Tesla Inc. will begin around-the-clock production at its Fremont, California, assembly plant to boost Model 3 output, chief executive officer Elon Musk told employees.
The electric-car maker will try to build 6,000 of the sedans a week by the end of June, Musk wrote in an email Tuesday first obtained by the blog Electrek. A Tesla spokesman declined to comment. The company’s shares rose as much as 2.9 percent in early U.S. trading on Wednesday.
“As part of the drive towards 6k, all Model 3 production at Fremont will move to 24/7 operations,” Musk wrote. “This means that we will be adding another shift to general assembly, body and paint.”
The goal Musk describes in the email is higher than the 5,000-a-week Model 3 target Tesla has set for the end of the second quarter, a potentially positive development that comes with some caveats. The CEO also signaled Tesla is planning another pause in Model 3 output next month after stopping for three to five days this week to make updates to its factories in California and Nevada.
The upgrades Tesla is making while idling the plants this week “should set us up for Model 3 production of 3000 to 4000 per week next month,” he wrote.
Model 3’s Importance
Tesla’s fortunes ride on boosting Model 3 output. The company needs revenue from delivering more cars to customers after spending billions of dollars to boost manufacturing capacity. Musk, who has said his automaker will be profitable and cash-flow positive in the third and fourth quarters and won’t need another capital raise this year, also outlined cost-saving measures in his email.
“I have asked the Tesla finance team to comb through every expense worldwide, no matter how small, and cut everything that doesn’t have a strong value justification,” he wrote. “All capital or other expenditures above a million dollars, or where a set of related expenses may accumulate to a million dollars over the next 12 months, should be considered on hold until explicitly approved by me.”
Tesla’s Fremont factory lines have been running on two shifts. Musk’s email doesn’t elaborate on the specifics of how a third will be added to the production schedule.
About 10,000 people work at what is the lone auto assembly plant on the U.S. West Coast, and that number will be growing. Between Fremont and its battery factory near Reno, Nevada, Tesla will be adding about 400 people per week for several weeks, Musk wrote.
Tesla produced 9,766 Model 3s in the first quarter and missed a goal to build 2,500 of the sedans in the last week of March. Musk touched on why he was setting a higher target internally than the one the company has communicated publicly in his email.
“The reason that the burst-build target rate is 6,000 and not 5,000 per week in June is that we cannot have a number with no margin for error across thousands of internally and externally produced parts and processes,” he said, noting that the carmaker produced 2,250 of the sedans last week.
Musk said that going forward, workers should walk out of meetings or drop off of a call “as soon as it is obvious you aren’t adding value” and avoid using “acronyms or nonsense words for objects, software or processes at Tesla” to boost their productivity. He thanked his team for “accomplishing miracles every day.”
“We are burning the midnight oil to burn the midnight oil,” he said. — Bloomberg