principles of quality management have enabled Tesla to decrease its production costs while ensuring the highest quality and safety standards. The attention to detail at every stage of production, combined with the advantages of the Chinese market, have enabled the brand to manufacture cars with fewer defects and resale values that are among the highest in the industry.

In addition, it has made great strides in applying technological innovations to assembly processes, significantly reducing production costs. This visit comes surrounded by rumors about Elon Musk's possible intention to improve the executive staff dedicated to operations in the US.

James Murdoch, a Tesla board member, recently claimed that the company had identified a candidate to lead Tesla. Among the probable names appeared that of Zhu, who was claimed to be being groomed for the position, although there is really no evidence or official information on this coming from the company.

All images courtesy of Tesla Inc.

Nico Caballero is the VP of Finance of Cogency Power, specializing in solar energy. He also holds a Diploma in Electric Cars from Delft University of Technology in the Netherlands, and enjoys doing research about Tesla and EV batteries. He can be reached at @NicoTorqueNews on Twitter. Nico covers Tesla and electric vehicle latest happenings at Torque News.