Musk Still in Production Hell as Gigafactory Delays Model 3

Lucy Hill
November 8, 2017

After-hours trading indicates that investors are less than inspired by Tesla's third quarter.

"We're doing this call from the Gigafactory bc that's where the production constraint is for the Model 3", Musk said. It noted, however, that parts of its operation for the Model 3 including drive unit, paint shops and part stamping can produce up to 1,000 units per week during "burst builds of short duration", but that other aspects including assembly of battery packs and final vehicle assembly are showing only "burst build" capacity of 300 units per week.

"A subbontractor dropped the ball - and we did not know the degree to which the ball was dropped", he said.

"It is harder to supplement with manual labor than the [Model] S or X because it is a very high degree of automation", Musk said.

Of four zones required for battery module assembly, Musk said that zones one and two are in trouble while zones three and four are going smoothly.

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"I always move my desk to wherever - I don't really have a desk actually - I move myself to wherever the biggest problem is in Tesla", Musk explained. After launching the mass-market Model 3 sedan, Musk at the time said the automaker would manufacture 20,000 of those vehicles by December, but had only produced 260 as of Oct. 2.

Just three months ago, Tesla said it would make 10,000 Model 3 cars per week in 2018. It had targeted production of around 1,500 cars in total during Q3, so it's way behind its own previous internal targets at this stage.

Thousands of Model 3s were supposed to have been sold by now. Musk, on a shareholder call, estimated this ramp to be complete late in Q1, likely March. We have redirected our best engineering talent to fine-tune the automated processes and related robotic programming, and we are confident that throughput will increase substantially in upcoming weeks and ultimately be capable of production rates significantly greater than the original specification. The researchers used artificial intelligence to teach their system the preferences of each voter, then aggregated them, creating a "distribution of societal preferences", in effect the rules of ethnical behavior in a car. Overall, the company hopes Model S and Model X deliveries will reach about 100,000 for the year.

Musk and Chief Financial Officer Deepak Ahuja wrote in a letter to shareholders that it was difficult to predict how long it will take to resolve all bottlenecks, or when new ones will emerge.

The 700 workers canned from Tesla were from a workforce of 33,000. They even discuss the underside of the vehicle. Tesla notes that it intervened in the process and took over the critical manufacturing process, bringing it in-house from the vendor that developed the process. He recalled being on the assembly line at 2 a.m. on a Sunday to help diagnose robot calibration issues and said work was being done seven days a week to solve the problems vexing the gigafactory.

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