Tesla had a surprising response to some very bad press

The Mercury News published an investigation this past weekend about a sub-contractor who is alleged to have violated California labour standards in constructing a paint shop for Tesla.

“About 140 workers from Eastern Europe, mostly from Croatia and Slovenia, built a new paint shop at Tesla’s Fremont plant, a project vital to the flagship Silicon Valley automaker’s plans to ramp up production of its highly anticipated Model 3 sedan,” Louis Hansen reported.

“Their story emerged from dozens of interviews conducted by the Bay Area News Group, and an extensive review of payroll, visa and court documents …. Yet neither the contractors involved nor Tesla itself have accepted legal responsibility for the hiring practices, long hours and low pay.”

The Mercury News reported that the pay averaged out to as little as $5 an hour, once overtime was figured in. The story centres on a worker who was badly injured while building the facility.

Tesla responded in a blog post:

Morally, we need to give Mr. Lesnik the benefit of the doubt and we need to take care of him. We will make sure this happens. We do not condone people coming to work at a Tesla facility, whether they work for us, one of our contractors or even a sub-subcontractor, under the circumstances described in the article. If Mr. Lesnik or his colleagues were really being paid $5 an hour, that is totally unacceptable. Tesla is one of the highest paying hourly employers in the US automotive industry. We do this out of choice, because we think it is right. Nobody is making us do so.

And CEO Elon Musk in a tweet pledged to investigate.

No other automaker would do this: deal with a piece of very bad press so swiftly and decisively. This is one of the reasons why Tesla is different. It can act fast, before the fog of controversy completely clears.

But in must be noted that the Mercury News report highlights and alarming trend for the startup automaker as it struggles to transition from being a niche manufacturer of expensive electric cars to a provider of electrified mass-mobility.

In the same blog post, Tesla offered this explanation for how it went about contracting for the new paint shop:

Gregor Lesnik was brought to the Tesla factory by a company called ISM Vuzem, a sub-contractor brought in by Eisenmann, the firm that we hired to construct our new, high-volume paint shop. We contracted with Eisenmann for the simple reason that we do not know how to build paint shops and they are regarded as one of the best, if not the best, in the world. In our dealings with them, we have found them to be an excellent company, run by good people. [Our emphasis]

A traditional car company would never admit that it doesn’t know how to either build or supervise the building of a paint shop, or any other facility critical to the production of cars and trucks in the 21st century.

To be sure, Tesla is on a steep learning curve when it comes to being a high-volume automaker. But sooner rather than later, it’s going to need to get better at building cars. It’s incredibly admirable that the company is taking full moral responsibility for what allegedly went wrong here. But over the next few years, the nuts of bolts of Tesla’s manufacturing evolution are something that the company has to get a better handle on.

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