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Tesla Going Round the Clock on Model 3 Production

EV maker looks to up Model 3 build rate to 6K weekly.

by on Apr.19, 2018

Tesla CEO Elon Musk is looking to make the Fremont, California plant a 24/7 operation to meet a new Model 3 production goal of 6,000 units weekly.

Tesla CEO Elon Musk is borrowing from a famous ‘50s rock ‘n’ roll ditty in order to get Model 3 production levels back on track: they’re going to work around the clock.

Musk ordered a weeklong shut down of the company’s plant in Fremont, California, to resolve once and for all the production bottlenecks the facility was experiencing related to Tesla’s first mass-market vehicle, the Model 3.

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The company’s founder, who has taken to sleeping on the plant floor regularly, said one of the big problems was the plant was too automated. “Humans are underrated,” he said.

The shutdown concerned some investors, driving the company’s stock price down, because it came with no concrete plan to resolve the problem — other than more people. A new memo emailed by Musk reveals part of his plan: people working 24/7 to build 6,000 units a week, up from the 5,000 already promised.

(Model 3 production halt raises worries about Tesla. Click Here for the story.)

Tesla CEO Elon Musk, (shown here at the Fremont plant), has come up with a way to meet Tesla's production goals: working 24 hours a day, seven days a week.

“As part of the drive toward 6k, all Model 3 production in Fremont will move to 24/7 operations,” Musk wrote. He said Tesla will adding another shift in its assembly, body and paint departments.

The new production schedule requires the hiring of 400 workers a week for several weeks, divided between the Fremont plant and Tesla’s battery Gigafactory outside Reno, Nevada. Musk asks for referrals for “anyone you know who you think meets the Tesla bar for talent, drive and trust.”

In the memo, made public by Jalopnik, Musk congratulated the employees for the work they had done, but also improvements in quality and body fit, which he said Tesla’s fits are already best in the world, but added they will need to be 10 times better. “I am not kidding,” he said.

He noted other changes with an eye toward keeping investors happy, including keeping an eye on rising costs. All expenditures of more than $1 million must be approved by him. He’s also going to be taking a closer look at contractor staffing to trim any fat he finds there.

(Click Here for details about Tesla being hit with NLRB complaints over firings.)

He vowed that the company would turn a profit soon, echoing a promise he issued last month, much to the surprise – and delight – of analysts. He made the promise in response to a tweet from The Economist, which warned Tesla would need to raise more cash this year.

“The Economist used to be boring,” Musk responded, “but smart with a wicked dry wit. Now it’s just boring (sigh). Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money.”

However, in the memo he acknowledged that the company’s consistent run in the red is fair game for criticism.

“A fair criticism leveled at Tesla by outside critics is that you’re not a real company unless you generate a profit,” he wrote. “It didn’t make sense to do that until reaching economies of scale, but now we are there.”

(Musk promises Tesla profits in second half of this year. Click Here for the story.)

One analyst was impressed. Trip Chowdhry of Global Equities Research wrote Tesla “is making manufacturing sexy again” in a note to investors Tuesday.

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2 Responses to “Tesla Going Round the Clock on Model 3 Production”

  1. Allen says:

    Exactly what comprises “sexy” manufacturing? “It didn’t make sense to do that until reaching economies of scale…” Not sure what to make of this. Several other small manufacturers are able to consistently turn a profit. Morgan and McLaren come to mind. Am I comparing apples and oranges here?

    • Paul A. Eisenstein says:

      Definitely apples to oranges. A lot easier focusing on a super performance niche, in McLaren’s case, especially, charging astronomical prices. There’s a lot going on at Tesla as it explores entirely new powertrain concepts and tries to ramp a relatively traditional factory up to volume numbers. That said, Tesla also appears to make a lot of mistakes that increase its losses.

      Paul E.