Elon Musk wants to ramp Model 3 production while it's already struggling - but his plan doesn't make sense
- Tesla CEO Elon Musk is pushing for Model 3 production to be able to surge to 6,000 per week.
- Musk outlined his new goals in an email to Tesla employees.
- Tesla Model 3 production will now run 24/7 and new employees will be hired to staff the factory.
The news around Tesla's troubled Model 3 ramp-up has been mostly bad. The company launched the vehicle last year and has thus far fallen woefully short of its production goals.
Let's not sugarcoat the situation: this is easily the worst new-vehicle roll-out I've ever seen in over a decade of covering the auto industry. It might be the worst roll-out in the history of the business. Even the infamous Edsel was briskly produced during its sad two years of existence, 60 years ago.
For contrast, the last risky roll-out I watched was Ford's complete redesign of its flagship F-150 pickup truck in 2014, switching from a steel to an aluminum body. There were issues, but Ford still managed to shift production in about two months at it Rouge factory in Michigan. In short order, Ford was building over 1,400 pickups per day.
Tesla is closing in on manufacturing 2,500 Model 3's, but that's on a weekly basis. Until yesterday, we were expecting 5,000 per week at the end of June.
Then CEO Elon Musk did something very Muskian and took to email to issue a companywide stretch goal: instead of 5,000 Model 3's per week, how the ability to surge to 6,000?
Tesla is throwing people at the problem
Electrek obtained Musk's sprawling email, which also included stern warnings to Tesla's suppliers, tips on how to avoid meetings, and directives about improving the build quality of Tesla vehicles, along with a plea to Tesla's workforce - now moving to what Musk called "24/7" production of Model 3 - to recruit 400 people per week to bulk up the headcount.
Tesla hasn't done a competent job of designing a production system for the Model 3 that can hit that previous target of 5,000 in weekly production, and Musk's dream of creating a heavily automated assembly line has, by his own admission, failed.
The solution is to throw people at the problem and find some ways to distribute partial blame to the supply chain, which for Tesla has often been fraught. The Model X SUV's seats were such a botch that Tesla decided to do them itself, for example.
Musk needs to get better at building cars
Musk is a visionary, with all the pros and cons such a role entails. But as a manufacturing leader, he's a work in progress. The Model S, which is the first car Tesla built from scratch, had initial production problems, and the Model X was so overdesigned that Musk later admitted the company shouldn't have made it.
Recently, he said that he would be taking over Model 3 production and sleeping - again - on the factory floor in Fremont. There are no other auto CEOs who pitch sleeping bags on their factory floors. That's because their factories are capably managed by manufacturing professionals who could build 2,000 Model 3's per day with less drama that Tesla has brought to the undertaking. GM's Mary Barra oversaw the sale of 10 million vehicles in 2017 and put a 200-plus-mile-range all-electric car on that road in 2016, a year and a half ahead of Musk.
As a longtime Musk watcher, I don't find this surprising or out-of-character. But it is another case of the guy embracing his penchant for hubris, a quality he has freely acknowledged in the past (I realize that overconfidence is an integral part of Musk's personality). In typical Silicon Valley fashion, however, Musk doesn't so much learn from his mistakes as double down on then in an effort to bend them to the force of his will.
Tesla's bad news overwhelms the good
I'm not going to argue with Tesla about hiring more people - jobs are jobs, and in my interactions with the company, employees maintain that it's an inspiring place to work. But I will argue with Musk's tendency to take measurable progress and zoom past it in an effort to keep the troops motivated.
Objectively, Tesla has done a good job of getting Model S and Model X production to where it should be. The system was, according to Musk, designed to make 100,000 cars a year, and that's what it's doing. The Model 3 system is supposed to take that to 500,000, but that never made any sense, as Tesla's factory, when it was operated by GM and Toyota in the 1980s, never hit that capacity (it did get close).
Despite the Model 3's difficult birth, Tesla has now managed to achieve its own benchmark. The company has produced about 2,500 in weekly production to call it a tardy success (obviously, if the company had simply delayed the launch by six months, a lot of this negative stuff could have been avoided).
But rather than consolidate at that level and make sure that 2,500 per week is sustainable - something that Tesla has repeatedly said it wants to do - the company has decided to push on toward the more adventurous goals. Just like the premature launch and the over-designed manufacturing process, this is a mistake. Tesla basically needs to spend at least a few months learning how to mass-produce cars according to decades-old industry standards.
Musk doesn't always seem satisfied with good news
The Model 3 has been fairly well-received by reviewers, including myself and my colleagues at Business Insider. That's good news. Tesla sold over 100,000 cars last year. That's good news. China just changed a decades-old rule permitting Tesla to construct its own factory in the country, without a Chinese partner. That's good news. The carmaker hasn't made any money since it was founded, and yet its market cap is higher than Ford's. That's good news (baffling, but for Tesla, good).
And the Model 3, at long last, was getting on track. Customers who placed pre-orders, at $1,000 each, could look forward to getting their cars. Instead of enjoying that milestone, Musk has swept in to bring his own touch to production and once more overloaded Tesla's limited capabilities.
It might work - a surge to 6,000 Model 3's per week would be impressive and would provide that margin for error, allowing Tesla to fluctuate around that 5,000 target. But if it doesn't work, that will yield bad news, which Musk sometimes seems to prefer anyway.
"Production hell," as he calls it, is where he likes to be. Tesla has made investors rich by minting crisis after crisis - you could argue that crisis is its real product - so there's every chance that they'll see this latest crushing objective as a chance to put their money into what they know.
The auto market is very strong in the US and the economy is in reasonably good shape, so Tesla isn't going to be unduly punished for Musk's unorthodox and at-times controversial management style. In the end, however, customers could suffer, if Model 3 continues to endure production challenges. They're a patient lot, but Tesla is asking much of them.