Tesla suspends Model 3 production… again

Tesla’s Fremont facility pictured in January 2018. ( Photo: Wikimedia Commons )

Automation and safety issues plaguing Fremont plant

Late on Monday afternoon, Tesla acknowledged that it had shut down Model 3 production at its Fremont, California facility for a four- to five-day pause in production. This production stoppage is the second time Tesla has shut down the Model 3 line since February. In the last few weeks of March, the company raced to meet its Q1 weekly production targets—which had already been halved from earlier projections—with Elon Musk sleeping in the factory and Tesla asking its employees to work longer hours. According to Bloomberg’s Model 3 Tracker, Tesla managed to achieve a rate of 1,166 Model 3s per week by the end of the quarter against a projection of 2,500.

This time, Tesla told its workers to use vacation days or stay home without pay. On Friday, Musk admitted that he had erred in committing so fully to untested automated production tools, tweeting, “Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.”

Musk’s tweet came after his appearance Friday on CBS This Morning. On that show, Musk admitted for the first time that Tesla’s Fremont plant was over-automated. “We had this crazy, complex network of conveyor belts… and it was not working, so we got rid of that whole thing,” Musk said. 

Industry observers saw this coming. Last month Wall Street bank Sanford C. Bernstein & Co. issued a research report claiming that Tesla was over-automated. The report’s lead author, Max Warburton, wrote, “The best producers—still the Japanese—try to limit automation. It is expensive and is statistically inversely correlated to quality. One tenet of lean production is ‘stabilize the process, and only then automate.’ If you automate first, you get automated errors. We believe Tesla may be learning this to its cost.” Bernstein’s analysts said that Tesla’s automation issues were inherent to their manufacturing strategy and flawed product design: “We believe that Tesla’s manufacturing system and philosophy may be fundamentally flawed and will be a severe impediment to building Model 3 in volume and at a profit.”

Tesla stock (TSLA) is down 5.7% over the past five days on news of the shutdown and a troubling report that alleged Tesla undercounted injuries at its production plants for years, failing to record minor injuries and downgrading serious injuries to minor incidents. Tesla workers have been cut by machinery, crushed by forklifts, burned in electrical explosions, and sprayed by molten metal: Tesla logged 722 injuries last year, about two a day, and recorded a serious injury rate (rate of injuries requiring time off or a work restriction) 83% worse than the industry average.

Former safety lead Justine White, growing frustrated by Tesla’s decision to prioritize production over safety, eventually resigned. A few months into her job, White had written an email to Sam Teller, Musk’s chief of staff, that said “I know what can keep a person up at night regarding safety. I must tell you that I can’t sleep here at Tesla.” White says that email was never answered. Justine White also alleged that Tesla did not count temp workers’ injuries at all. California’s Division of Occupational Safety and Health has cited Tesla for more than 40 violations since 2013. Reveal’s investigative report on Tesla’s safety record includes White’s story as well as accounts from several injured workers whose injuries weren’t recorded by Tesla.

Check out FreightWaves’ additional coverage of Tesla: a skeptic’s reaction to the Tesla Semi; our work on early Model 3 production difficulties; and the last Model 3 assembly shutdown.

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John Paul Hampstead, Associate Editor

John Paul writes about current events and economics, especially politics, finance, and commodities, and holds a Ph.D. in English literature from the University of Michigan. In previous lives John Paul studied Shakespeare in London and Buddhism in India, but now he focuses on transportation and logistics in the heart of Freight Alley--Chattanooga. He spends his free time with his wife and daughter herding cats, collecting books, and walking alongside the Tennessee River.