Tesla’s troubles keep growing as production goal remains elusive
Elon Musk can’t stay focused long enough to get Tesla on track
In need of an ego boost, Elon Musk held an event for the first thousand people to pick up their Boring Company flamethrower earlier this week. You might think, for someone who has the time to waste on such frivolous side projects, that everything must be going well at the companies they’re supposed to be overseeing — yet nothing could be further from the truth.
Tesla is in big trouble. It took a while for Musk to accept that to be the case — he’s notoriously self-absorbed — but it seems he may finally be accepting that if he doesn’t turn things around soon, Tesla could join countless other car companies in the history books.
What’s causing all these problems? In many ways, Musk is to blame. His tendencies to constantly overpromise and underdeliver, paired with his near-unshakable belief that more technology can solve any problem, are finally catching up to him, and it remains to be seen whether he can right his wrongs in time to save the company he’s staked so much of his legacy on.
Musk promised the world that by selling luxury electric vehicles he could fund the development of an affordable, mass-market version: the Tesla Model 3. Well, now that vehicle is finally for sale, but Tesla is unable to get them out the door on the timelines that Musk promised customers and shareholders.
The production goals for the Model 3 have been pushed time and time again, and Musk is currently promising Tesla will be producing 5,000 Model 3s per week by the end of this month, yet Bloomberg has been tracking the vehicle’s production and its estimates do not line up with those of Musk — it looks like he’ll fall short again, but may be able to spin it so Tesla appears to be near its target, even though it likely won’t be.
Part of what’s causing all these production issues is the fact that Musk tried to automate final assembly, thinking he could do what other auto companies had previously failed to achieve, but then Musk’s attempts also failed and he didn’t have a backup plan. On top of that, the processes Tesla does have don’t seem to be very efficient or up to industry standards. Recent reports suggest that fires in the paint shop — almost unheard of at other auto manufacturers — were far worse than Tesla reported and the company is wasting “as much as 40 percent of the raw materials used to produce batteries and driving units manufactured at Tesla’s Gigafactory in Nevada,” costing $150 million in wasted parts for fewer than 10,000 vehicles.
But there hasn’t just been a monetary cost for Musk’s failures — there have also been consequences for Tesla’s workers. The rates of serious injuries at Tesla’s factory in Fremont, California were reported to be 30 percent higher than the industry average, and the company has been accused of misreporting injuries so they didn’t have to be included in legally mandated reports, making the factory appear safer than it was. While Musk has denied the claims, Tesla’s former safety director filed a complaint earlier this month alleging he’d been fired for reporting the discrepancies in the company’s incident reporting system.
Tesla is also in front of the National Labor Relations Board this month for a hearing over allegations it stopped workers from trying to form a union, in violation of federal safeguards, and the company’s lawyers are trying to stop Musk’s name from being used in order to protect his personal brand, even though he previously promised workers frozen yogurt and a rollercoaster if they opposed a union, and recently sent some tweets about unions that may have been in violation of labor law.
To make things worse, Musk’s mismanagement has the company in such a deep fiscal hole that he fired 9 percent of the company’s workforce — about 4,000 people — earlier this week in an attempt to cut costs. Even though Musk claims the company won’t need to go back to the markets and will be profitable by the end of the year, Goldman Sachs and rating agencies think he’ll need to go back to investors for billions to keep the company afloat. Musk accompanied the layoffs with news that Tesla’s sales agreement with Home Depot would also be terminated; a move which an employee told Jalopnik would cut about 30 percent of leads for residential solar and “crush the solar part of the business.” Tesla has also slashed its public job postings.
Tesla’s troubles and Musk’s failure to give customers reliable delivery timelines have clearly been getting to people. The initial excitement about the Model 3 has faded and, as of April 2018, nearly a quarter of all US reservations had been refunded — a number which is likely even higher, since 18 percent of total refunds happened in April alone.
It’s not an exaggeration to say this is a make or break time for Tesla. The Model 3 needs to become the mass-market success Musk promised it would be, even though he recently admitted that Tesla is currently unable to produce the vehicle to be profitable at the $35,000 price point. When anger was mounting from investors, Musk made a show of sleeping on the couch in his office to ensure issues were being addressed, but many problems remain, while Musk has moved on to handing out flamethrowers, talking about making bricks out of dirt, and threatening to have internet trolls rate journalists on their credibility.
Musk has been able to get by on branding himself as a self-made billionaire entrepreneur with plenty of help by the tech and business press, but now that the media is no longer falling for his ploy, it remains to be seen whether he’ll be able to turn the company around. Norway’s trillion-dollar sovereign-wealth fund already wants him out as chairman as even bigger problems could be just around the corner.
After a series of delays, Musk has announced that Autopilot will finally be updated in August to enable Full Self Driving mode, even as questions about the safety of self-driving vehicles have been mounting in the aftermath of a number of high-profile crashes involving Tesla vehicles using Autopilot and other vehicles using autonomous-driving systems. Musk says this update is about safety, but the production issues may not even be ironed out before Tesla has to contend with a new wave of vehicle crashes — possibly even some more fatal ones. That’s the last thing Tesla needs right now.