Fremont, California - Tesla nearly
produced 5000 Model 3 electric sedans in the last week of its
second quarter, with the final car rolling off the assembly line
on Sunday morning, several hours after the midnight goal set by chief executive Elon Musk.
Two workers at the factory told
Reuters the 5000th car finished final quality checks at the factory around 5am; it was not clear if Tesla could maintain that level
of production for a longer period. Musk said the company hit its target of 5,000 Model 3s in a
week, according to an email sent to employees on Sunday
afternoon, and expects Tesla to produce
6000 Model 3 sedans a week "next month".
"I think we just became a real car company," Musk wrote. The
company hit the Model 3 mark while also achieving its production
goal of 7000 Model S and Model X vehicles in a week, Musk said
in the email. Tesla confirmed the contents of the email.
After repeatedly pushing back internal targets, Tesla vowed
in January to build 5000 Model 3s per week before the close of
the second quarter on Saturday to demonstrate it could mass
produce the battery-powered sedan.Money-losing Tesla has been burning through cash to produce
the Model 3, and delays have also potentially compromised
Tesla's first-to-market position for a mid-priced, long-range
battery electric car as a host of competitors prepare to launch
rival vehicles.
Over-reliance on automation
Production of the Model 3, which began in July 2017, has been
plagued by a number of issues, including problems from an
over-reliance on automation on its assembly lines, battery
issues and other bottlenecks. As the end of the quarter neared, Musk spurred on workers,
built a new assembly line in a huge tent outside the main
factory, and fanned expectations that Tesla could hit its
target, including tweeting pictures of rows of auto parts and
robots over the final days of the quarter.
"It was pretty hectic," said one worker who described the
atmosphere as "all hands on deck." Another worker speaking after the 5000th car was made
described the factory as a "mass celebration". Tesla is likely to announce production and delivery numbers
for the quarter later this week, and investors will watch to see
whether the company can keep up its end-of-quarter production
speed and increase efficiency to produce the cars at a profit.
Tesla had to set up an additiional assembly line in a giant marquee at its Fremont, California assembly plant to make its target of 5000 Model 3s in a week. Picture: Stephen Lam / Reuters
Tesla will have to prove to investors that it can sustain
and increase its production pace, and some sceptics have bet
against the company. Short sellers lost more than over $2 billion (R27 billion) in June due to Tesla's
rising share price and this latest achievement could buoy the
company's shares at market open on Monday.
In recent months, the company has engaged in so-called
"burst builds," temporary periods of fast-as-possible
production, which it uses to estimate how many cars it is
capable of building over longer periods of time. Analyst Brian Johnson of Barclays warned investors in March
to be wary of brief "burst rates" of Model 3 production that
were not sustainable.
One worker told Reuters that, to meet the goal, employees
from other departments were dispatched to parts of the Model 3
assembly line to keep it running constantly, and breaks were
staggered "so the line didn't stop moving". He also said some areas within the factory - including the Model S line - were shut
down to divert their workers to help out on the Model 3.
That suggests Tesla was able to generally meet its
production target through manual labor, rather than the
automation Musk originally promised would make Tesla a
competitive force in manufacturing. Earlier in 2018 Musk -
who has described his vision for the Fremont factory as an
"alien dreadnought" - acknowledged error in adding too much
automation, too fast, to the Model 3 assembly line. And in May Tesla sent a new battery assembly line via cargo
planes to its Gigafactory battery plant outside Reno, Nevada in
order to speed production.
450 000 reservations
When first unveiled in March 2016, the Model 3 generated
thousands of reservations from consumers in an unprecedented
show of support for the new vehicle. Most recently in May, Tesla
said that despite the delivery delays, its net Model 3
reservations - accounting for new orders and cancellations -
exceeded 450 000 at the end of the first quarter.
Despite touting the Model 3 as a $35 000 (R485 000) car, Tesla has
yet to begin building that basic version and instead is
currently building a higher-priced version. It is not clear how
many of the orders are for the more premium version.