Just days after Elon Musk gave a softball interview to "CBS This Morning" explaining Tesla's efforts to boost Model 3 production to Musk's target of 2,000 a week (down from the 5,000 a week he had initially promised), Buzzfeed News is reporting that the company is temporarily shutting down production of its Model 3 sedan to "improve automation."
Of course, this comes after Musk famously claimed Tesla was relying too heavily on robots to run its assembly line (a sentiment he echoed in his CBS interview) - and that this was at the root of the company's "production hell".
Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.— Elon Musk (@elonmusk) April 13, 2018
Workers at the factory told Buzzfeed that the announcement of the temporary closure - expected to be only four or five days - came without warning, and that most workers are expected to use vacation time or stay at home pay during the break.
Just a few days after Tesla CEO Elon Musk said he’s feeling optimistic about his ability to speed up production on the company’s vehicles, the assembly line for the Model 3 in the company’s Fremont, California plant has been temporarily shut down — again.
The announcement of the four- to five-day production pause for Model 3 came without warning, according to Tesla employees who spoke with BuzzFeed News. During the pause, workers are expected to use vacation day or stay home without pay; a small number of workers may be offered paid work elsewhere in the factory.
A Tesla spokesperson said that the assembly line is on pause in order to “improve automation.”
The news hit Tesla shares like a brick...
The company previously shut down production in late February. Also, last fall, the Wall Street Journal famously reported that Tesla had been assembling Model 3's by hand.
As Buzzfeed reminds us, Tesla's inability to meet production goals has been the primary factor behind the deluge of criticism it has faced in recent months, ever since the company botched the Model 3 rollout.
Over the last six months, Tesla’s inability to meet its production goals has become a mounting problem for the company. The most recent miss came at the end of the first quarter of 2018; Musk had said the company would be manufacturing 2,500 cars a week by that date, but it was making only 2,000 per week by April 1. Now, just two weeks later, production is once again on hold.
Tesla's current goal is to manufacture 5,000 cars per week by the end of the second quarter; 5,000 per week had initially been its year-end goal for 2017.
These production problems — as well as a lackluster reviews of the new Tesla model and alleged problems with its Autopilot technology — could put Tesla on the path to bankruptcy, CNN (and others) have reported. Musk’s only comment on this possibility to date has been an April Fool’s joke in which he pretended the business, which employs more than 30,000 people, had in fact gone out of business, and that he was wandering Palo Alto drinking a fake product called Teslaquilla.
Tesla’s struggle to hit ambitious production goals has been a priority for years, at times above issues like worker safety. Tesla has denied these claims, and says its factory is getting safer, though a recent investigation by the Center for Investigative Reporting suggests the company’s evidence of improvement may be inaccurate. Musk himself has referred to the factory during high-stress periods as “production hell” and told CBS’s Gayle King that the last few months have been “incredibly difficult and painful.”
To be sure, Tesla says the temporary shutdown is part of the "Model 3 rampup" that Musk has been touting in the media.
But regardless of the reasons behind the shutdown, it should go without saying that this won't help Tesla turn cash-flow positive in Q3...
But, on some level, Elon Musk must be relieved about the shutdown.
After all, it's probably a lot easier to catch some midday ZZZs on the floor of your factory without all of those machines running at full capacity.