Tesla Halts Model 3 Production, Elon Musk Admits Missteps with Automation
As Elon Musk scrambled to ramp up production of the Model 3 at its Fremont, California assembly plant, the Tesla CEO admits missteps were taken that actually slowed down production instead of speeding it up, including the use of too much automation. As a result, today Tesla said the Model 3 assembly line has been temporarily shut down to address production issues.
The announcement of the Model 3 shutdown came unexpectedly, according to Tesla employees who spoke anonymously. During the pause, workers are expected to use vacation days or stay home without pay. The shutdown is expected to last four or five days.
A Tesla spokesperson said that the assembly line is on pause in order to "improve automation", without providing any more details.
Tesla fell short of its goal of producing 5,000 Model 3 per week by the end of the first quarter. In an interview with "CBS This Morning," Elon Musk admits to mistakes that have hindered the rollout of its most important vehicle to date.
The CEO says "production hell" related to the Model 3 sedan has been worse than he expected. "We got complacent about some of the things that we felt were our core technology. We put too much new technology into the Model 3 all at once. This—this should have been staged," he said.
Tesla's highly automated assembly line actually contributed to a slowdown in production. Eventually, Tesla had to eliminate its "crazy, complex network of conveyor belts," Musk said.
In a recent post on Twitter, the CEO further indicated Tesla went too far with automation.
"Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated."
Tesla's recent announcements come a month after Tesla received a downgraded credit rating from Moody's. However, Musk remains optimistic.
"The problem that people have, a lot of the analysts, is they kinda look in the rearview mirror instead of looking at the front windscreen," Musk said. "This has very frequently been why people have underestimated Tesla, because they would look at Tesla's – what Tesla's done in the past and use that as proxy for what we're able to do in the future."
Despite the missed targets for the first quarter and the temporary shutdown of the Model 3 assembly line, once back up and running, Musk expects Model 3 output to increase dramatically over the next few months.
"We'll probably have, I don't know, a three or four-fold increase in Model 3 output in the second quarter," he told CBS. But the company is still burning through cash.
In responding to a report by The Economist which stated that Tesla would need to raise $2.5 to $3 billion worth of additional capital this year, Musk promised that Tesla would become profitable in the second half of the year. We will have to wait and see if he's right.
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