He may be worth billions, but Tesla Motors founder and CEO Elon Musk apparently likes to rough it. He’s been spending a lot of nights curled up in a sleeping bag at the company’s Fremont, California assembly plant, he revealed during a Wednesday evening teleconference.
It has nothing to do with the fact that Musk is getting divorced again. The South African-born executive is trying to stay as close as possible to the plant as it struggles to resolve embarrassing quality problems while getting set up for next year’s launch of the Model 3 battery-electric vehicle.
The well-reported quality snags have already cost the bigger Tesla Model S its coveted “Recommended Buy” endorsement from influential Consumer Reports magazine. And industry analysts warn that if the problem carries over to the Model 3, it could short-circuit initially strong demand for the more affordable electric sedan.
“Tesla is hell-bent on being the best manufacturer on Earth,” Musk told analysts and reporters during the call.
(Tesla still in red, but losses narrow during Q1. Click Here for the latest.)
In its bid to get its factory operations in order, Tesla is showing the door to two of its top factory officials, Greg Reichow, the vice president of production, and Josh Ensign, head of manufacturing.
For his part, the notoriously demanding Musk offered kind words about their upcoming departure. He noted that Reichow is due a “well-earned break,” and that he will stick around long enough to help his replacement “transition” into the job.
Musk added that Tesla has been recruiting top talent from around the industry in a bid to improve its manufacturing. But it has also seen some of its best-and-brightest – from all corners of its operations – poached by new competitors such as Faraday Future, and even Apple, the latter still not officially confirming plans to enter the automotive space.
Tesla has faced a variety of quality problems, starting with the Model S, but the situation apparently has gotten worse with the newer Model X battery-electric SUV, according to Consumer Reports and online blog sites devoted to Tesla owners. The ute’s unusual “falcon wing” doors have been one of the biggest headaches, Tesla going as far as suing the Swiss company originally involved in the door design.
(Tesla claims it has developed a bio-defense mode for its battery-cars. Click Here for the story.)
Despite the technical glitches, Tesla sales have continued to increase. But the company promises a more than 500% jump in production by 2018, once the Model 3 gets into full production mode. It can’t afford to have any glitches, analysts stress.
The Model 3 will be Tesla’s first mainstream vehicle. Even with a promised range of over 200 miles per charge, Musk is promising it will come in around $35,000 before federal and state tax credits. That has helped drive a flurry of advance reservations, 325,000 during just the first week after the Model 3’s official unveiling on March 31st.
Tesla is taking several key steps to get quality right with the new sedan, Musk and others stressed during their conference call. For one thing, they have adopted a so-called design-for-manufacturing approach favored by high-quality automakers like Toyota. That means that the basic process of putting the car together was integral to the basic design of the vehicle, rather than engineering the car and then telling the factory to figure out how to put it together.
The Model 3 won’t have all the “bells-and-whistles,” such as the falcon doors, that tripped things up with the Model X, Musk added. More basic designs and fewer options can help simplify the manufacturing operation and improve consistency and quality.
New blood will bring in new ideas, and Tesla is making key personnel changes now in order to get the factory ready well before Model 3 launch.
Musk insisted the company is actually speeding up the launch program “substantially.” And it is leaning hard on parts and component suppliers, some of whom caused snags in the Model X roll-out because they couldn’t deliver on time.
According to Musk, the target is to be fully production-ready by July 1, 2017, even though he quickly conceded that Tesla “really” won’t be ready to throw the switch for a couple more months. But holding everyone – including plant personnel – to the earlier date gives Tesla a bit of breathing room and the opportunity to see where potholes pop up.
The goal is now to have as many as 200,000 Model 3 sedans roll out of the plant by the end of 2017, with the factory at full speed – it’s capable of producing about 500,000 vehicles annually – in 2018.
Considering its history, the Model X launch coming two years late, there are plenty of skeptics. But even a slightly slower ramp-up would be acceptable to many observers if Tesla can deliver world-class quality for the Model 3.
And that just might make it possible for Musk to roll up his sleeping bag and head home.
(Even luxury maker Bentley is looking at its battery-electric options. Click Here for the story.)