- Tesla CEOElon Musk is pushing for Model 3 production to surge to 6,000 a week.
- Musk outlined his new goals in an email to Tesla employees.
- Tesla Model 3 production will now run 24/7, Musk says, and employees will be hired to staff the factory.
The news around Tesla’s troubled Model 3 ramp-up has been mostly bad. The company launched the vehicle last year and has thus far fallen woefully short of its production goals.
Let’s not sugarcoat the situation: This is easily the worst new-vehicle rollout I’ve seen in over a decade of covering the auto industry. It might be the worst rollout in the history of the business. Even the infamous Edsel was produced briskly during its sad two years of existence 60 years ago.
For contrast, the last risky rollout I watched was Ford’s redesign of its flagship F-150 pickup truck in 2014, switching from a steel body to an aluminium one. There were issues, but Ford still managed to shift production in about two months at its Rouge Factory in Michigan. In short order, Ford was building more than 1,400 pickups a day.
Tesla is closing in on manufacturing 2,500 Model 3s – but that’s on a weekly basis. Until Tuesday, we were expecting 5,000 a week at the end of June.
Then CEO Elon Musk did something very Muskian and issued a companywide stretch goal via email.
Instead of 5,000 Model 3s a week, how about surging to 6,000?
Tesla is throwing people at the problem
Electrek obtained Musk’s sprawling email, which also included stern warnings to Tesla’s suppliers, tips on how to avoid meetings, directives about improving the build quality of Tesla vehicles, and a plea to Tesla’s workforce – now moving to what he called “24/7” production of the Model 3 – to recruit 400 people a week to bulk up the headcount.
Tesla hasn’t done a competent job of designing a production system for the Model 3 that can hit that previous target of 5,000 in weekly production, and Musk’s dream of creating a heavily automated assembly line has, by his own admission, failed.
The solution is to throw people at the problem and find some ways to distribute partial blame to the supply chain, which for Tesla has often been fraught – for example, the Model X SUV’s seats were such a botched job that Tesla decided to do them itself.
Musk needs to get better at building cars
Musk is a visionary, with all the pros and cons such a role entails. But as a manufacturing leader, he’s a work in progress.
The Model S, the first car Tesla built from scratch, had initial production problems, and the Model X was so overdesigned that Musk later acknowledged that the company probably shouldn’t have made it.
Recently, he said he would be taking over Model 3 production and sleeping – again – on the factory floor in Fremont, California.
There are no other auto CEOs who pitch sleeping bags on their factory floors. That’s because their factories are capably managed by manufacturing professionals who could build 2,000 Model 3s a day with less drama than Tesla has brought to the undertaking. General Motors’ Mary Barra oversaw the sale of 10 million vehicles last year and put an all-electric car with a 200-mile range on the road in 2016, a year and a half ahead of Musk.
As a longtime Musk watcher, I don’t find this surprising or out of character. But it is another case of the guy embracing his penchant for hubris, a quality he has freely acknowledged in the past. (I realise overconfidence is an integral part of Musk’s personality.)
In typical Silicon Valley fashion, however, Musk doesn’t so much learn from his mistakes as double down on them to try to bend them to the force of his will.
Tesla’s bad news overwhelms the good
I’m not going to argue with Tesla about hiring more people – jobs are jobs, and in my interactions with the company, employees maintain that it’s an inspiring place to work.
But I will argue with Musk’s tendency to take measurable progress and zoom past it to keep the troops motivated.
Objectively, Tesla has done well in getting Model S and Model X production to where it should be. The system was, according to Musk, designed to make 100,000 cars a year, and that’s what it’s doing.
The Model 3 system is supposed to take that to 500,000 – but that never made any sense. Tesla’s factory, when it was operated by GM and Toyota in the 1980s, never hit that capacity, though it did get close.
Despite the Model 3’s difficult birth, Tesla has managed to achieve its own benchmark, producing about 2,500 a week to call it a tardy success. But if the company had simply delayed the launch by six months, a lot of this negative stuff might have been avoided.
But rather than consolidate at that level and ensure that 2,500 a week is sustainable – something Tesla has repeatedly said it wants to do – the company has decided to push on toward more adventurous goals.
Just like the premature launch and the over-designed manufacturing process, this is a mistake. Tesla needs to spend at least a few months learning how to mass-produce cars according to decades-old industry standards.
Musk doesn’t always seem satisfied with good news
- The Model 3 has been fairly well received by reviewers, including myself and my colleagues at Business Insider. That’s good news.
- Tesla sold more than 100,000 cars last year. That’s good news.
- China just changed a decades-old rule permitting Tesla to construct a factory in the country, without a Chinese partner. That’s good news.
- The carmaker hasn’t made any money since it was founded, and yet its market cap is higher than Ford’s. That’s good (though baffling) news.
- And the Model 3, at long last, was getting on track. Customers who preordered it, paying $US1,000 each, could look forward to getting their cars.
But instead of enjoying that milestone, Musk has swept in on production and once more overloaded Tesla’s limited capabilities.
It might work. A surge to 6,000 Model 3s a week would be impressive and provide a margin of error to allow Tesla to fluctuate around that 5,000 target. But if it doesn’t, it will be bad news, which Musk sometimes seems to prefer anyway.
“Production hell,” as he calls it, is where he likes to be. Tesla has made investors rich by minting crisis after crisis – so much so that you could argue that crisis is its real product – so it’s possible they will see this latest crushing objective as a chance to put their money into what they know.
The auto market is strong in the US, and the economy is in reasonably good shape, so Tesla isn’t going to be unduly punished for Musk’s unorthodox and at times controversial management style.
In the end, however, customers could suffer if the Model 3 continues to endure production challenges. They’re a patient lot, but Tesla is asking much of them.
Business Insider Emails & Alerts
Site highlights each day to your inbox.