Tesla will reportedly pause production at its Fremont factory for 6 days from May 26–31, 2018. The work stoppage will allow the all-electric luxury car manufacturer to make some adjustments to its Model 3 assembly line, sources inside the company told Reuters. (Note: there is some rumor the downtime will end up being shorter than initially planned, only the May 26–27th weekend.)
Delayed volume production of the Model 3 sedan impacted Tesla stock forecasts following the Q1 2018 shareholder letter. The media airwaves were fired up with predictions of gloom, too, all of which is at the heart of the upcoming Fremont factory shutdown.
Tesla CEO Elon Musk has expounded on the challenges of over-automation and has even hinted that reducing automation would actually increase their gross margins. Wall Street analysts Max Warburton and Toni Sacconaghi agree, saying that robots can’t pump out Tesla’s highly anticipated Model 3s fast enough. They argue that trying to “hyper-automate final assembly” is to blame for Tesla’s inability to bring Model 3 production to scale quickly enough and call the process too ambitious, risky, and complicated.
Yet automation continues to be a central tenet in Tesla’s plan to build high-volume, low-cost electric cars for the masses. It is this very tension of innovation and competitive advantage that is key to the Tesla brand and future.
Many in the industry doubt that Tesla will be able to hit its 5,000-a-week target in the next few months. Of course, production shortfalls up till now have delayed essential customer deliveries (compared to forecasts from the past year, but not going back deep into Tesla history), prompting Musk to pull all-nighters at the factory in order to take direct control of the production line in early April.
“We were able to unlock some of the critical things that were holding us back from reaching 2,000 cars a week. But since then, we’ve continued to do 2,000 cars a week,” he said, according to The Guardian.
This is not the first Fremont factory shutdown. Assembly lines were halted in February and April this year. Musk has said the planned stoppages are intended to give the company time to perform upgrades that will help it reach a goal of building 6,000 vehicles per week by the end of June.
Two sources confirmed to Reuters that, in addition to the Fremont factory shutdown, the teams working on general assembly have already switched to 3 shifts, a schedule which maximizes production capacity and flexibility. Teams focused on the car’s external shell are working in two 12-hour shifts.
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