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Globe Drive For Tesla, ‘production hell’ looks like the reality of the car business

A Tesla Model 3 is seen in a showroom in Los Angeles, California, U.S. Jan. 12, 2018.

Lucy Nicholson/Reuters

Tesla began producing electric cars at its plant in Fremont, California, six years ago, starting with small quantities and increasing to about 100,000 vehicles last year. Now, as it tries to double or triple that number, the company and its chief executive, Elon Musk, are getting a lesson in how hard it is to mass-produce automobiles.

On Tuesday, Tesla reported that it had managed to increase production of a crucial new model in the first quarter of 2018, although it remained well short of the company’s already lowered target. At the same time, it encountered a new hitch – a drop in sales of its two established products, the Model S sedan and Model X sport-utility vehicle.

The company is counting on the success of the new offering, the Model 3, to increase revenue and help pare its losses as Tesla invests heavily in the vehicles it hopes to offer in the future.

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But a series of setbacks have left Tesla far behind schedule in turning out the Model 3 – for which nearly 400,000 prospective buyers have already put down $1,000 deposits – and it is taking some extraordinary measures to turn things around. Musk said on Twitter this week that he had been sleeping at the plant, and the company said some workers who normally assemble the Model S and Model X were shifted to Model 3 production.

The troubles reflect a reality overlooked by many people outside the auto industry: producing a quarter of a million cars a year in one plant is a daunting task.

“You have to have a finished car rolling off the line every couple of minutes,” said Mark Wakefield, global co-head of automotive and industrial at AlixPartners, a consulting firm.

Even as he introduced the Model 3 at an event last summer, Musk warned that the company would find itself in “production hell” – and as those words proved prescient, he has had to repeatedly dial back his forecasts.

In a filing with the Securities and Exchange Commission, Tesla said it expected its output to “climb rapidly” through the second quarter and reach 5,000 per week in about three months.

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