Bloomberg published an article recently outlining how the production of the Tesla Model 3 has been “hell” for Elon Musk.
In an article titled “Hell for Elon Musk Is a Midsize Sedan” Bloomberg discusses the huge setbacks that Tesla has faced in the production of their Model 3 sedan and the pressure that Tesla CEO Elon Musk faced during the production cycle.
Bloomberg notes that Musk’s vision has so far not panned out as he expected — in fact, Tesla had to disassemble their robotic production line and replace the operating machines with human workers:
It hasn’t worked out that way. Tesla ended 2017 having made not quite 2,700 Model 3s. As of the end of June it had turned out about 41,000, and some analysts express doubts about whether it will ever be able to show a profit on the car, and Tesla hasn’t even started selling the $35,000 base model. Making matters worse, Tesla has $10 billion in debt and suffered a credit downgrade in March. It’s spent about a billion dollars more per quarter, on average, than it has taken in over the past year, and the cost of a recently announced factory in China is still unknown. Tesla is running out of cash at a time when competition is heating up—Volkswagen, BMW, Daimler, and others plan to release dozens of electric car models.
As Musk came under more pressure to produce the cars to the companies own time schedule, Tesla began to attempt more daring – and some say dangerous – tactics:
In early June, at Tesla’s annual meeting, Musk tried to project calm, but at times seemed close to tears. “This is like—I tell you—the most excruciatingly hellish several months that I have ever had,” he said, before noting that Tesla’s assembly lines were being further upgraded, making the company “very likely” to hit the weekly goal of 5,000. He also revealed he’d asked employees to build a third general assembly line that would be “dramatically better than Lines 1 and 2.” That sounded even more alien-dreadnoughty.
A week later, Musk posted a picture of the new facility on Twitter. There were no fancy robotic systems, nor fixed walls, even—just a large tent outside the factory built from scrap from the other lines. The automotive world winced. “Insanity,” said Max Warburton, an analyst with Sanford C. Bernstein & Co., in an email to Bloomberg News. “I don’t think anyone’s seen anything like this outside of the military trying to service vehicles in a war zone.”
Bloomberg acknowledges that if Musk manages to produce the Model 3 cars in a safe and efficient fashion, he could disrupt the entire car manufacturing industry, but mass producing cars may be one issue that Musk cannot solve:
The tent sufficed. “I think we just became a real car company,” Musk wrote in a July 1 email to employees announcing that Tesla had made 5,031 Model 3s the previous week. Even so, it’s unclear whether Musk has put Tesla on a path to lasting greatness or just staved off collapse. The company is the most shorted U.S. stock, and a higher percentage of Wall Street analysts give TSLA a sell rating than for all but one stock on the S&P 500. The story of Tesla’s sprint to release the Model 3, based on interviews with 20 members of Tesla’s design and engineering teams, suppliers, and dozens of current and former workers, is a case study in brilliant design and unbelievable hubris.
The prize for Musk is enormous: If he gets the Model 3 right, he will remake a trillion-dollar industry and do more to reduce carbon emissions than any person on the planet. But it may turn out that mass-producing cars is the one challenge that simply defies him.
Read the full article in Bloomberg here.