Tesla Switching To 24/7 Shifts As Musk Targets 6,000 Model 3s Per Week

Tesla shares popped in after-hours trading on Tuesday after popular electric vehicle blog Electrek published a "leaked" email sent by Elon Musk to all Tesla employees about certain changes that will be made at Tesla's two US factories that Musk says will help the company increase Model 3 production to 6,000 cars a week by the end of June.

Part of this plan involves the temporary shutdown reported yesterday, which is meant to allow a "comprehensive set of upgrades". Another shutdown is planned for May. 

But the section of the email that probably caught the market's eye (hopefully it's learned that Elon's production projections are about as reliable as a tea-leave reading) was buried midway through the email in a section where Musk describes certain cost-control measures he's undertaking. From here on out, any expenditure over $1 million must be personally approved by Musk. Until then, managers are to consider them on hold.

That sent Tesla shares higher, though they quickly retraced some of the bounce.

Tesla

Of course, Electrek says the email was leaked by an anonymous Tesla employee.

Because we're sure Musk never wanted a note expressing his commitment to fiscal responsibility to see the light of day less than a week after he pledged to take the company cash flow positive in less than six months.

Here's the full email:

Progress, Precision and Profit

Elon Musk

Everybody

Progress

First, congratulations are in order! We have now completed our third full week of producing over 2000 Model 3 vehicles. The first week was 2020, the second was 2070 and we just completed 2250 last week, along with 2000 Model S/X vehicles.

This is more than double Tesla’s weekly production rate last year and an amazing feat in the face of many challenges! It is extremely rare for an automotive company to grow the production rate by over 100% from one year to the next. Moreover, there has simultaneously been a significant improvement in quality and build accuracy, which is reflected in positive owner feedback.

Starting today at Giga and tomorrow at Fremont, we will be stopping for three to five days to do a comprehensive set of upgrades. This should set us up for Model 3 production of 3000 to 4000 per week next month.

Another set of upgrades starting in late May should be enough to unlock production capacity of 6000 Model 3 vehicles per week by the end of June. Please note that all areas of Tesla and our suppliers will be required to demonstrate a Model 3 capacity of ~6000/week by building 850 sets of car parts in 24 hours no later than June 30th.

Any Tesla department or supplier that is unable to do this will need to have a very good explanation why not, along with a plan for fixing the problem and present that to me directly. If anyone needs help achieving this, please let me know as soon as possible. We are going to find a way or make a way to get there.

The reason that the burst-build target rate is 6000 and not 5000 per week in June is that we cannot have a number with no margin for error across thousands of internally and externally produced parts and processes, amplified by a complex global logistics chain. Actual production will move as fast as the least lucky and least well-executed part of the entire Tesla production/supply chain system.

By having a Model 3 subsystem burst-build requirement of 6k by the end of June, we will lay the groundwork for achieving a steady 6k/week across the whole Model 3 system a few months later.

As part of the drive towards 6k, all Model 3 production at Fremont will move to 24/7 operations. This means that we will be adding another shift to general assembly, body and paint. Please refer anyone you know who you think meets the Tesla bar for talent, drive and trust. Between Fremont and Giga, Tesla will be adding about 400 people per week for several weeks.

Precision

Most of the design tolerances of the Model 3 are already better than any other car in the world. Soon, they will all be better. This is not enough. We will keep going until the Model 3 build precision is a factor of ten better than any other car in the world. I am not kidding.

Our car needs to be designed and built with such accuracy and precision that, if an owner measures dimensions, panel gaps and flushness, and their measurements don’t match the Model 3 specs, it just means that their measuring tape is wrong.

Some parts suppliers will be unwilling or unable to achieve this level of precision. I understand that this will be considered an unreasonable request by some. That’s ok, there are lots of other car companies with much lower standards. They just can’t work with Tesla.

Profit

A fair criticism leveled at Tesla by outside critics is that you’re not a real company unless you generate a profit, meaning simply that revenue exceeds costs. It didn’t make sense to do that until reaching economies of scale, but now we are there.

Going forward, we will be far more rigorous about expenditures. I have asked the Tesla finance team to comb through every expense worldwide, no matter how small, and cut everything that doesn’t have a strong value justification.

All capital or other expenditures above a million dollars, or where a set of related expenses may accumulate to a million dollars over the next 12 months, should be considered on hold until explicitly approved by me. If you are the manager responsible, please make sure you have a detailed, first principles understanding of the supplier quote, including every line item of parts & labor, before we meet.

[ZH: And that's how Musk creates the impression of lower cash burn - stops paying bills?]

I have been disappointed to discover how many contractor companies are interwoven throughout Tesla. Often, it is like a Russian nesting doll of contractor, subcontractor, sub-subcontractor, etc. before you finally find someone doing actual work. This means a lot of middle-managers adding cost but not doing anything obviously useful. Also, many contracts are essentially open time & materials, not fixed price and duration, which creates an incentive to turn molehills into mountains, as they never want to end the money train.

There is a very wide range of contractor performance, from excellent to worse than a drunken sloth. All contracting companies should consider the coming week to be a final opportunity to demonstrate excellence. Any that fail to meet the Tesla standard of excellence will have their contracts ended on Monday.

Btw, here are a few productivity recommendations:

– Excessive meetings are the blight of big companies and almost always get worse over time. Please get of all large meetings, unless you’re certain they are providing value to the whole audience, in which case keep them very short.

– Also get rid of frequent meetings, unless you are dealing with an extremely urgent matter. Meeting frequency should drop rapidly once the urgent matter is resolved.

– Walk out of a meeting or drop off a call as soon as it is obvious you aren’t adding value. It is not rude to leave, it is rude to make someone stay and waste their time.

– Don’t use acronyms or nonsense words for objects, software or processes at Tesla. In general, anything that requires an explanation inhibits communication. We don’t want people to have to memorize a glossary just to function at Tesla.

– Communication should travel via the shortest path necessary to get the job done, not through the “chain of command”. Any manager who attempts to enforce chain of command communication will soon find themselves working elsewhere.

A major source of issues is poor communication between depts. The way to solve this is allow free flow of information between all levels. If, in order to get something done between depts, an individual contributor has to talk to their manager, who talks to a director, who talks to a VP, who talks to another VP, who talks to a director, who talks to a manager, who talks to someone doing the actual work, then super dumb things will happen. It must be ok for people to talk directly and just make the right thing happen.

In general, always pick common sense as your guide. If following a “company rule” is obviously ridiculous in a particular situation, such that it would make for a great Dilbert cartoon, then the rule should change.

If there is something you think should be done to make Tesla execute better or allow you to look forward to coming to work more (same thing in the long term), please send a note to [redacted]

Thanks for being such a kickass team and accomplishing miracles every day. It matters. We are burning the midnight oil to burn the midnight oil.

Elon

Comments

RafterManFMJ SethPoor Tue, 04/17/2018 - 17:57 Permalink

LOL!!

We work 24/7 - it's called a 21 turn schedule - this tool is ONLY NOW realizing they can run a line 24/7? 

I call pure horseshit; just Musk spinning as fast as he can all those plates he has in the air 

And here's another prediction - they are suffering critical component shortages of some type and won't be able to run 21 turns

In reply to by SethPoor

gregga777 RafterManFMJ Tue, 04/17/2018 - 18:08 Permalink

Study that passage real carefully where he asks for the identity of any supplier(s) or department(s) that are unable to achieve 6,000 units per week: 

  • Does the Tesla factory shipping & receiving department(s) have sufficient labor and organizational capacity for 6,000 total parts of all kinds per week?
  • How many Tesla's will be rolled out to storage yards missing critical assemblies?
  • What if the missing sub-assemblies require disassembly of previously assembled parts? 
  • Has Tesla frozen the engineering designs of all parts or are they still making changes while simultaneously trying to ramp up the production rate? 
  • What is the current Tesla battery pack production rate at the Gigafactory?
  • Are all of those completed Tesla's equipped with battery packs?

If not already lost, loss of engineering configuration control of the complete design is a definitely possibility. 

Production bottlenecks are a real bitch. Typically there's only enough floor space in a factory for the production line and the work in progress. Where do they shuffle off the half completed cars awaiting parts?

 

In reply to by RafterManFMJ

FireBrander FireBrander Tue, 04/17/2018 - 18:16 Permalink

The 200,000th car sold in the USA by Telsa will get that $7500 government rebate...the 200,001st car will get $3750...and will soon after hit ZERO...Tesla was at about ~140,000 sold in the USA late in 2017.

In June 2015, Georgia ended a $5,000 state income tax credit for EV buyers and imposed a $200 registration fee. EV sales in the Peach State plummeted about 90% over the next six months.

https://www.usatoday.com/story/money/cars/2017/12/19/electric-car-buyer…

In reply to by FireBrander

jcaz FireBrander Tue, 04/17/2018 - 18:29 Permalink

Oh I see- so Tesla has just been pacing themselves up til now, rightttttttt...  His robots refused to work at night?  Did they change their minds?   Anyone tell his component suppliers that, even tho they can't supply Tesla with two shifts worth of product now, he's adding a shift?   Genius......

In other news, I plan to produce 10,000 cars per week by May- I like my odds better than Tesla's.

And since the SEC doesn't appear to give a shit about Reg FD anymore, neither one of us will get in any trouble for making up numbers........ Why stop at 6000?  Say 60,000, Elon- doesn't matter, does it?

I'm sure those panel gap problems will get a LOT better on the 3rd shift, tho- QC rocks at 3am.

The good news is that you lose money on every 3 that you build, so if you actually manage to build more (assuming your workers don't go on strike because you just burned their vacation time with this unannounced line stoppage),  you'll be that much closer to the printing more stock-  that's some 3-D chess there, Elon.......

In reply to by FireBrander

PT Big Whoop Tue, 04/17/2018 - 23:44 Permalink

"We're already working 168 hours per week."
"Not enough.  We're still behind.  Have them work 10 hours per week extra."
"You mean have them work 178 hours per week?"
"Look!  I'm a sadist, not a mathematician."
 - from memory, paraphrasing an old Mad Magazine sending up the original Star Wars movie.

In reply to by Big Whoop

ldd PT Wed, 04/18/2018 - 00:30 Permalink

these cars are the product of a society that values nice shiny packaging. i'm sure they look nice and cool and the idea is nice TOO but until they solve the issue of power source they are nothing but the vacuous shell and symbol of our society. why else would people pay a ridiculous amount of money for a car that is less environmentally sound than say a hybrid or a natural gas powered vehicle. same reason people pay a few grand for a bag when they can get something for a 1/10 of the price which is just as well made but does not look as nice and shiny.

In reply to by PT

CHoward Tue, 04/17/2018 - 17:42 Permalink

Leaked?  Nothing is leaked any more - it's fucking published.  So Elon is reaching down in his hat o'tricks even deeper - well, it gets him another two months and the suckers once again are satiated.  Fuck Musk!

3-fingered_chemist Tue, 04/17/2018 - 17:45 Permalink

Flat out panic mode by Tesla. They can increase production all they want, the problem is that it costs them even more money. Their burn rate will be even higher. This is why Musk is asking managers to go line by line.

Bunga Bunga Tue, 04/17/2018 - 17:47 Permalink

Calm down, just a phony trader planting some fake news. They have problems pushing out  2k/week, so they just switch to 6k/week?

24/7 production is not as easy as thought, because technicians need downtime for maintenance, adjustments and repairs and the whole supply chain has to adjust to 24/7 as well. 

I Am Jack's Ma… Tue, 04/17/2018 - 17:47 Permalink

If you do a websearch for people claiming the Tesla is a real piece of shit...

well, you'll find more than a couple.

Maybe Musk is really just an agent of the coal industry.  Since coal is burned for the majority of generated electricity in the US, the electric car was never "clean" but gave the appearance of being clean.

And design-wise, the car looks cool. 

 

That durable outer shell prevents fall apart, for sure.

 

But how would it do as a rental in NYC for 6 months? 

 

 

gregga777 I Am Jack's Ma… Tue, 04/17/2018 - 17:52 Permalink

Picked up a name brand rental agency car at JFK Airport once for a trip to upstate New York and Vermont for some Aerospace supplier meetings. The car had relatively low miles but it had been beat to shit. The shocks and steering were so bad that it was hard to keep it in one lane. It tended to wander all over the Interstate. The Interstate wasn't in very good shape within the city either. 

In reply to by I Am Jack's Ma…

gregga777 Tue, 04/17/2018 - 17:47 Permalink

A Tesla is powered them with thousand(s?)* of highly flammable Lithium-Ion batteries**, each a little larger than an alkaline AA-cell***. The complete battery pack occupies much of the underfloor area of the Tesla passenger compartment (see photos here*).  Because Li-ion batteries are very sensitive to charge/discharge factors they are apparently grouped by threes with individual charging, over-heating and over-current protection circuitry. 

 

The Tesla Gigafactory may have developed some means of modularizing the battery pack into small packages making it amenable to some form of automated pick-and-place electronics manufacturing assembly line technology. They might have some form of fixture into which small groups of batteries are loaded, set atop some type of printed circuit board (PCB), wave soldered on the bottom side. Are they then flipped over to be wave soldered on the top side or does each battery have wire pigtail terminals of some sort? Then maybe they are hand assembled into completed battery packs. But, I expect that their touch labor, rework rates and scrap rates would be considerable. Perhaps that's why the Gigafactory takes two full shifts to produce a single Model 3 battery pack.

 

That is before pointing out that an automobile is a very high vibration and shock environment, has extreme temperature cycling, and susceptible to corrosion and contamination from all manner of moisture, water, sand, salt, dust, etc. The battery pack is apparently very wide and long but not very deep too to bottom. It may be very sensitive to vibration and vertical shock as well as the natural flexure of the chassis over rough road conditions. These factors may significantly shorten the life of the battery pack. 

 

*See photos of Li-ion batteries exposed in the Tesla's battery pack in which Apple engineer Walter Hwang lost his life: 

 

https://www.bizjournals.com/sanfrancisco/news/2018/03/29/tesla-autopilo…

https://www.bizjournals.com/sanfrancisco/news/2018/03/29/tesla-autopilo…

 

**21700 Lithium-ion battery; 21 mm diameter by 70 mm long; Announced by Samsung[54] and LG Chem in 2015 for electric bikes.[55] As of January 5, 2017 currently being produced at Tesla Gigafactory 1 for Tesla Model 3.[56]

 

***A AA-cell is 14.5 mm by 50.5 mm.

Abbie Normal ExPat2018 Wed, 04/18/2018 - 17:35 Permalink

There are 18650s and there are 18650s.  The made-in-China ones are much lighter and don't hold much of a charge.  The Panasonics are heavier and hold a charge longer, but can overheat when charging.  Sanyos have about the same longevity as the Panasonic but they don't heat up as much.  Some new TSLA owners are discovering they have to keep their garage doors open while charging because it can easily get over 100F in the closed space.  Guess they could always use their Powerwall battery to cool down the garage....

In reply to by ExPat2018