Elon Musk has a fairly consistent message for all the haters and doubters and gossips and journalists and investment bankers and analysts who think Tesla is about to hit a massive financial wall: Suck it. In a tweet today, Musk again insisted that the many reports — the latest coming from The Economist — claiming Tesla will have to raise at least $2 billion this year are baloney. Why? Because he says the company is going to turn a profit in the second half of 2018. The Economist used to be boring, but smart with a wicked dry wit. Now its just boring (sigh). Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money. In the report, the Economist offered up a scathing review of how far short Tesla has fallen in terms of its production promises for the Model 3: Alas, Tesla has repeatedly failed to meet its own targets… In July 2017 Mr Musk claimed that his firm would be cranking out 20,000 Model 3s per month by December of that year. In fact, it managed to produce fewer than 2,500 in the entire final quarter of 2017. He vowed to produce 2,500 Model 3s a week by the end of March, rising to 5,000 a week by the end of June. Despite superhuman efforts by workers and managers (Mr Musk is personally supervising production of the new model and claims to be sleeping at the factory), on April 3rd Tesla confirmed that it is producing only around 2,000 Model 3 saloons a week. This production shortfall had led Moodys credit rating agency to conclude that Tesla would need to raise a bundle this year. Musk is given to brash statements, but this one carries a fair bit of risk. The company is already facing shareholder lawsuits. Now Musk is making a strong, forward-looking statement to investors. If it turns out not to be true, he could end up facing even more legal headaches down the road.
Tesla's big issue is battery production, but this robot thing didn't help. Tesla's affordable Model 3 has been trapped in development hell for what seems like ages now, and in an interview with CBS's Gayle King, CEO Elon Musk offered a little more insight into how the production process has fallen short. While escorting King through the company's Fremont, California-based factory, Musk conceded that Tesla might've been too many robots involved in its car production process and that the company would benefit from having more humans on the line. And when King opined out loud that in some cases, said robots probably slowed down production , Musk responded with a terse "yes, they did." Musk didn't get to elaborate on the complexities of his factory setup, but he did point out one particular failure: the facility at one point used a "crazy, complex network of conveyor belts, and it was not working so [Tesla] got rid of the whole thing." That Musk would've chosen to rely on a highly automated facility is little surprise. During a shareholder meeting in 2016, he excitedly noted that he thinks of the factory itself as a product with the potential for tremendous breakthroughs. "We realized that the true problem, the true difficulty, and where the greatest potential is – is building the machine that makes the machine," Musk said. "In other words, it's building the factory." Musk's plan to craft the machine that builds machines only picked up steam when Tesla acquired Perbix, an automated manufacturing company that Tesla had long-running business ties with. While the move allowed Tesla to being more component production in-house, it might have caused still more problems -- Tesla temporarily suspended Model 3 production for a week in February in part to "improve automation. " It seems clear that Musk hasn't yet struck the right balance between machines and the roughly 10,000 human workers at the Fremont factory. Just to be clear though, a surfeit of robots isn't the only reason Tesla has consistently fallen short of its production goals. On the company's most recent earnings call, Musk candidly pointed out that issues with battery module production at the company's Gigafactory in Nevada was the "limiting factor" in Model 3 output. "We were probably a little overconfident, a little complacent, in thinking this is something we understand," he said at the time. "We put a lot of attention on other things and just got too comfortable with our ability to do battery modules, because we've been doing that since the start of the company."