Home Business News Elon Musk Scraps Automation That Slowed Tesla Output, Then Hikes Targets For Model 3 And Profits

Elon Musk Scraps Automation That Slowed Tesla Output, Then Hikes Targets For Model 3 And Profits

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David Butow/Corbis via Getty Images

Workers assemble a car on the line at Tesla’s factory in Fremont, Calif.

Elon Musk can’t help himself. In an interview with CBS This Morning, the Tesla chief executive admitted to overreaching on Model 3 production targets and factory automation, disappointing both investors and customers. Yet in the next breath, he claimed matter-of-factly that Tesla will triple or quadruple production rates this quarter, well beyond those initial lofty targets.

The program aired Friday, just hours after Musk made another bold promise that stretched credulity, tweeting overnight that Tesla will be profitable in the third and fourth quarters of this year and will not have to raise any money from investors.

By now, people have become accustomed to Tesla’s overpromising and under-delivering. But this is material stuff that affects financial markets. His tweet, in response to a story in The Economist that predicted a cash crunch ahead for Tesla, drove the company’s shares up 3 percent this morning, for example.

The ever-confident Musk isn’t bothered by naysayers, admitting to CBS’ Gayle King, that the “production hell” he frequently&nbsp;complains about “is worse than I thought,” then adding: “I’m feeling pretty optimistic about where Telsa is right now. At this&nbsp;point, I have a pretty clear understanding of the path out of hell, and I did not until recently have a clear understanding.”

But it’s not at all clear&nbsp;to viewers of CBS This Morning what that confidence is based on. Musk agreed with King that Tesla put too many robots in its factory, which slowed production — something established auto industry experts said all along — and that Tesla would be better off with more people making its cars.

“We had this crazy, complex network of conveyor belts and it was not working. So we got rid of that whole thing,” Musk said, a major reversal from February, when he called the parts&nbsp;conveyor system “probably the most sophisticated in the world,”&nbsp;adding that it “appears to be on track.” The system, built a level below the assembly line, was intended to carry parts to the assembly line.&nbsp;It’s not clear how Tesla is handling parts delivery now.

Musk had bragged in February that Tesla’s fully automated factory, not its vehicles, would be its long-term competitive advantage, while lean&nbsp;manufacturing experts called it a wasteful folly that would gobble up billions of dollars in capital.

Tesla has not invited journalists to tour the Fremont, Calif., assembly plant since Model 3 production started, so it’s tough to get a feel for the current state of production, other than Tesla’s assertion that it is now building cars at a rate of 2,000 per week, on the way to a rate of 5,000 per week&nbsp;in about three months.&nbsp;

In CBS’ video, you can see a lot of boxed inventory, a number of unpainted car bodies sitting on stands, and other signs of disorganization. Most of the automation shown was in the body shop, where steel panels are welded together, a process that is 90 percent automated in most car factories anyway. In one shot, workers were hand-buffing a&nbsp;painted car body on a stand. Paint repair or spot-buffing occurs in other plants, but usually while the vehicle is moving on the assembly line. In this case, the Tesla had been pulled from the line for buffing.

Musk showed King the factory conference room where he sleeps in a sleeping bag during his self-described “production hell.” To Musk anyway, Hell is cold and hard: King said the room was frigid and the sofa was uncomfortably&nbsp;firm.

The 7-minute CBS story had&nbsp;Jeffrey Liker, the retired University of Michigan professor whose 2004 book,&nbsp;The Toyota Way, outlined the principles of lean manufacturing, scratching his head.

There is no reason for production hell if you have an experienced management team and experienced workers and a well-designed process and you do good planning, said Liker. “Production startup at Toyota takes a lot of work but it goes very smoothly…Within one week they are up to full volume on a brand new vehicle. &nbsp;

Toyota Motor Chief Executive Akio Toyoda once slept in the very same plant — it used to be a joint venture between Toyota and General Motors — when a major piece of equipment crashed, Liker said, but the CEO was there merely for moral support. The boss left the responsibility for the technical problem-solving to the people who knew the equipment best.

That is clearly not Elon Musk’s style.

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David Butow/Corbis via Getty Images

Workers assemble a car on the line at Tesla’s factory in Fremont, Calif.

Elon Musk can’t help himself. In an interview with CBS This Morning, the Tesla chief executive admitted to overreaching on Model 3 production targets and factory automation, disappointing both investors and customers. Yet in the next breath, he claimed matter-of-factly that Tesla will triple or quadruple production rates this quarter, well beyond those initial lofty targets.

The program aired Friday, just hours after Musk made another bold promise that stretched credulity, tweeting overnight that Tesla will be profitable in the third and fourth quarters of this year and will not have to raise any money from investors.

By now, people have become accustomed to Tesla’s overpromising and under-delivering. But this is material stuff that affects financial markets. His tweet, in response to a story in The Economist that predicted a cash crunch ahead for Tesla, drove the company’s shares up 3 percent this morning, for example.

The ever-confident Musk isn’t bothered by naysayers, admitting to CBS’ Gayle King, that the “production hell” he frequently complains about “is worse than I thought,” then adding: “I’m feeling pretty optimistic about where Telsa is right now. At this point, I have a pretty clear understanding of the path out of hell, and I did not until recently have a clear understanding.”

But it’s not at all clear to viewers of CBS This Morning what that confidence is based on. Musk agreed with King that Tesla put too many robots in its factory, which slowed production — something established auto industry experts said all along — and that Tesla would be better off with more people making its cars.

“We had this crazy, complex network of conveyor belts and it was not working. So we got rid of that whole thing,” Musk said, a major reversal from February, when he called the parts conveyor system “probably the most sophisticated in the world,” adding that it “appears to be on track.” The system, built a level below the assembly line, was intended to carry parts to the assembly line. It’s not clear how Tesla is handling parts delivery now.

Musk had bragged in February that Tesla’s fully automated factory, not its vehicles, would be its long-term competitive advantage, while lean manufacturing experts called it a wasteful folly that would gobble up billions of dollars in capital.

Tesla has not invited journalists to tour the Fremont, Calif., assembly plant since Model 3 production started, so it’s tough to get a feel for the current state of production, other than Tesla’s assertion that it is now building cars at a rate of 2,000 per week, on the way to a rate of 5,000 per week in about three months. 

In CBS’ video, you can see a lot of boxed inventory, a number of unpainted car bodies sitting on stands, and other signs of disorganization. Most of the automation shown was in the body shop, where steel panels are welded together, a process that is 90 percent automated in most car factories anyway. In one shot, workers were hand-buffing a painted car body on a stand. Paint repair or spot-buffing occurs in other plants, but usually while the vehicle is moving on the assembly line. In this case, the Tesla had been pulled from the line for buffing.

Musk showed King the factory conference room where he sleeps in a sleeping bag during his self-described “production hell.” To Musk anyway, Hell is cold and hard: King said the room was frigid and the sofa was uncomfortably firm.

The 7-minute CBS story had Jeffrey Liker, the retired University of Michigan professor whose 2004 book, The Toyota Way, outlined the principles of lean manufacturing, scratching his head.

There is no reason for production hell if you have an experienced management team and experienced workers and a well-designed process and you do good planning, said Liker. “Production startup at Toyota takes a lot of work but it goes very smoothly…Within one week they are up to full volume on a brand new vehicle.  

Toyota Motor Chief Executive Akio Toyoda once slept in the very same plant — it used to be a joint venture between Toyota and General Motors — when a major piece of equipment crashed, Liker said, but the CEO was there merely for moral support. The boss left the responsibility for the technical problem-solving to the people who knew the equipment best.

That is clearly not Elon Musk’s style.

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