Tesla's Model 3, the Mass Market Electric Car, is Finally Ready to Fly

A six-month delay is finally over, Musk tells shareholders.

It looked a little like Elon Musk was about to cry.

The Tesla CEO was on stage Tuesday in Mountain View, California, at the annual meeting of the electric car company’s shareholders, recounting a story of an obsessed Tesla worker who showed up to work 60 days in a row to the Gigafactory, the Nevada battery plant that suffered epic problems while trying to press batteries for the Model 3. And it wasn’t 60 weekdays, it was every day. The worker’s managers had to tell him to go home or he would keel over, Musk told the assembled shareholders in the room and anybody watching the livestream.

The sporty sedan is the company’s big bet on a mass market electric car (base price: $35,000) that has seen “insane demand,” in the words of a popular Tesla writer, since its debut in March 2016 that had people lined up around the block to put down a $1,000 deposit.

“And then he snuck back in to work. ‘Damnit, we said go home!’ Musk said, adopting the demeanor of a caring boss. He appeared ever so slightly emotional as he resurfaced the memory of that dedicated employee who’s executing his vision of sustainable transportation.

Tesla’s treatment of its employees has been criticized over the years, so the illustrative story about how loyal workers waded through “production hell” served as an anecdotal counter to recent reports that the United Auto Workers union accused Musk of trying to bust up organizing efforts. And a year ago this week, reports surfaced that Tesla fired a female engineer who filed a sexual harassment against the company. Last summer, a machinist at Tesla alleged he was fired just before he was able to exercise Tesla stock options. In short, the story of the 60-day Tesla worker shows the range of experiences the 38,000 employees have there, even as Musk is eyeing more and more automation that could replace people with robots.

But people matter at Tesla, as they do at any large operation. The CEO learned this lesson in a new way with the Model 3, when automated processes designed to make batteries at a faster rate malfunctioned. Rewriting software takes a longer time than replacing a sick employee, he learned.

“The Model 3 production process will be vastly more automated than the production process of Model S, Model X or almost any other car on the market today, and bringing this level of automation online is simply challenging in the early stages of the ramp,” the company announced last fall.

The speed of cars coming off the line slowed to a creep because of battery production problems, Tesla revealed in November:

Our primary production constraint has been in the battery module assembly line at Gigafactory 1, where cells are packaged into modules. Four modules are packaged into an aluminum case to form a Model 3 battery pack. The combined complexity of module design and its automated manufacturing process has taken this line longer to ramp than expected. The biggest challenge is that the first two zones of a four zone process, key elements of which were done by manufacturing systems suppliers, had to be taken over and significantly redesigned by Tesla. We have redirected our best engineering talent to fine-tune the automated processes and related robotic programming, and we are confident that throughput will increase substantially in upcoming weeks and ultimately be capable of production rates significantly greater than the original specification.

“Humans are underrated,” Musk said back in April during a CBS This Morning segment, and again this week. The problems with battery production at the Gigafactory had been well-known for months, and now, with a light at the end of the tunnel, Musk isn’t shy about saying Tesla’s human workers could do a better job than automated robots at certain tasks. A hype video by Tesla released earlier this month puts Tesla’s human workers in front of the camera, not the robots:

Musk’s relationship with people — jokes about him being a robot wearing a human skin suit are excellent, but put those aside for a moment — is what landed him and Tesla in trouble in the first place. As an engineer, especially when talking about the future production facilities for the in-development Model Y crossover SUV, Musk is obsessed with Tesla’s market differentiator being its factory, not its car. He envisions robots building cars so blurringly fast that you’ll need to point a strobe light at them to see them clearly.

When Musk’s high-flying vision crashed to the ground at the Gigfactory, it’s apparent he began to realize that humans are better at some jobs than robots, or at least was shrewd enough to push forward that message publicly. It wasn’t exactly “up with people!” but a moment of public humility in front of Gayle King has undeniable restorative properties to a person’s rep. The six-month delay on Model 3 orders — of which where were more than 300,000, according to some estimates — now nearly over, Musk has sought to restore positivity around the future of Tesla.

At the shareholders meeting, while wearing a humanizing Rick and Morty Butter Robot shirt under a leather jacket, he said as much: “It’s clear that there are some elements of production that are really suited to people doing it, and some elements of production that are well suited to robotics.” To automate some process also seemed silly in retrospect, he admitted.

The production target for the Model 3 was to build 5,000 of the electric sedans a week by the end of the 2017. That target was pushed back a few times, eventually to the beginning of July, as announced in January in a statement released with the car company’s earnings:

As we continue to focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time, we expect to have a slightly more gradual ramp through Q1, likely ending the quarter at a weekly rate of about 2,500 Model 3 vehicles. We intend to achieve the 5,000 per week milestone by the end of Q2.

And at the shareholder’s meeting on Tuesday, Musk effectively said the slide should stop.

“It’s quite likely that we will achieve 5,000-cars a week by the end of this month,” he said to applause. “It’s like, phew, I tell you, the most excruciating, hellish several months I’ve maybe ever had, and a lot of other people at Tesla. But I think we’re getting there.”

Tesla executives have said delays with the Model 3 — which remains, despite its problems, poised to be the first mass market electric car — were because production constraints. With the automation problems close to fixed — and the much talked-about 5,000-cars-a-week pace weeks away — Tesla finally appears ready to come out of production hell.

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