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Tesla denies further Model 3 production issues

January 28, 2018 01:06·
Reuters

Reuters

The driver of a Tesla Model S crashed into a fire truck while driving down a California highway.

Tesla Inc is on track to achieve its production targets for the Model 3, the electric car-maker said on Thursday, squashing a report of further delays and quality issues for its latest and most-affordable sedan.

Quoting unnamed Tesla insiders, CNBC reported that there have been numerous problems with that machinery requiring the battery-carmaker to continue doing much of the battery pack production work by hand, but also forcing Tesla to bring in additional workers from both its battery partner Panasonic and from temp agencies.

More than 450,000 people have preordered the Tesla Model 3, the company's first mass-market sedan. This is where the problems arose. and according to the CNBC report, the employees said, "the complex and precise work is hard to accomplish manually, resulting in high scrappage rates and the risk that some battery packs could fail in the field". They went on, saying, "As with Model S and Model X, which have well demonstrated safety records, we maintain a rigorous approach to quality and process control for the Model 3 battery. This is something Elon and JB discussed extensively on our Q3 earnings call, and it has no impact on the quality or safety of the batteries we're producing".

That has raised the growing specter that Tesla will have to return to the equity markets to raise more capital, an irony considering the continuing strength of its stock.

But more recently, Kolodny acknowledges, Tesla has begun to ramp up production. The company will never deliver more than a token few for less than the current $49,000 lowest-cost offering. "And even at those higher prices Tesla will never come anywhere close to its promised [profitability]". Elon Musk has been in talks with Jeffrey Brian Straubel regarding the cuts in earnings by Tesla.

Tesla has a history of setting and missing ambitious targets. Nobody dressed up like Elon Musk or pitched a tent outside the showroom overnight to get an enviable place in line. In a shareholders' update in August, the company should be producing 5,000 Model 3s per week by the end of 2017. But while Musk also claimed production would ramp up rapidly, by the end of 2017, Model 3s were still being built at a much lower rate than previously promised. No $35,000 basic models have shipped as of mid-January.

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"To be absolutely clear, we are on track with the previous projections for achieving increased Model 3 production rates that we provided earlier this month", the corporate statement read. "There are questions of tolerance and risk, what meets quality criteria and so on", one said. Each battery pack contains four modules. Production is supposed to be entirely automated, so the company had to "borrow" dozens of workers from lithium-ion cell supplier Panasonic to complete work on the batteries. Those cells have to be precisely aligned. Workers are also still manually assembling batteries at the Gigafactory.

But bandoliers are tough to put together by hand.

A current Gigafactory engineer recalled that in December, factory workers were manually "slapping bandoliers together as fast as they possibly could", generating a lot of scrap in the process.

Tesla's gigafactory in Sparks, Nevada is just a three hour drive from Clayton Valley.

"In light of these facts, it's preposterous to suggest that a company as committed to safety as Tesla would allow untested or unsafe batteries to go in our vehicles".

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