Tesla Inc. (TSLA) suspended production of its Model 3 electric sedans for a week in February, claiming that a break was necessary to iron out "bottlenecks" that have already forced the company to halve its manufacturing targets.
Manufacturing at Tesla’s assembly plant in Fremont, California temporarily was halted from Feb. 20 to Feb. 24, the automaker confirmed in an emailed statement to Bloomberg on Sunday. A company spokesman added that the manufacturing freeze was ordered to improve automation and develop new ways to increase production rates of Tesla’s heavily delayed, first mass-market electric vehicle. (See also: Tesla's Auto 2.0 Near-Monopoly May Soon End: Morgan Stanley)
“Our Model 3 production plan includes periods of planned downtime in both Fremont and Gigafactory 1,” the spokesman told Bloomberg. “These periods are used to improve automation and systematically address bottlenecks in order to increase production rates. This is not unusual and is in fact common in production ramps like this.”
Confirmation of Tesla’s production break came on the same day that CEO Elon Musk admitted to fans that Model 3 delays are one of his biggest worries. Talking on stage at the South by Southwest entertainment festival in Austin, Texas, Musk told attendees that manufacturing hiccups and artificial intelligence (AI) are the two things that cause him the most stress.
“Right now the things that are really stressing me out in a big way are AI, I would say, and working really hard on Tesla Model 3 production,” he said. “We're making good progress. But it's a huge amount of work."
Tesla has a lot riding on the success of the Model 3. The sedans have been billed as a way to bring electric vehicles to the masses and vastly widen the company’s customer base. Those prospects triggered a surge in Tesla’s share price, pushing its market valuation above established auto giants, General Motors Co. (GM) and Ford Motor Co. (F). (See also: Tesla Raising Over $500M With Debt Backed By Vehicle Leases)
However, the Model 3 has also been plagued by manufacturing setbacks. In February, the company slashed its production targets for the first quarter of 2018 in half. Tesla is now targeting a weekly Model 3 production rate of 2,500 by the end of this month and 5,000 by the end of June.