Tesla Facing New Probe From California Regulator As It Builds Cars In A Tent

Investigations into (and concerns bout) workplace safety standards (and OSHA compliance) at Tesla continue to multiply, with Jalopnik reporting that Tesla is now facing a third investigation by California State Safety and Health regulators after a complaint was submitted by an unnamed employee of the company (maybe the same whistleblower who leaked Tesla's skipping on is brake test earlier in the week):

Erika Monterroza, a spokesperson for the state’s industrial relations department, confirmed the agency had opened a new inspection on June 19, the third for Tesla since April.

“As of today, Cal/OSHA has 3 investigations ongoing at Tesla,” Monterroza told Jalopnik last month. Monterroza said department policy prevents her from discussing the content of the complaint that sparked the new investigation. In response to a public records request, a separate department official confirmed the disposition of the complaint can’t be released until the inspection is complete.

Readers may recall that Tesla already had two ongoing OSHA investigations into its business as a result of a detailed and intricate expose performed by Reveal, alleging that the company was underreporting its safety incidents and not doing enough to keep workers safe and the workplace injury free. The latest probe is OHSA's third concurrent investigation into Elon Musk's production standards.

The timing for this investigation is curious: last week Tesla reported that 20% of the Model 3 vehicles made in order to reach its 5,000 Model 3 per week run rate goal were assembled in the giant (and hastily erected) tent outside of the company's Fremont facility.

According to Jalopnik, Tesla is in the process of going back-and-forth with the government regarding permitting at the tent, even though some initial building permits have already been approved:

Building permits filed with the city of Fremont show that Tesla has been temporarily approved to use it for up to six months, but for now several features have been deferred. On Wednesday, records show, Tesla submitted a revised permit that included electrical and piping, and it received permits for a sprinkler system.

Gary West, a Fremont building official, told Jalopnik on Tuesday that his office “understands the timeline that some of our businesses are trying to meet with productions, and the City of Fremont makes a valiant effort to accommodate these concern when we can.”

“As the project designs are submitted to our office for review some of the beginning designs are approve so the first steps of the construction is allowed by our office to commence,” West said. “As additional designs are created and submitted to are office for review the next stage of construction is allowed to continue.”

This report also comes after Reuters published an article at the beginning of the week, detailing some of the consequences Tesla is having to face as a result of rearranging its manpower to meet its Model 3 production goal.

The conditions at Tesla’s production facility leading up to meeting its Model 3 production goal have been reported as nothing short of hellish as Elon Musk "barked" at employees working 12 hour shifts, bottlenecking other parts of the company's production and reportedly causing concern by employees that the long hours and strenuous environment would cause even more workplace injuries and accidents.

Some Tesla analysts and bulls seemed surprised that the company's stock fell on Monday and Tuesday, even after the company was able to report at the end of the weekend that it had not only reached its 5,000 Model 3 per week goal, but also that it had produced 7,000 vehicles overall. “I think we just became a real car company,” Musk wrote in an e-mail to his employees after meeting the goal for one week.

This led to a nearly 50 point swing in the price of Tesla stock during trading on Monday and Tuesday. The stock opened on Monday, to rise above $360 before it ultimately faded, gave up all of its gains and went on to finish the day red by several percent. Tuesday, in a shortened session, the stock fell further, closing at $310.

So Tesla was able to produce 5,000 Model 3's in a week, but at what cost?

Skeptics and bears have asked what is the point of meeting the 5,000 per work goal was if it must be done in an “all hands on deck“ fashion that is going to burn out employees and bottleneck other parts of the production line. For instance, it's now being reported that the company's Model S line is 800 cars behind schedule.

On Tuesday, Reuters reported that this is basically what happened. It added that a "short tempered" Elon Musk personally oversaw production and “snapped“ at employees who were told that that weekend work days were mandatory and that 12 hour shifts should be expected, to wit:

A tense and short-tempered Chief Executive Elon Musk barked at engineers on the Fremont, California assembly line. Tesla Inc pulled workers from other departments to keep pumping out the Model 3 electric sedans, disrupting production of the Model S and X lines. And weekend shifts were mandatory.


Leading up to Sunday morning’s production milestone, Musk paced the Model 3 line, snapping at his engineers when the around-the-clock production slowed or stopped due to problems with robots, one worker said. Tesla built a new line in just two weeks in a huge tent outside the main factory, an unprecedented move in an industry that takes years to plan out its assembly lines, and said the tented production area accounted for 20 percent of the Model 3s produced last week.

“They were borrowing people from our line all day to cover their (Model 3) breaks so the line would continue to move,” said a Model S worker on Sunday.

Because of the focus on the Model 3, the S line is about 800 cars behind, the worker said.

“They’ve been throwing Model 3s ahead of the S to get painted to try to assure that they make their goal of 5,000,” the worker said. “The paint department can’t handle the volume.”

Employees were also told to expect working 6 days a week. The company even re-wrote its attendance policy to make exceptions as to when they had to notify employees that they would be working weekends. We can't possibly imagine  what impact this has had on "dreadnought" morale:

Last week’s big push also brought a rewrite of the employee attendance policy. After mandatory weekend shifts were assigned, two workers said, Tesla rescinded a policy promising workers at least one week’s notice before weekend work.

“The manager and supervisor are verbally going around and saying: ‘If you don’t come in, you’ll be written up’,” one of the workers told Reuters last week.

Some employees are worried the frenetic pace plus long hours could burn out workers. One employee said they were told to keep working until they met their daily production mark, not when their shifts ended.

“They said starting tomorrow be prepared to work up to 12 hours,” said the Model S employee on Monday. “It’s gonna be basically 12 hours from now on and I’ve got a feeling it’s gonna be six days a week.”

Meanwhile, confirming a prior Reuters report from late last week, Reuters again noted that the influx of new vehicles at a high rate bottlenecked the company's paint shop, despite CEO Elon Musk responding to these allegations last week by Instagramming a relatively meaningless photograph of the company's paint shop as if to say “hey, everything is fine."

Reuters reported that this bottleneck could also threaten the company's annual total production goals:

Disruption of the Model S and X lines could threaten Tesla’s target of building 100,000 of those vehicles in 2018. Tesla built 49,489 of those cars in the first half of this year.

Asked about the potential S and X impact, Tesla said it also produced 1,913 of those vehicles during the last week of the quarter along with its Model 3s.

Tesla said it built a total of 28,578 Model 3s in the second quarter, and 40,989 since production began last July.

The hellish week of production seems to have taken its toll on employees based on Reuters reports. The article notes that employees believe that the strenuous hours and the nonstop work will eventually burn out the staff, if it hasn’t already, and will lead to increased injuries and Musk "going through an awful lot of people". In addition, with just one week's run of 5,000 Model 3's behind them, Tesla is now giving some of the line a break for the Fourth of July holiday:

In the morning of Sunday, July 1, about five hours after the self-imposed second-quarter deadline had passed, the number 5,000 flashed on a countdown screen viewed by Tesla’s Model 3 assembly-line workers. The Model 3 itself bore a “5,000” sign in its front window.

Tesla said on Monday that some of its Model 3 production would be on break as part of the July 4 holiday, with production to resume on Thursday. Tesla plans to build 6,000 Model 3s per week by August.

But the worker told to expect longer shifts warned that pushing assembly-line workers too hard could backfire.

“He (Musk) is gonna go through an awful lot of people because people are gonna start getting hurt left and right,” by the fast-moving assembly line, the worker said.

“There’s only so fast a person can move.”

Tesla had released a production update early Monday claiming  that it had met its 5,000 car per week a goal by “factory gating“ 5000 Model 3s and 7000 total cars over the course of a week.

However, as one observer noted on Twitter, the time from reserving your Model 3 to getting it delivered has shrunk. This indicates that the pool of orders waiting to be filled on the Model 3 is also starting to decline.

Considering Tesla has completely scrapped and then revamped its entire plans for its production and has resorted to building cars in a tent outside of its main production facility to begin with, it isn’t surprising to see that another OSHA investigation has been opened. If they are producing vehicles with the same precision that they are running their business, the results of said investigations could turn out to be extremely interesting



StychoKiller RAT005 Thu, 07/05/2018 - 22:31 Permalink

Given California's numerous regulations concerning VOCs (volatile organic compounds), HOW are they getting away with painting anything in what is essentially an open-air building?  I'm just finishing up making a kitchen table with a two-part epoxy coating on top, which requires a very clean (& bug-free!) environment to get a flat surface with no dust particles on it, and we're supposed to believe they're painting & clear-coating auto parts?  I call bullsh!t.

In reply to by RAT005

zebra77a Winston Churchill Thu, 07/05/2018 - 11:46 Permalink

Factory owners are crazee to make their factory in anything other than a portable sea can with a weekly reminder to the local  authority about how the entire factory can be moved without notice.

If Factories did this and so did offices,  and simply moved without notice I think regulatory bodies would be a lot less keen about stepping on the productive class.


In reply to by Winston Churchill

ludwigvmises Thu, 07/05/2018 - 09:30 Permalink

Once the next recession pulls the curtain on this fraudulent company Elon Musk can get used to sleeping in a tent. He can join Elizabeth Holmes at the homeless shelter.

Endgame Napoleon ludwigvmises Thu, 07/05/2018 - 10:27 Permalink

The tent is a novel idea. What is wrong with it? People work outside without the shelter of a tent all of the time, including electricians exposing electrical parts to the elements. If it was dangerous to have electrical parts outside of an enclosed building, big government would never let electricians do it in their highly regulated field.

Other than avoiding the expense and the environmental impact of an ugly industrial building, what is the downside to the tent? The only thing I see is the lack of air-conditioning, but they probably have alternative cooling systems for the tent.

The factory-tent is portable. It can be moved from state to state, filling production quotas onsite, without the need for shipping. Employees can work extra hard in the lead up to filling their production quota, knowing they’ll have time off while waiting for another big order to fulfill.

Nurses take on 12-hour shifts, working 3 or 4 days per week with the other days off. Their work is also physically hard, with the added non-value of being much more disgusting that car construction, including handling all kinds of body fluids instead of just grease. 

In reply to by ludwigvmises

Quantify Thu, 07/05/2018 - 09:31 Permalink

Silly Musk, you can't build cars in a tent in the highest regulated state in the country. I have no doubt that in Kali you need a license to get any other kind of license. Unless you wish to vote of course.

zebra77a Quantify Thu, 07/05/2018 - 11:48 Permalink

Silly Musk, you can't build [anything] in a tent in the highest regulated state in the country. I have no doubt that in Kali you need a license to get any other kind of license. Unless you wish to vote of course. - FIFY

Nobody will be permitted to get in the way of Cali's self-immolation with crazy things like productive factories etc..  I am utterly shocked that anyone would put ANY factory in California.

In reply to by Quantify

Turin Turambar Thu, 07/05/2018 - 09:36 Permalink

I'm no fan of PT Barnum, but the gubbermint needs to stay the hell off his property and out of his business.  If he wants to erect a tent for auto production, then so be it.  Gawd, I'm sick and tired of these effin' parasitic, bureaucratic busybodies.

FringeImaginigs Turin Turambar Thu, 07/05/2018 - 14:13 Permalink

@Turin Except when those busybody gubbermint slobs actually enforce regulations that stop cranes collapsing, workers getting crushed, fingers and legs getting cut off, eyes being splashed by stray acids..... just to name a few.  But then again for a good capitalist those are just minor administrative items that can be solved by a few bucks to the widow and nothing to the kids.

In reply to by Turin Turambar

Turin Turambar FringeImaginigs Fri, 07/06/2018 - 12:08 Permalink

Good ol gubbermint saving us all.  Your argument is akin to people dropping dead in restaurants from food poisoning if the gubbermint didn't send in somebody once a year to check and see if they qualify for a magic piece of paper that guarantees customer safety.  I guess it never occurred to you that it's not in a businesses best interest to kill or maim its customers or employees.  SMH 

In reply to by FringeImaginigs

TuPhat Thu, 07/05/2018 - 09:39 Permalink

This reminds me of International Harvester's Scout production plant in Indiana back in the 80's.  They were going under financially so they tried to produce as many vehicles as possible in a month to make the company look better.  Most of the vehicles ended up in the factory parking lot awaiting rework/repairs and the plant was closed down.  Tesla is on a known track to failure.

NEOSERF Thu, 07/05/2018 - 09:50 Permalink

So is this Model 3 being made in the tent actually a "3T"?  At least the VIN should indicate it with a T at the end so that Consumer Reports and regulators can track the impending quality collapse of the special edition.

RozKo Thu, 07/05/2018 - 10:05 Permalink

Almost sounds like the problem Triumph had with the TR7, except i believe theirs was a labor union issue. The cars will be put together as junk because the workers are getting pushed mentally and physically. Trying to meet numbers always destroys quality, only fools would spend money on these lemons...

Endgame Napoleon RozKo Thu, 07/05/2018 - 10:39 Permalink

It wouldn’t if they did it for a limited period of time, with rest in-between. They should be willing to do it since those jobs pay more than most jobs—enough to actually cover living expenses—and they are making something that is a little more innovative than a typical car. What is the country going to do when fossil fuels run out? Due to tackling this issue despite the lack of easy profitability, Musk is given a little more leeway, especially since he is bothering to employ American citizens. 

In reply to by RozKo

Lucretius Miss Expectations Thu, 07/05/2018 - 18:29 Permalink

Dear Ms,

 if memory serves me, the TR-7 was intended as a heavy equipment wheel chock, not a car! I've only been a mechanic for forty some odd years, back when imported cars were truly thought of as exotic and unusual, so what do I know... Further, as I recall they used 40-50 year old tractor engines, BACK THEN! ( or were those MG's??? Or other English junk, with electrical systems by the Dark Knight- Lucas).

If it's got tits or tires, you WILL experience problems! Gasoline, Kerosene, Alcohol, Diesel, Propane, Hydraulic, Pneumatic, Electric, same rule applies to ALL!

Peace, L.

In reply to by Miss Expectations