Elon Musk says Tesla relied on too many robots to build the Model 3, which is partly to blame for the delays in manufacturing the crucial mass-market electric car. In an interview with CBS Good Morning, Musk agreed with Teslas critics that there was over-reliance on automation and too few human assembly line workers building the Model 3. Earlier this month, Tesla announced that it had officially missed its goal of making 2,500 Model 3 vehicles a week by the end of the first financial quarter of this year. It will start the second quarter making just 2,000 Model 3s per week, but the company says it still believes it can get to a rate of 5,000 Model 3s per week at the midway point of 2018. Previously, Tesla has blamed bottlenecks in the production of the Model 3s batteries at the companys Gigafactory for the delays. But in a wide-ranging (and largely positive) interview with CBSs Gayle King, Musk also admits it was Teslas over-reliance on robots in the production. Musk then said the company needs more people working in the factory and that automation slowed the Model 3 production process. He alluded to a crazy, complex network of conveyor belts the company had previously used and said the company eliminated it after it became clear it wasnt working. Its a fairly stunning admission from the man who previously likened his companys massive factory to an alien dreadnought thanks to the complex assemblage of advanced robotic arms building its line of electric cars. In an earnings call with investors last year, Musk spoke about the production speeds facilitated by Teslas robots. Its remarkable how much can be done by just beating up robots ... adding additional robots at choke points and just making lines go really, really fast, he said. Speed is the ultimate weapon. Last year, Tesla acquired Perbix, a private machining firm that makes automated equipment for factories, allowing the carmaker to bring the production of more parts in-house. Tesla described the deal as a step further in its long-stated ambition to build the machine that makes the machine. In fact, Musk was so confident that Tesla had gotten right the mix of robots and humans that its giant Gigafactory would become the companys ultimate product. The competitive strength of Tesla long-term is not going to be the car, its going to be the factory, he said last February. Were going to productize the factory. Musk is also one of the foremost voices urging caution in the development of robotics and artificial intelligence. He has called for governments to regulate AI to prevent the technology from threatening human existence, and has warned for a coming AI apocalypse. Also in the interview, Musk said the Model 3s technical complexities were additionally to blame for the companys ongoing production hell. We got complacent about some of the things we felt were our core technology, we put too much new technology into the Model 3 all at once, Musk said. A spokesperson for Tesla declined to clarify Musks comments. While aesthetically more minimal than the Model S or X, the Model 3 uses 2170 lithium-ion battery cells, which are more complex than the industry-standard 18650 battery cells used in the Model S and X. Musk previously confirmed that Teslas Gigafactory 1 in Nevada was the source for the production bottlenecks slowing Model 3 deliveries. Panasonic, Teslas battery cell manufacturing partner at the factory, has also confirmed this. To be sure, Musk has used the too much technology excuse before. In 2016, he owned up to the problems with production of the Model X, telling an audience of Tesla shareholders, This [Model X] program has been challenging. I particularly need to fault myself for a fair bit of hubris for putting too much technology all at once into a product. The Model 3, he said, would not have as much technology as the Model S and X. Now Musk said he has taken over production of the Model 3, sleeping at Teslas Fremont factory in an effort to keep tabs on the vehicles rollout. In the interview, he shows King the conference room where he sleeps. A pillow and sleeping bag can be seen in the shot. King calls the couch not even [...] comfortable.
In a rare mea culpa for the mercurial billionaire, Tesla CEO Elon Musk acknowledged that the company has been too reliant on robots for production. Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated. Excessive automation at Tesla was a mistake, Musk wrote, responding to a Wall Street Journal reporters tweet. Humans are underrated. He also talked about this with CBS News Gayle King, adding we had this crazy, complex network of conveyor belts ….And it was not working, so we got rid of that whole thing. Tesla has faced mounting public pressure amid a production slowdown for its Model 3, its lower-priced car. The company recently revealed that it missed its target to produce 2,500 cars a week, disappointing investors. The uncertainty has resulted in a volatile stock. A month ago shares were trading at $340 and then slid to $252. Things have started to recover now that Musk says the company will be profitable and cash flow positive in the third quarter. This was also revealed in a tweet that Musk wrote to The Economist on Friday. 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. Theres no need to raise money, he added. Shares closed Friday at $300.34. The company has a market cap of $50.7 billion. By comparison, Ford Motors has a market cap of $45 billion.
Tesla is one of the more interesting companies for Wall Street that had an interesting couple of months this year — and it seems even tweets from Elon Musk, who said that the company will be profitable in the back half of the year, may be enough to swing its stock. The Tesla and SpaceX founder sent a tweet very early this morning that the company would be profitable and cash-flow positive in the third and fourth quarter this year. Tesla is known for setting ambitious targets and forecasts, especially as it looks to ramp up Model 3 production to around 2,500 vehicles per week. Musk said he took direct control of Model 3 production earlier this month in a note to employees, also sent out at around 3 a.m. pacific time. Teslas shares were up slightly, gaining around 2% in trading today. 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. Tesla saw a small bump in its stock throughout the day. While it could be for a variety of reasons, Musks data point may have offered a small amount of clarity (and optimism) around whether the company will be able to eventually turn a profit. The tweet was fired off as a response to a story by The Economist that said the company may have to raise additional capital at some point, according to banking firm Jeffries. (It was also quite snarky.) On Teslas last call to discuss the companys quarterly results with Wall Street analysts, Musk said that the company would begin generating positive quarterly operating income on a sustained basis, and said he was cautiously optimistic that the company would be GAAP profitable. Musk said the company wanted to hit a production target of 5,000 Model 3 vehicles per week at some point in 2018, though did not give a specific time frame. The tweet, while fired off as a response to a story by The Economist, appears to offer another small data point as to when it might happen. Earlier this month, Tesla fell back behind Ford in terms of its market cap as some pressure has hit the stock. Tesla has had to address a fatal crash involving its autopilot, in addition to a voluntary recall of 123,000 Model S vehicles. There is some skepticism around whether Tesla will hit its production targets from Wall Street (making cars is hard, it seems).
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."