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Tesla Buys Automation Supplier to Help With Model 3 Issues

EV maker is not close to meeting previously announced production rates.

by on Nov.09, 2017

Tesla acquired former supplier Perbix to help it with its automation woes as Model 3 production continues to lag expectations.

After watching the ambitious production plans for the new Model 3 go up in smoke, Tesla purchased a Minnesota-based make of production equipment.

Perbix designs and manufactures automation machinery, and has been used as a supplier, according to Bloomberg. The terms of the deal were not disclosed but Perbix president James Dudley is to receive about $10.5 million in Tesla stock, according to a regulatory filing

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Tesla has been hammered by the bad news stemming from the snarled production lines in Fremont that are supposed to build the Model 3 in sufficient volume to serve as Tesla’s bridge into the market for affordable transportation. 

Tesla’s most recent earnings report knocked the company’s stock for a loop: a massive $619 million loss, combined with Musk’s confirmation that the entry-level Model 3 sedan was behind schedule, were not what investors wanted to hear and has led to steady decline in the value of its high-flying shares.

(Can Tesla bounce back from disastrous Model 3 launch. For the story, Click Here.)

The first "saleable" Model 3 shown after rolling off the line at the Fremont plant in June.

The company’s stock is down 27% from where it stood before Musk delivered the unwelcome insights about the production problems back in October.

In addition, Tesla is also facing a series of unfair labor practice charges from its decision to fire more than 700 employees that it described as underperforming. The firings included the dismissal of pro-union employees in direct contravention of federal labor laws.

(Click Here to see why Tesla’s Q3 earnings fell below expectations.)

Musk has insisted the problems with the Model 3 would soon pass, adding production is the most automated of any Tesla model, which invariably leads to challenges early in the production process.

Fewer than 300 of Tesla’s $35,000 Model 3 sedans have been delivered so far.

(To see why Tesla raised an additional $500M in cash, Click Here.)

Musk told analysts Nov. 1, it would take his company months longer than announced to hit a 5,000-cars-per-week production target. Anyone ordering a Model 3 now would have to wait up to 18 months to receive it, the company said.

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One Response to “Tesla Buys Automation Supplier to Help With Model 3 Issues”

  1. Fred says:

    Musk should have raided Ford or GM for top Vehicle Operations engineers. When is the last time either company had a major launch issue?

Leave a Reply to Fred