Tesla didn’t exactly meet its goal of producing 5,000 copies of the Model 3 on a weekly basis by the end of the first quarter. Instead, Tesla made just 2,020 units despite the company’s best efforts to address bottlenecks in the production process. Now, in an interview with “CBS This Morning,” Elon Musk admits to mistakes that have hindered the rollout of its most important vehicle to date.
The CEO says “production hell” related to the Model 3 sedan has been worse than he expected. “We got complacent about some of the things that we felt were our core technology…We put too much new technology into the Model 3 all at once. This—this should have been staged,” he said.
Tesla’s highly automated assembly line actually contributed to a slowdown in production. Eventually, Tesla had to eliminate its “crazy, complex network of conveyor belts,” Musk said. In a recent post on Twitter, the CEO further indicated Tesla went too far with automation.
Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.
— Elon Musk (@elonmusk) April 13, 2018
Tesla received a downgraded credit rating from Moody’s last month, one sign that many pundits used to speculate about the company’s overall well-being. But Musk has a brighter outlook. “The problem that people have, a lot of the analysts, is they kinda look in the rearview mirror instead of looking at the front windscreen,” Musk said. “This has very frequently been why people have underestimated Tesla, because they would look at Tesla’s – what Tesla’s done in the past and use that as proxy for what we’re able to do in the future.”
Despite a slower-than-expected first quarter, Musk expects Model 3 output to increase dramatically in the next few months. “We’ll probably have, I don’t know, a three or four-fold increase in Model 3 output in the second quarter,” he told CBS. In its recent quarterly report, Tesla indicated it would not need an equity or debt raise this year other than standard credit lines.
According to analyst estimates compiled by Bloomberg, Tesla is expected to suffer adjusted net losses of around $192 million in the third quarter and $35 million in the fourth quarter. Musk, however, claims Tesla will be cash flow-positive in the last two quarters of the year.
The Economist used to be boring, but smart with a wicked dry wit. Now it’s just boring (sigh). Tesla will be profitable & cash flow+ in Q3 & Q4, so obv no need to raise money.
— Elon Musk (@elonmusk) April 13, 2018
Source: CBS, Elon Musk via Twitter, Bloomberg