Tesla’s Stock Stalls After a Report Says It Skipped a Brake Test to Reach Its Model 3 Production Targets

July 4, 2018, 10:10 AM UTC

Tesla’s stock tumbled by more than 7% after a report stated that CEO Elon Musk had the company skip part of the safety testing process in order to meet production targets for the Model 3 sedan.

Business Insider reported Tuesday that, according to internal documents it had seen, Musk asked factory engineers to stop performing a “brake and roll” test on the Model 3s a few days before the deadline for finally producing 5,000 cars in a week, as promised to investors.

The point of these tests is to check that the car’s braking system works and that its wheels are perfectly aligned. Experts told Business Insider that not performing the test could result in quality issues, but Tesla said it conducts other tests that make this particular one redundant.

Wall Street was not impressed. Tesla’s share price had already fallen earlier in the day, due to analysts downgrading their predictions of the company’s deliveries in the second quarter and increasing estimates of the losses that Tesla is making. The testing report just made things worse, and Tesla closed down 7.2%.

The company is by now famous for its inability to meet Musk’s lofty production targets, and Tesla went to extraordinary lengths to meet its 5,000-in-a-week goal. Apart from skipping the allegedly redundant brake and roll test, Tesla built a third production line in a huge tent and workers put in a lot of overtime. Musk himself has reportedly been sleeping at the factory.