TES.06.01.16.Tesla model x.5
The Tesla Model X. Courtesy of Tesla

Elon Musk: Tesla Was In ‘Production Hell’ This Year

Aug 03, 2016

Billionaire entrepreneur Elon Musk says that his electric car company Tesla was in "production hell" in the first half of this year, as the company struggled to make more of its cars.

Musk made the comments in Tesla's second quarter earnings call on Wednesday afternoon.

Tesla started shipping its first Model X, an electric SUV with swooping doors, to customers late last year. By the time deliveries started, the car was already months behind schedule.

Over the following months the company faced the additional difficulty of increasing Model X production while also ensuring quality. To complicate things further, Tesla was also trying to simultaneously boost production of its electric sedan, the Model S.

See also: Tesla About To Spend Big On Model 3

Reviews of early Model X cars found a variety of shortcomings like difficulties with opening and closing doors. Tesla settled a lawsuit with an owner of three Tesla cars who had demanded a refund for his Model X under California’s “Lemon Laws" (he now owns only two Tesla cars).

Tesla has said that some of the problems with making the Model X stemmed from it trying to cram too much advanced technology into the early versions of the cars. Musk has described that mistake as "hubris."

For Fortune's review of the Model X watch our video:

See also: How a Combined Tesla & SolarCity Could Save $150 Million in a Year

As a result of the design problems and Model Xs production shortfall, Tesla failed to meet its forecast for the number of cars it shipped for two consecutive quarters and had to slightly lower its car shipment guidance for this year. Tesla now plans to ship 79,180 cars this year, down from the 80,000 to 90,000 cars originally forecast.

In the second quarter, Tesla delivered 14,402 cars to customers (9,764 Model S cars and 4,638 Model X cars), which was substantially lower than its prediction of 17,000 cars. Overall the company made 18,345 cars in the quarter, or 18% more than the number of cars Tesla made in the previous quarter.

Tesla said that half of the second quarter’s car production was in the final four weeks of the quarter, indicating that the fixes came relatively late. Production at the end of the quarter was about 2,000 cars weekly, the company said, which Musk described as "pretty stable."

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On Wednesday, Musk said the company had "climbed out of production hell in June" and called the production ramp "a lot of hurt." He added that he had "burned out a few neurons" and had "a lot of mental scar tissue" from solving the production problems.

Whether Tesla's Model X production problems are over isn't entirely clear. Musk said suppliers of Model X parts "had mostly gotten their shit together," though he said he would visit a supplier this weekend to address an unidentified problem.

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