The weakest link in the Karma battery

This is just too relevant for quality management to pass by. Plus it is about a nice car, which makes it even more difficult to ignore. The car is Fisker Karma, the plug-in hybrid with a massive battery pack. The issue is with the battery pack, supplied by A123 company. This piece from Bloomberg provides a fairly comprehensive overview of the case, but here are couple of excerpts that are particularly interesting:

Five customers are potentially affected by the defects, David Vieau, the company’s chief executive officer, told reporters today in a conference call. The root cause of a $107,000 Fisker Karma model shutting down in tests this month by Consumer Reports is associated with A123’s defective batteries, Vieau said, without naming other customers.

 

The cause of the defects described today was faulty calibration of one of four welding machines in the Michigan plant that caused misalignment of a component in some cells, Vieau said today. The flaw could cause an electrical short, which could result in premature failure of the battery or decrease performance and reduce battery life, he said.

 

While the rate of total cells welded by the faulty machine is “a fraction” of the product A123 made in the Michigan plant, the probability is “very high” that a module or pack contains a defect because of the number of cells that go into them, Vieau said. “We feel that virtually all the product that we produce in this facility has been effectively contaminated by this particular defect,” he said.

First, it is commendable that A123 has identified the root cause and were able to nail it down to a particular production step, and they’ve done so pretty quickly. Second, the case underscores the importance of quality management when there is a massive interaction between components in a product. One faulty part out of a thousand can trigger a chain reaction, thus leading to the failure of the entire product. In this case, it is surprising that such possibility was not prevented by the design of the battery.

A123 seems to be doing well in terms of damage control though. For one thing they are undertaking the replacement of $55M worth of batteries made at the Michigan plant. Also they are upping warranty terms on Karma’s batteries, clearly betting on the future demand. Such level of interaction between the companies is remarkable. Probably it has to do with the fact that A123 holds a stake in Fisker who is its major customer.

 

Will globalization help Ford manage inventory?

So here we go again – car inventory at Ford is growing, specifically, new Focuses and Fiestas. WSJ reported on this recently and so did my colleagues at Kellogg. The graph of inventory is indeed telling, so I’ll repost it here.

We know what such inventory stockpiles usually leads to – lower prices. This time, though, it can be different.

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