tl;dr: Toyota and Tesla approach manufacturing with fundamentally different mindsets. Toyota emphasizes built-in quality, respect for people, and continuous improvement. Tesla has often prioritized speed, automation, and fixing defects after the fact. Tesla's quality has improved since the “production hell” days of 2017-2018, but inconsistencies persist — especially at Fremont. The NUMMI factory tells both stories, and the lessons apply far beyond auto manufacturing. Updated for 2026.
The Same Building, Three Very Different Cultures
The Tesla factory in Fremont, California has had three lives. From 1961 to 1982, it was a GM plant — one of the worst in the company. Quality was terrible. Labor relations were toxic. GM shut it down.
In 1984, Toyota and GM reopened it as NUMMI, a joint venture run under Toyota's management system. Using largely the same workforce that GM had given up on, NUMMI became one of the highest-quality plants in North America. The difference wasn't the workers. It was the management system — standardized work, built-in quality, respect for people, and the expectation that every team member would speak up about problems.
Read more: Lessons from NUMMI's Closing: NPR's “End of the Line” and What GM Failed to Learn
Embed from Getty ImagesTesla bought the building in 2010. At the time, they had a partnership with Toyota, and their VP of Manufacturing, Gilbert Passin, had significant Toyota experience, including running a Toyota plant in Ontario. Some people who knew the NUMMI story assumed Tesla would continue down that path. But the Toyota partnership “fizzled” and ended. And the management culture that developed at Tesla looked, in many ways, more like the old GM than like NUMMI.
You can check out additional posts and podcasts of mine about the NUMMI story.
Embed from Getty ImagesBuilt-In Quality vs. Fix It Later
One thing that's special about the Toyota Production System is that it seriously puts quality first. Any worker is allowed, if not expected, to stop the line if there is a defect — pulling an andon cord or pushing a button. Many of us in healthcare have advocated for this same mindset, including the patient safety alert system at Virginia Mason Medical Center.
The accusations at Tesla went in the opposite direction. Employees described pressure to keep the assembly line moving, even when problems emerged. Reports described batches of cars being sent through with parts missing — windshields in one case, bumpers in another — with the understanding that these flaws would be fixed later. That's not built-in quality. That's inspection and rework dressed up as production.
As one former Toyota/NUMMI employee, Salvador Sanchez, put it: “Unfortunately there is little to no sign of TPS inside Tesla. I believe that is very intentional.” Bill Waddell, a manufacturing consultant, added: “The evidence is piling up that Tesla leadership has missed the Toyota culture message entirely.”
People vs. Robots: A Lesson Learned the Hard Way
In the 1980s, GM's CEO Roger Smith spent an estimated $90 billion trying to automate away complexity and labor — without first fixing GM's management system or engaging the workforce. The result wasn't world-class manufacturing. It was breakdowns, quality problems, and massive waste.
Read more: GM Spent $90 Billion on Automation — Toyota's Advantage Was Management
Tesla seemed to repeat the pattern. Elon Musk also championed a vision of the “lights-out factory” — fully automated, no people needed. Fast Company reported on a “nearly fetishistic appreciation of automation” at the Model 3 plant. The result was what Musk himself called “production hell.”
Embed from Getty ImagesMusk eventually admitted the mistake publicly:
“Humans are underrated.”
Tesla removed some of the automation, and in at least one case discovered that a heavily automated process — installing fiberglass battery insulation — wasn't even necessary. They tested the car with and without it, found no difference in cabin noise, and eliminated the step entirely.
Toyota's advantage was never “better robots.” Toyota plants are generally less automated than those of American automakers. The advantage is better thinking about when not to automate, and how technology should support people rather than replace them. As Ritsuo Shingo said in my podcast: “If everybody loses their job, is it a happy situation? No. Toyota tries to adapt to many people and try to improve them. The people are key.”
The Culture Difference
Toyota's approach to manufacturing starts with respect for people. At NUMMI, management trusted workers enough to let them pull the andon cord — knowing that a stopped line could cost thousands of dollars per minute. Workers trusted that they wouldn't be punished for surfacing problems. That mutual trust, built through consistent leadership behaviors, is what made the system work.
At Tesla, the reports suggest a different dynamic. Pressure to meet production numbers. Quality concerns getting overridden. Workers who spoke up about safety issues reportedly facing retaliation.
When Tesla was struggling to hit Model 3 production targets in 2018, their head of engineering sent an email memo exhorting workers to try harder — an “us against the world” rallying cry that framed skeptics as “haters.” W. Edwards Deming warned against exactly this kind of management behavior decades ago: “Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the workforce.” The problem wasn't the workers' effort. It was the system they were working in.
I wrote more about the memo and the Deming connection in Lessons from Tesla ‘Schooling' Toyota: Did You Get the Memo?
Meanwhile, Musk was reportedly sleeping in the factory during the Model 3 ramp-up — which some framed as dedication. But contrast that with Toyota's approach to ramping up new models. Susan Elkington, Toyota's first female plant manager, described the Camry and Avalon ramp-up at Georgetown: “There's a lot of education that needs to still happen and to really embrace the Toyota Production System and Lexus mindset. It's not something that happens overnight. It takes years of training.” Toyota invested in developing people. Tesla relied on a heroic CEO working around the clock. One approach scales. The other doesn't.
As Farah Borges at GE Aerospace said in a different context: “Culture can't be declared. You have to build it.” The same building in Fremont has housed three very different cultures. The building didn't determine the outcomes. The management system did.
2026 Update: Has Tesla Improved?
I first wrote about this comparison in 2017, and I've updated this post several times as the story has evolved. It's worth asking: has Tesla's manufacturing quality improved?
The honest answer is yes, somewhat. Musk acknowledged during a 2018 earnings call that “we didn't understand manufacturing complexity” when launching the Model 3. “We were huge idiots and didn't know what we were doing,” he told Bloomberg. That's a remarkable admission — and in a Lean culture, that kind of honesty would be the starting point for serious improvement.
Tesla has made progress since then. The Shanghai Gigafactory, in particular, produces cars with noticeably better build quality than Fremont. Single-piece casting technology for the rear underbody replaced 70+ individual parts with two or three cast components, reducing weld points and alignment errors. The refreshed Model 3 (“Highland”) shows measurable improvements in panel fit, door seals, and interior materials. Owner surveys suggest post-2023 vehicles have significantly fewer defects than earlier production runs.
Embed from Getty ImagesBut inconsistencies persist — especially at Fremont. Consumer Reports ranks Tesla below the industry average for predicted reliability. J.D. Power's 2025 Vehicle Dependability Study tells a similar story. The Cybertruck attracted criticism for body panel alignment issues. And the 2026 Model Y “Juniper” has drawn owner complaints about highway vibrations, with Tesla reportedly telling owners the issue is “within spec.” Panel gaps have become something of a meme in automotive circles, and while they're less severe than they were in 2017, they haven't disappeared.
Embed from Getty ImagesThe pattern is familiar to anyone who studies quality systems. Tesla has gotten better at detecting and fixing defects — better inspection, better automation of quality checks, better iteration between model years. But “getting better at finding and fixing problems after the fact” is a different philosophy than “building quality in at the source.” Toyota's approach is to prevent defects from occurring. Tesla's approach, even as it matures, still leans toward catching them downstream.
Tesla's improvements also seem to correlate with factory maturity — Shanghai is better than Fremont, and Austin is improving. That's consistent with a learning curve, which is normal. But Toyota's insight was that you don't have to wait for the learning curve to flatten on its own. You can accelerate it by investing in people, standardized work, and a culture where problems are surfaced immediately. The question isn't whether Tesla is improving. It's whether they're improving as fast as they could be with a different management system.
What This Means Beyond Auto Manufacturing
The Toyota-Tesla comparison isn't really about cars. It's about two fundamentally different theories of how work should be organized and how people should be led.
One theory says: automate everything, move fast, fix problems later, push people to hit targets. The other says: build quality in, develop people, improve systems continuously, and create conditions where speaking up is expected and rewarded.
I've seen both approaches play out in healthcare, in factories, and in service organizations. The first approach sometimes produces impressive short-term numbers. The second approach produces sustainable results — and it's a better way to treat people.
The NUMMI story shows what's possible when leadership supports disciplined systems and learning. The same workforce that failed under GM succeeded under Toyota's management system. That should give hope to any organization that thinks “our people are the problem.” They probably aren't. The system might be.
What's your experience? Have you worked in — or with — organizations that prioritize speed over quality, or the reverse? I'd be curious to hear how the culture shaped the outcomes.
Frequently Asked Questions
Initially, there was a partnership. Tesla hired manufacturing leaders with Toyota experience, and Toyota invested in Tesla. But the partnership ended, and reports from inside the factory suggest that Toyota Production System practices did not take root. Former NUMMI employees who observed Tesla's operations reported seeing little evidence of TPS.
Because Toyota changed the management system, not the workforce. NUMMI introduced standardized work, built-in quality, team-based problem solving, and the expectation that workers would speak up about problems. Managers were screened carefully to ensure they were committed to the new way of working. The workers responded to being treated differently.
After severe production delays on the Model 3 line, Musk acknowledged that Tesla had over-automated its factory. Some automated processes were removed and replaced with human workers, which actually improved production flow. It echoed a lesson GM learned decades earlier — that automation without a sound management system creates more problems than it solves.
No. Toyota uses significant automation in welding, painting, and material handling. But Toyota is selective about where to automate. The principle is that technology should support people and processes, not replace human judgment and problem-solving capability. Toyota plants are generally less automated than comparable American plants, by design.
Yes, incrementally. Post-2023 vehicles show fewer defects than earlier production runs, and the Shanghai Gigafactory produces noticeably better quality than Fremont. Innovations like single-piece casting have reduced alignment errors. But Consumer Reports and J.D. Power still rank Tesla below the industry average for reliability, and build quality inconsistencies — particularly panel gaps and fit issues — continue to show up, especially in vehicles built at Fremont. The improvements are real, but they reflect a “detect and fix” philosophy more than Toyota's “prevent at the source” approach.
The core lesson is that culture and management systems matter more than technology or speed. Organizations in healthcare, software, and service industries face the same choice: invest in building quality into processes and developing people, or push for output and fix problems after the fact. The NUMMI story shows that the same workforce can produce very different results depending on the management system around them. That applies whether you're building cars, caring for patients, or shipping software.
Early Twitter comments:
LinkedIn Comment(s):
Starting with Bob Emiliani:
As Scholtes and others said, when there are arbitrary targets and people are placed under pressure, people can do three things:
1) Distort the system (let quality slide)
2) Distort the numbers (underreport quality problems)
3) Improve the system
Tesla claims they are improving productivity and quality year over year, so there’s a bit of #3. But also a lot of #1 and #2?
More from LinkedIn:
Salvador D. Sanchez (a former Toyota/NUMMI employee)
Sr. Manager of Global Operations Excellence Improvement Group at Dana Holding Corporation
Bill Waddell
Principal at Bill Waddell Manufacturing Leadership Support
Two former NUMMI group leaders commented on LinkedIn:
And
I wonder if Elon made any public comments about Toyota?
From this 2010 Tesla release:
Elon said:
Interesting
WOW Holly Crap. Can we send them the book Management Lessons From Taiichi Ohno .
Would at least have them take pause , And reflect on the system they are building , Not that mine is flawless , Thanks for Sharing
Here is a post of mine from 2013 that I should have thought to incorporate into the post:
Elon Musk Wrongly Pooh-Poohs Process as a Substitute for Thinking
I share my reactions to his comments in that linked post.
Interesting comment on LinkedIn:
There is a job posting currently for “Associate Manager, Lean Team.”
Copying and pasting to save for posterity. It’s good that it doesn’t require a “belt” (they aren’t confusing Lean with Lean Six Sigma). But, the job posting seems to really focus on tools for team members and projects. What about the culture and management system?
Description
As the Associate Manager for Lean Team, you will work across the organization and lead a team to help launch and support departmental and company-wide initiatives, develop and use lean tools and systems, create global standards, and identify and drive process improvements. This role will require an understanding of lean methodologies and the ability to influence the organization to adopt such methodologies. Key factors for success will be demonstrating proficiency in a broad range of skills needed to successfully lead and support a team in driving lean initiates throughout the organization.
Responsibilities and Requirements
Manage daily operations and performance of a team of Lean Coaches
Facilitate, train and coach team members in the use of Lean concepts and methodologies
Create and manage detailed project plans for the development and implementation of new initiatives, including employee engagement and recognition programs
Drive measurable improvement in support of operational objectives; generate and publish status reports and relevant key performance metrics
Demonstrate the ability to spend his/her time, and the time of others, on what’s important; quickly zeros in on the critical few and puts the trivial many aside; can quickly sense what will help or hinder the accomplishing of a goal; eliminates road blocks and creates focus
Qualifications
Demonstrated success in transformative process improvement efforts
Experience in project management and employee supervision
Able to work in a fast-paced and ambiguous environment
Strong analytical skills
Expertise in lean methodologies, tools, and best practices
Excellent leadership, communication (written and oral), and interpersonal skills
Bachelor Degree Required
From the news:
Tesla employees say automaker is churning out a high volume of flawed parts requiring costly rework
Another article:
Commentary: Elon Musk is today’s Henry Ford, and that’s not a good thing
I like how you were able to compare everything Tesla is doing in their production to Toyota to point out the difference in quality. It is clearly evident that Tesla is unable to meaningfully change their production process in order to keep up with their demand/ deadlines. Furthermore, this decreases quality because the whole process is rushed.
Such an interesting article! Truly shows the important of Lean and eliminating waste when such a large (90) percent of vehicles are not even leaving the shop area without a defect. Implementing Lean from the early stages is the best way to prevent any numbers like that from showing up!
Thank you for Bill for this Insightful article. There is tremendous interest in what TESLA does and also deep curiosity on the extent to which it imbibes Toyota’s Philosophy. Sadly TESLA seems to be in a hurry and do not believe in “build a culture of stopping to fix problems, to get quality right the first time”, ………………………………………………………….all-in-all, leading to high rework rates. I guess, this is yet another case of ‘Culture eating strategy for breakfast’, as elegantly articulated by the Management Guru Peter Drucker. One hopes that TESLA is learns fast, as other car companies are moving at blistering pace to reduce the technology gap and come up with better products
This discussion is not complete without reference to “The Algorithm.” Discussed well in Jon McNeil’s new book, with both Tesla and non-Tesla examples, this five step approach embodies much of lean in a fresh, even radical, way. Rapid learning and relentless elimination of waste can be observed in both Tesla’s products and its processes. We should also remember that in car company years, Tesla is still a new born.
The discussion should also reference Jay Leno’s video on the new Tesla Semi truck where he talks in detail about its design and prove out with its chief engineering. In my view this story exemplifies much of the best of lean, including how they spend time with drivers in the gemba.
There are certainly some positive things happening. But I don’t think Tesla will ever reach full potential as long as Elon is CEO. He clearly doesn’t like it when people speak up and challenge him.
See Cybertruck.
I found this a really interesting comparison, I liked the idea that the NUMMI factory proved it wasn’t the workers but more the system that created their results. The difference between building quality versus fixing it later when it breaks stood out to me and it sounds like Toyota is thinking long term while Tesla is not.
I liked what you had to say about automation and how it should be used to support people not to replace them. I think as AI is taking over now this could be important in other sectors then just manufacturing as well.
Do you think that Tesla will one day start building things to last and think long term or will their speed approach be how they always operate?
Their culture won’t change until they get a new CEO someday.