Early Sunday, Tesla came within a hair’s breadth of its longstanding goal of producing 5,000 Model 3 sedans per week. New reporting from inside Tesla’s Model 3 facility describes how that goal was (nearly) met, a push which one line supervisor described as “desperate,” and which came with plenty of breaks from auto-industry orthodoxy.
The company’s goals were laid out last year, before it had perfected its assembly line. That led to a lot of anxiety among investors and supporters when the early numbers fell dramatically short. Later, CEO Elon Musk would reveal that the gap was mostly caused by over-reliance on automation, and the months since have involved rethinking the entire Model 3 production process on the fly. Those shifts are detailed in an extensive new report by the New York Times, which toured part of the Model 3 facility and interviewed workers there.
In one case, for instance, robots were proving inept at bolting down seats and connecting wiring to them, so human beings took over those tasks—though robots still move the seats into place. Importantly, the Times does note that in some instances the push for automation has paid off, with the Model 3 production line requiring many fewer workers for certain processes than the equivalent portions of the Model S and Model X lines. That should lead to lower costs in the long run, making the initial fumbles well worth it.
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Tesla is also continuing to experiment with other possible efficiencies, including testing robots at speeds higher than they’re rated for. They’re even eliminating some basic construction elements, such as welds on the car’s frame, that engineers have deemed redundant. More dramatically, Tesla recently built a third Model 3 production line, under a huge canvas awning, which serves not only to expand capacity, but to implement improvements over the original two lines.
The many reconfigurations have meant long hours and heightened stress for everyone from Musk on down. Musk has reportedly been sleeping at the factory regularly for months, while line workers told the Times they were putting in 10- or 12-hour days, as often as six days a week.
The changes have also meant many new hires, who receive training that experts say is much shorter than the industry average, and who are, according to some workers, showing signs of high turnover. Poor worker retention could make it more difficult for Tesla to continue improving its speed—or it may help the company find a stable core of workers who can adapt to its need for flexibility. We believe in rapid evolution,” Musk told the Times. “It’s like, find a way or make a way. If conventional thinking makes your mission impossible, then unconventional thinking is necessary.”
While Tesla fell short of its initial projections, then, it appears that unconventional thinking has helped it remedy many of the underlying issues. That may or may not silence a growing army of skeptics, including an army of short sellers with more than $10 billion dollars on the line. Those bets, and the emotion behind them, make Tesla by one estimate the most hated stock on Wall Street. Shorts lost a reported $2 billion in just the first half of June as Tesla stock surged.
Though the stock has leveled off since, another rally—perhaps caused by this weekend’s good news—could trigger a “short squeeze.” In that scenario, the rising price of a stock forces short sellers to cover their bets by buying back stock they borrowed as part of their short. That can force the stock even higher, triggering a cascade of further calls, and leaving shorts with little to show for their naysaying.
