Tesla to Halt Production of Model 3 Cars Temporarily

Source: By NEAL E. BOUDETTE, New York Times • Posted: Wednesday, April 18, 2018

In the final week of March, Tesla made just over 2,000 Model 3 cars. It is hoping to lift that to 5,000 cars a week by the end of the second quarter. David Zalubowski/Associated Press

Tesla plans to halt production of its Model 3 compact car on Tuesday in a bid to work out kinks that have slowed assembly of the car, a critical vehicle in the company’s business plan.

It expects to idle its Model 3 assembly line for several days to clear impediments that have held production well below the electric-car company’s targets.

In the final week of March, Tesla made just over 2,000 Model 3s. It is hoping to lift that to 5,000 cars a week by the end of the second quarter. At one time, the company’s chief executive, Elon Musk, thought Tesla would be able to make several hundred thousand Model 3s in 2018.

In a statement, Tesla said it had planned downtime into its production plans at its car plant in Fremont, Calif., “to improve automation and systematically address bottlenecks in order to increase production rates.”

News of the halt in production was first reported by BuzzFeed. The company’s stock price was down slightly in Tuesday trading.

Tesla’s trials in putting the Model 3 into mass production have drawn scrutiny from investors. With a starting price of $35,000, the Model 3 is supposed to be Tesla’s most affordable and top-selling car. The company has been counting on a quick increase in sales to bolster revenue and enable the company to pare down losses and pay off bonds and borrowings while still investing heavily in future vehicles.

Concerns over the slow pace of Model 3 assembly spurred Moody’s Investors Service to cut Tesla’s credit rating last month and question whether the company could face a cash crunch this year.

Its financial troubles have been compounded by an investigation by federal safety experts into a fatal crash on March 23 that involved a Tesla Model X sport-utility vehicle that was operating with its Autopilot driver-assistance system engaged. The driver, Wei Huang, a software engineer at Apple, died in a hospital shortly after the crash.

The National Transportation Safety Board sent investigators to California to look into the crash. Tensions between Tesla and the agency increased after the automaker suggested the driver was at fault because data from the car showed that he did not have his hands on the steering wheel for several seconds before the car hit a concrete barrier.

In production of the Model 3, Mr. Musk gambled by creating an assembly line that relies much more heavily on automated equipment and robots than workers. But it has proved more difficult than he expected to get the machinery to work in harmony. He recently said he was sleeping at the Fremont plant while working to improve the production line, and he has described the delays and glitches as “production hell.”

In a tweet over the weekend, Mr. Musk acknowledged that “excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.”

Tesla stock and bond prices have slumped in recent weeks. On Monday, Tesla shares closed at $291.21, down 3 percent on the day. They have lost nearly a fifth of their value since March 12.