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Elon Musk Is Furious Over His Minisub Failure To Participate In Rescue Operation In Northern Thailand
Tesla Plots Bold China Factory Move, Stays Silent on Cost
Updated on July 11, 2018, 6:41 AM GMT+2 Video / 02:41
Baird says big question for investors is how it’ll be paid for
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Tesla Plots Bold China Factory Move, Stays Silent on Cost
https://www.bloomberg.com/news/articles/2018-07-10/tesla-is-said-to-plan-china-plant-with-500-000-vehicle-capacityUpdated on July 11, 2018, 6:41 AM GMT+2 Video / 02:41
Baird says big question for investors is how it’ll be paid for
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Hell for Elon Musk Is a Midsize Sedan
July 12, 2018, 11:00 AM GMT+2
Will the Model 3 make Tesla a real car company?
On July 1, Elon Musk went home to sleep. The chief executive of Tesla Inc. had been camping out at his electric car factory in Fremont, Calif., for much of the past week. He’d been sleeping on a couch, or under a desk, as part of a companywide push to get out of what he calls “production hell” by manufacturing at least 5,000 of Tesla’s new Model 3 sedans in a week.
“I was wearing the same clothes for five days,” Musk says in an interview with Bloomberg Businessweek. “My credibility, the credibility of the whole team,” was at stake.
Musk initially promised as many as 200,000 Model 3s by the end of 2017. To get there he planned an unprecedented investment in factory robots, calling the production line “the machine that builds the machine.” He’d said it would look like “alien dreadnought”—a manufacturing process so futuristic, unstoppable, and cost-effective that it would seem extraterrestrial.
It hasn’t worked out that way. Tesla ended 2017 having made not quite 2,700 Model 3s. As of the end of June it had turned out about 41,000, and some analysts express doubts about whether it will ever be able to show a profit on the car, and Tesla hasn’t even started selling the $35,000 base model.
Making matters worse, Tesla has $10 billion in debt and suffered a credit downgrade in March. It’s spent about a billion dollars more per quarter, on average, than it has taken in over the past year, and the cost of a recently announced factory in China is still unknown. Tesla is running out of cash at a time when competition is heating up—Volkswagen, BMW, Daimler, and others plan to release dozens of electric car models.
In early June, at Tesla’s annual meeting, Musk tried to project calm, but at times seemed close to tears. “This is like—I tell you—the most excruciatingly hellish several months that I have ever had,” he said, before noting that Tesla’s assembly lines were being further upgraded, making the company “very likely” to hit the weekly goal of 5,000. He also revealed he’d asked employees to build a third general assembly line that would be “dramatically better than Lines 1 and 2.” That sounded even more alien-dreadnoughty.
A week later, Musk posted a picture of the new facility on Twitter. There were no fancy robotic systems, nor fixed walls, even—just a large tent outside the factory built from scrap from the other lines. The automotive world winced. “Insanity,” said Max Warburton, an analyst with Sanford C. Bernstein & Co., in an email to Bloomberg News. “I don’t think anyone’s seen anything like this outside of the military trying to service vehicles in a war zone.”
The tent sufficed. “I think we just became a real car company,” Musk wrote in a July 1 email to employees announcing that Tesla had made 5,031 Model 3s the previous week. Even so, it’s unclear whether Musk has put Tesla on a path to lasting greatness or just staved off collapse. The company is the most shorted U.S. stock, and a higher percentage of Wall Street analysts give TSLA a sell rating than for all but one stock on the S&P 500. The story of Tesla’s sprint to release the Model 3, based on interviews with 20 members of Tesla’s design and engineering teams, suppliers, and dozens of current and former workers, is a case study in brilliant design and unbelievable hubris.
The prize for Musk is enormous: If he gets the Model 3 right, he will remake a trillion-dollar industry and do more to reduce carbon emissions than any person on the planet. But it may turn out that mass-producing cars is the one challenge that simply defies him.
In early 2015, Musk convened a meeting of his top engineers in a windowless conference room at the factory. There were 12 people, including experts in batteries, design, chassis, interiors, body, drive systems, safety, and thermodynamics. Musk, who did not attend himself, had gathered them to figure out what the Model 3 would be.
Over the course of the meeting, the engineers filled a whiteboard with dozens of requirements, including a range of at least 200 miles and an affordable price. The last of these criteria made the project especially daunting. Even scarier, Tesla would begin selling it in mid-2017, giving the company 2 ½ years to design, test, and build a new vehicle, compared with about five years at a traditional automaker.
Creating a low-cost electric car is about maximizing range in every possible way. For instance, Tesla’s designers added plastic covers, costing $1.50 each, to hide four pads on the underside of the car where a jack goes. The decision reduced wind resistance and improved the car’s range by 3 miles. They also opted for four-piston monoblock caliper brakes, which are usually reserved for more expensive cars. But since the brakes are lightweight, they lower the car’s battery requirements and overall cost. “Every single decision like that was put back into the context of an electric car,” says Doug Field, a former Apple vice president Musk recruited as a top engineer in 2013. In other words, electric cars require new ways of thinking about cost and performance.
Musk decreed that the Model 3 would have a single central screen for all controls and information, which would both cut costs and allow Tesla to push the front seats forward to allow for more rear legroom. Tesla’s design chief, Franz von Holzhausen, spent the 2015 Christmas holiday figuring out how to design a car interior without a traditional dashboard.
Musk declared he didn’t want visible air vents. “I don’t want to see any holes,” von Holzhausen recalls him saying. Von Holzhausen paired engineer Joseph Mardall with designer Peter Blades to figure that one out. Blades’s sketch called for a recessed gap across the entire width of the car from which the air would flow, with a long strip of wood instead of the dash. Mardall pointed out that to make the approach work, the entire ventilation system would need to be redesigned. “Are we serious about this?” he recalls asking.
Musk was serious, but a second problem soon appeared: The wooden strip, just below the air gap, worked like an airplane wing, sucking cold air down and shooting it into the driver’s lap. Mardall, an aerodynamics specialist, proposed adding a second, hidden gap from which air would shoot straight up, lifting the main blast of cold air above the piece of wood and away from the driver’s crotch. “It was one of those eureka moments,” Blades recalls, still in awe of the elegance of the solution. “The spine still tingles.”
The system Blades and Mardall designed combines all the components of a standard HVAC system into a single basketball-size glob of molded plastic tucked under the hood, which Tesla calls the Superbottle. The glob is stamped with a logo of a bottle wearing a superhero cape.
Blades and Mardall relay all this with pride. “I had to negotiate with my wife: I’m going to do seven days a week for the next half-year,” Blades recalls. “And that’s not just me—everybody’s wives or partners—it’s just part of the story of Tesla. At this company if you don’t ask those silly questions and ask to do something crazy, then it’s not really the right place for you.”
If such loyalty seems extreme, it’s partly the result of Musk’s reputation for defying odds (and, some would say, common sense). He was mocked in 2002 when, as a 31-year-old software entrepreneur with no aerospace training, he founded SpaceX. It now launches more rockets a year than any other company.
Mass-producing a car isn’t rocket science; in some ways, it’s harder. Rockets can essentially be built and checked by hand; a perfect car must come off the production line every minute or so if you have any prayer of keeping pace with the world’s leading manufacturers. Cars are composed of tens of thousands of individual parts and have to withstand snow, potholes, and highway speeds, performing flawlessly for years. They are the largest purchase most people make besides a home, and they’re also heavily regulated lethal weapons that contribute to more than a million deaths each year.
At a typical plant run by Toyota Motor Corp., widely seen as the most capable carmaker, a new car requires about 30 hours of labor. Even with all the robots, Tesla spends more than three times that number of hours on each car, says Michelle Hill, a manufacturing expert at management consulting firm Oliver Wyman. And Toyota would never, as Musk has, try a new manufacturing system and all-new workforce on a never-before-built car. Successful carmaking is “the orchestration of so many things that have to play together in unison,” she says.
Musk’s disregard for precedent, of course, is part of his appeal. In the weeks before the March 2016 public unveiling of the Model 3 design, employees took bets on how many prospective buyers would pay a refundable $1,000 deposit to reserve one. The most optimistic prediction was around 200,000; the actual number was twice that. Field recalls opening his staff meeting the following week with a warning: “You are now working at a different company,” he said. “Everything has changed.”
According to one supplier, Tesla had said it expected to spend 28 months to reach large-scale mass production, but after seeing demand for the car, Tesla moved up the timeline by 15 months. It had previously said it would build 500,000 cars per year by 2020, a goal skeptics called outlandish. But in May 2016, Musk said the plan was to do that in 2018.
In an unconventional move, Musk restructured Tesla, assigning the engineers who designed the Model 3 to invent its manufacturing process. He put Field in charge of the factory and gave him the budget to automate as much of the car assembly as possible. Tesla bought two robotics companies, Grohmann Engineering in Germany and Perbix in Minnesota. Field’s team invented dozens of industrial processes. One involved a tool called the golden wheel, an apparatus that automatically breaks in suspensions and aligns cars in one step without humans.
Automakers generally rely on thousands of suppliers, from windshield wiper makers to electronics manufacturers. But Musk has long argued that the traditional supplier model led to cost overruns and mediocrity. Starting in 2015, he told employees he wanted to make even the thorniest parts of his supply chain in-house. In late 2015 he appointed a recently hired car interiors expert, Steve MacManus, to build a seat factory near the main plant in Fremont. Seat assembly is labor-intensive and is outsourced by every major car company to the lowest-paid workers they can find. “Your job is to get us out of seat hell,” MacManus recalls Musk telling him during their first conversation after he’d started.
And so, in one area of MacManus’s Model 3 seat line, more than a dozen robots rapidly piece together the front seats, including tiny motors, hinges, heaters, and frames. Tesla claims this is the world’s first front seat assembly line in which no humans are involved at all. The plan is eventually to use Musk’s tunnel-digging venture, the Boring Co., to dig an underground passageway to bring seats to and from the main Fremont factory, about 2 miles away. They already have a spot in mind.
Musk keeps trying to bring other parts of Tesla’s supply chain in-house. In an email to employees this spring, he also announced he would fire all contractors and consultants unless a Tesla employee personally vouched for them. “We’re going to scrub the barnacles,” he said during the company’s earnings call in May. “It’s pretty crazy. We’ve got barnacles on barnacles. So there’s going to be a lot of barnacle removal.”
To critics, Musk’s description of contractors as parasitic crustaceans is revealing. He is maniacally committed to Tesla’s mission of saving the world from global warming, but at times Tesla has seemed to fall short of more prosaic obligations, such as making sure its workers are safe. On Nov. 18, 2016, eight months before Model 3 production began, a factory employee heard a scream coming from just outside the main building at the Fremont plant. He saw a colleague, quality-control lead Robert Limon, writhing on the blacktop and grabbing at his leg, which was “bleeding like crazy,” the worker says. The specifics of this incident haven’t been previously reported.
Limon’s co-workers gathered around him. Someone used a belt to tie a tourniquet around his leg. The witness, who declined to be named out of concern for adverse consequences from Tesla, says management offered counseling for people who had seen what happened—and the witness took the company up on it, because it was traumatic.
Limon later told this co-worker he’d been hit by a forklift driver who’d been doing doughnuts on the property for fun. Limon didn’t respond to requests for comment for this story, but according to people who saw and spoke to him in the following days, and as depicted in photos seen by Bloomberg Businessweek, the injured leg was amputated.
Tesla says that both Limon and the forklift driver were fooling around in an inappropriate way that isn’t representative of the automaker’s safety culture. Afterward, Tesla says it fired the driver and held factorywide safety meetings on each shift. The company suggests Tesla’s enemies disclosed the episode to damage its reputation. “Nothing is more important to us than the safety of our employees,” a spokesperson says. “This is not to say that there aren’t real issues that need to be dealt with at Tesla or that we’ve made no mistakes with any of the 40,000 people who work at our company.” The spokesperson says Tesla’s goal is to “have the safest factory in the world by far.”
The state agency Cal/OSHA, which fined Tesla $800 in connection with the injury, described it as an ankle fracture. But agency documents show it did not interview Limon. Tesla says it tried repeatedly to arrange an interview. A few months later, Justine White, a Tesla safety official, sent a resignation letter to Musk that was recently reported by the Center for Investigative Reporting. White said she had made “repeated safety recommendations” about “informing employees of forklift hazards in a timely manner after an employee’s lower leg was amputated when run-over.” Tesla disputed White’s claims.
Dozens of current and former Fremont workers, many of whom requested anonymity, say there’s a larger pattern in which a company hellbent on making lots of cars tolerates unsafe conditions. A 2017 analysis by Worksafe Inc., a nonprofit, said that serious injuries at Tesla’s plant in 2015 and 2016 were well above industry averages. Tesla, which is a nonunion company that has been targeted by the United Auto Workers, points out that Worksafe has ties to labor. It says injury rates in 2017 fell 25 percent and were about the same as the industry average. In June, Musk said Tesla’s 2018 injury rates so far were 6 percent below the average, even as Model 3 production increased.
Tesla’s safety records were questioned again earlier this year when the Center for Investigative Reporting reported that Tesla had misclassified work-related injuries as personal medical issues, which made the plant seem safer than it is. Tesla argued that the report was “an ideologically motivated attack by an extremist organization,” but it retroactively added 13 injuries from 2017 to its safety logs, according to a subsequent article. Tesla says it routinely updates safety logs to ensure accuracy.
“An important error that Tesla has made is simply ignoring the extensive experience of the last 50 years in the auto industry,” says Harley Shaiken, a University of California at Berkeley professor who chaired a state commission that warned against the 2010 closure of the Fremont plant, which previously had been operated by Toyota and General Motors Co. as a joint venture. Tesla sought, Shaiken continues, “to start from scratch in a way that has resulted in meltdowns and near-meltdowns.”
Tesla says automation on the Model 3 line is making the factory safer. But when robots break down, employees have to pick up the slack. For instance, an enormously complex robotic conveyance system for bringing parts to the line had to be removed, and teams of human workers wound up doing the work. (Parts of the conveyance system, which had included 500 machines to lift parts, were used to build the new manual production line under the tent.)
Today, Tesla has about 10,000 workers at its Fremont plant. GM and Toyota had less than half that and produced more than 400,000 cars at the plant’s peak in 2006. Tesla argues that a larger workforce is justified given that more of the car is manufactured in-house, but interviews with workers suggest the company has stretched to ensure that there are enough workers on the floor. Current and former employees describe 12-hour shifts as common, with some going as long as 16 hours.
To battle exhaustion, employees drink copious amounts of Red Bull, sometimes provided free by Tesla. New employees develop what’s known as the “Tesla stare.” “They come in vibrant, energized,” says Mikey Catura, a Tesla production associate. “And then a couple weeks go by, and you’ll see them walking out of the building just staring out into space like zombies.”
Four current employees say the pressure they felt to avoid delays forced them to walk through raw sewage when it spilled onto the floor. Dennis Duran, who works in the paint shop, says that one time when workers balked, he and his peers were told, “Just walk through it. We have to keep the line going.” Tesla says it’s not aware of managers telling employees to walk through sewage and that plumbing issues have been handled promptly. It also notes that Duran and Catura have publicly supported unionization efforts at Tesla.
Musk and many Tesla employees dispute that workers are unhappy or unsafe. “There’s always going to be challenges from a safety standpoint and from a production standpoint—that’s all manufacturing,” says Dexter Siga, who started as a technician in 2011 and is now a manager. He adds that Tesla has “had our fair share of challenges” as a young and rapidly growing company, but it treats safety as “an overriding priority.”
For his part, Musk says Tesla demands hard work, but that’s because it’s the only way to survive as a U.S. car manufacturer. “I feel like I have a great debt to the people of Tesla,” he says, his voice cracking with emotion. “The reason I slept on the floor was not because I couldn’t go across the road and be at a hotel. It was because I wanted my circumstances to be worse than anyone else at the company. Whenever they felt pain, I wanted mine to be worse.
“You know,” he continues, “at GM they’ve got a special elevator for executives so they don’t have to mingle with anyone else.” (“Typical Elon, deflecting from the real issue, which is the ability to mass-produce at scale and with quality,” says GM spokesman Ray Wert.) “My desk is the smallest in the factory, and I am barely there,” he says. “The reason people in the paint shop were working their asses off was because I was with them. I’m not in some ivory tower.”
In July 2017, Musk delivered the first Model 3 sedans at a raucous party in Fremont. The car was celebrated by reviewers (“Driving Tesla’s Model 3 Changes Everything” was Bloomberg’s take), but it was almost immediately apparent that Tesla could never deliver it in the numbers Musk promised.
The first problem involved the batteries. Tesla and Panasonic Corp., which jointly operate a battery factory in Nevada, had designed cells that were slightly larger than the standard 18650 cells used in previous Teslas. The new batteries were better, but the automated manufacturing line for packing thousands of them together didn’t work, and the task had to be done by hand for a time. A new system, made by Grohmann, was eventually built and flown in.
In November, Musk told analysts he was “really depressed” but doing his best to fix the battery-packing issue. Other problems emerged, and Tesla had to shut down the Fremont plant for five days in February. In retrospect, Musk says, trying to automate so much of Tesla’s factory at once was overly ambitious. “We thought it would be good, but it was not good,” he says. “We were huge idiots and didn’t know what we were doing.”
This April, Musk took over manufacturing engineering personally. “I’m back to sleeping at factory,” he tweeted. “Car biz is hell.” Field, who’d been in charge of the factory, took a leave of absence the following month; he later left the company. In mid-June, Tesla announced it was laying off 9 percent of its workforce, more than 3,000 people.
Musk turned 47 in late June, during the final sprint to make 5,000 cars a week. “First bday I’ve spent in the factory,” he tweeted, “but it’s somehow the best.” On the Friday before the deadline, Musk seemed giddy with excitement about what he expected would be a spike in Tesla’s stock price. He tweeted a music video of the 1958 single Short Shorts, by the Royal Teens. On Sunday he announced that Tesla had hit the milestone and proclaimed his love for his employees. Tesla’s stock price gained 5 percent on Monday morning.
The exuberance was gone by lunchtime, and Tesla’s stock finished the day down 2 percent. It lost 7 percent on Tuesday. The “short burn of the century” that Musk had predicted had failed to come to pass, as skeptics pointed out that Tesla’s wild sprint would be unsustainable.
Musk projected confidence during an interview with Businessweek on July 8. “The past year has been very difficult, but I feel like the coming year is going to be really quite good,” he said. He still had “one foot in hell.” He said manufacturing hell will be over in a month.
At present, the Model 3 is selling more units in the U.S. than any comparably priced midsize sedan, including those offered by Mercedes-Benz, BMW, and Audi. It’s fast and fun to drive. When you stomp the accelerator, the Model 3 stomps back, and Tesla’s designers tried to replicate the feeling of instantaneous acceleration in every aspect of the driving experience. “Point and shoot,” says Lars Moravy, Tesla’s director of chassis dynamics. “There’s no overshoot, and there’s no delay. That’s the essence of the electric motor and our name.”
Of course, quick acceleration isn’t unique to the Model 3; it’s true of all electric cars. But the fact that there even is a market for these vehicles is to a large extent Musk’s doing. He set out to teach the world that consumers would pay for zero-emissions cars in huge numbers. Whatever happens to Tesla, he’s succeeded in that. Tesla is, as Musk says, “a real car company.” That’s glorious, and it’s also hell. —With Sohee Kim
Next:
Inside Tesla’s Model 3 Factory
Bloomberg Built Its Own Model to Estimate Tesla’s Output of the Model 3
‘The Last Bet-the-Company Situation’: Q&A With Elon Musk
https://www.bloomberg.com/news/features/2018-07-12/how-tesla-s-model-3-became-elon-musk-s-version-of-hellJuly 12, 2018, 11:00 AM GMT+2
Will the Model 3 make Tesla a real car company?
On July 1, Elon Musk went home to sleep. The chief executive of Tesla Inc. had been camping out at his electric car factory in Fremont, Calif., for much of the past week. He’d been sleeping on a couch, or under a desk, as part of a companywide push to get out of what he calls “production hell” by manufacturing at least 5,000 of Tesla’s new Model 3 sedans in a week.
“I was wearing the same clothes for five days,” Musk says in an interview with Bloomberg Businessweek. “My credibility, the credibility of the whole team,” was at stake.
Musk initially promised as many as 200,000 Model 3s by the end of 2017. To get there he planned an unprecedented investment in factory robots, calling the production line “the machine that builds the machine.” He’d said it would look like “alien dreadnought”—a manufacturing process so futuristic, unstoppable, and cost-effective that it would seem extraterrestrial.
It hasn’t worked out that way. Tesla ended 2017 having made not quite 2,700 Model 3s. As of the end of June it had turned out about 41,000, and some analysts express doubts about whether it will ever be able to show a profit on the car, and Tesla hasn’t even started selling the $35,000 base model.
Making matters worse, Tesla has $10 billion in debt and suffered a credit downgrade in March. It’s spent about a billion dollars more per quarter, on average, than it has taken in over the past year, and the cost of a recently announced factory in China is still unknown. Tesla is running out of cash at a time when competition is heating up—Volkswagen, BMW, Daimler, and others plan to release dozens of electric car models.
In early June, at Tesla’s annual meeting, Musk tried to project calm, but at times seemed close to tears. “This is like—I tell you—the most excruciatingly hellish several months that I have ever had,” he said, before noting that Tesla’s assembly lines were being further upgraded, making the company “very likely” to hit the weekly goal of 5,000. He also revealed he’d asked employees to build a third general assembly line that would be “dramatically better than Lines 1 and 2.” That sounded even more alien-dreadnoughty.
A week later, Musk posted a picture of the new facility on Twitter. There were no fancy robotic systems, nor fixed walls, even—just a large tent outside the factory built from scrap from the other lines. The automotive world winced. “Insanity,” said Max Warburton, an analyst with Sanford C. Bernstein & Co., in an email to Bloomberg News. “I don’t think anyone’s seen anything like this outside of the military trying to service vehicles in a war zone.”
The tent sufficed. “I think we just became a real car company,” Musk wrote in a July 1 email to employees announcing that Tesla had made 5,031 Model 3s the previous week. Even so, it’s unclear whether Musk has put Tesla on a path to lasting greatness or just staved off collapse. The company is the most shorted U.S. stock, and a higher percentage of Wall Street analysts give TSLA a sell rating than for all but one stock on the S&P 500. The story of Tesla’s sprint to release the Model 3, based on interviews with 20 members of Tesla’s design and engineering teams, suppliers, and dozens of current and former workers, is a case study in brilliant design and unbelievable hubris.
The prize for Musk is enormous: If he gets the Model 3 right, he will remake a trillion-dollar industry and do more to reduce carbon emissions than any person on the planet. But it may turn out that mass-producing cars is the one challenge that simply defies him.
In early 2015, Musk convened a meeting of his top engineers in a windowless conference room at the factory. There were 12 people, including experts in batteries, design, chassis, interiors, body, drive systems, safety, and thermodynamics. Musk, who did not attend himself, had gathered them to figure out what the Model 3 would be.
Over the course of the meeting, the engineers filled a whiteboard with dozens of requirements, including a range of at least 200 miles and an affordable price. The last of these criteria made the project especially daunting. Even scarier, Tesla would begin selling it in mid-2017, giving the company 2 ½ years to design, test, and build a new vehicle, compared with about five years at a traditional automaker.
Creating a low-cost electric car is about maximizing range in every possible way. For instance, Tesla’s designers added plastic covers, costing $1.50 each, to hide four pads on the underside of the car where a jack goes. The decision reduced wind resistance and improved the car’s range by 3 miles. They also opted for four-piston monoblock caliper brakes, which are usually reserved for more expensive cars. But since the brakes are lightweight, they lower the car’s battery requirements and overall cost. “Every single decision like that was put back into the context of an electric car,” says Doug Field, a former Apple vice president Musk recruited as a top engineer in 2013. In other words, electric cars require new ways of thinking about cost and performance.
Musk decreed that the Model 3 would have a single central screen for all controls and information, which would both cut costs and allow Tesla to push the front seats forward to allow for more rear legroom. Tesla’s design chief, Franz von Holzhausen, spent the 2015 Christmas holiday figuring out how to design a car interior without a traditional dashboard.
Musk declared he didn’t want visible air vents. “I don’t want to see any holes,” von Holzhausen recalls him saying. Von Holzhausen paired engineer Joseph Mardall with designer Peter Blades to figure that one out. Blades’s sketch called for a recessed gap across the entire width of the car from which the air would flow, with a long strip of wood instead of the dash. Mardall pointed out that to make the approach work, the entire ventilation system would need to be redesigned. “Are we serious about this?” he recalls asking.
Musk was serious, but a second problem soon appeared: The wooden strip, just below the air gap, worked like an airplane wing, sucking cold air down and shooting it into the driver’s lap. Mardall, an aerodynamics specialist, proposed adding a second, hidden gap from which air would shoot straight up, lifting the main blast of cold air above the piece of wood and away from the driver’s crotch. “It was one of those eureka moments,” Blades recalls, still in awe of the elegance of the solution. “The spine still tingles.”
The system Blades and Mardall designed combines all the components of a standard HVAC system into a single basketball-size glob of molded plastic tucked under the hood, which Tesla calls the Superbottle. The glob is stamped with a logo of a bottle wearing a superhero cape.
Blades and Mardall relay all this with pride. “I had to negotiate with my wife: I’m going to do seven days a week for the next half-year,” Blades recalls. “And that’s not just me—everybody’s wives or partners—it’s just part of the story of Tesla. At this company if you don’t ask those silly questions and ask to do something crazy, then it’s not really the right place for you.”
If such loyalty seems extreme, it’s partly the result of Musk’s reputation for defying odds (and, some would say, common sense). He was mocked in 2002 when, as a 31-year-old software entrepreneur with no aerospace training, he founded SpaceX. It now launches more rockets a year than any other company.
Mass-producing a car isn’t rocket science; in some ways, it’s harder. Rockets can essentially be built and checked by hand; a perfect car must come off the production line every minute or so if you have any prayer of keeping pace with the world’s leading manufacturers. Cars are composed of tens of thousands of individual parts and have to withstand snow, potholes, and highway speeds, performing flawlessly for years. They are the largest purchase most people make besides a home, and they’re also heavily regulated lethal weapons that contribute to more than a million deaths each year.
At a typical plant run by Toyota Motor Corp., widely seen as the most capable carmaker, a new car requires about 30 hours of labor. Even with all the robots, Tesla spends more than three times that number of hours on each car, says Michelle Hill, a manufacturing expert at management consulting firm Oliver Wyman. And Toyota would never, as Musk has, try a new manufacturing system and all-new workforce on a never-before-built car. Successful carmaking is “the orchestration of so many things that have to play together in unison,” she says.
Musk’s disregard for precedent, of course, is part of his appeal. In the weeks before the March 2016 public unveiling of the Model 3 design, employees took bets on how many prospective buyers would pay a refundable $1,000 deposit to reserve one. The most optimistic prediction was around 200,000; the actual number was twice that. Field recalls opening his staff meeting the following week with a warning: “You are now working at a different company,” he said. “Everything has changed.”
According to one supplier, Tesla had said it expected to spend 28 months to reach large-scale mass production, but after seeing demand for the car, Tesla moved up the timeline by 15 months. It had previously said it would build 500,000 cars per year by 2020, a goal skeptics called outlandish. But in May 2016, Musk said the plan was to do that in 2018.
In an unconventional move, Musk restructured Tesla, assigning the engineers who designed the Model 3 to invent its manufacturing process. He put Field in charge of the factory and gave him the budget to automate as much of the car assembly as possible. Tesla bought two robotics companies, Grohmann Engineering in Germany and Perbix in Minnesota. Field’s team invented dozens of industrial processes. One involved a tool called the golden wheel, an apparatus that automatically breaks in suspensions and aligns cars in one step without humans.
Automakers generally rely on thousands of suppliers, from windshield wiper makers to electronics manufacturers. But Musk has long argued that the traditional supplier model led to cost overruns and mediocrity. Starting in 2015, he told employees he wanted to make even the thorniest parts of his supply chain in-house. In late 2015 he appointed a recently hired car interiors expert, Steve MacManus, to build a seat factory near the main plant in Fremont. Seat assembly is labor-intensive and is outsourced by every major car company to the lowest-paid workers they can find. “Your job is to get us out of seat hell,” MacManus recalls Musk telling him during their first conversation after he’d started.
And so, in one area of MacManus’s Model 3 seat line, more than a dozen robots rapidly piece together the front seats, including tiny motors, hinges, heaters, and frames. Tesla claims this is the world’s first front seat assembly line in which no humans are involved at all. The plan is eventually to use Musk’s tunnel-digging venture, the Boring Co., to dig an underground passageway to bring seats to and from the main Fremont factory, about 2 miles away. They already have a spot in mind.
Musk keeps trying to bring other parts of Tesla’s supply chain in-house. In an email to employees this spring, he also announced he would fire all contractors and consultants unless a Tesla employee personally vouched for them. “We’re going to scrub the barnacles,” he said during the company’s earnings call in May. “It’s pretty crazy. We’ve got barnacles on barnacles. So there’s going to be a lot of barnacle removal.”
To critics, Musk’s description of contractors as parasitic crustaceans is revealing. He is maniacally committed to Tesla’s mission of saving the world from global warming, but at times Tesla has seemed to fall short of more prosaic obligations, such as making sure its workers are safe. On Nov. 18, 2016, eight months before Model 3 production began, a factory employee heard a scream coming from just outside the main building at the Fremont plant. He saw a colleague, quality-control lead Robert Limon, writhing on the blacktop and grabbing at his leg, which was “bleeding like crazy,” the worker says. The specifics of this incident haven’t been previously reported.
Limon’s co-workers gathered around him. Someone used a belt to tie a tourniquet around his leg. The witness, who declined to be named out of concern for adverse consequences from Tesla, says management offered counseling for people who had seen what happened—and the witness took the company up on it, because it was traumatic.
Limon later told this co-worker he’d been hit by a forklift driver who’d been doing doughnuts on the property for fun. Limon didn’t respond to requests for comment for this story, but according to people who saw and spoke to him in the following days, and as depicted in photos seen by Bloomberg Businessweek, the injured leg was amputated.
Tesla says that both Limon and the forklift driver were fooling around in an inappropriate way that isn’t representative of the automaker’s safety culture. Afterward, Tesla says it fired the driver and held factorywide safety meetings on each shift. The company suggests Tesla’s enemies disclosed the episode to damage its reputation. “Nothing is more important to us than the safety of our employees,” a spokesperson says. “This is not to say that there aren’t real issues that need to be dealt with at Tesla or that we’ve made no mistakes with any of the 40,000 people who work at our company.” The spokesperson says Tesla’s goal is to “have the safest factory in the world by far.”
The state agency Cal/OSHA, which fined Tesla $800 in connection with the injury, described it as an ankle fracture. But agency documents show it did not interview Limon. Tesla says it tried repeatedly to arrange an interview. A few months later, Justine White, a Tesla safety official, sent a resignation letter to Musk that was recently reported by the Center for Investigative Reporting. White said she had made “repeated safety recommendations” about “informing employees of forklift hazards in a timely manner after an employee’s lower leg was amputated when run-over.” Tesla disputed White’s claims.
Dozens of current and former Fremont workers, many of whom requested anonymity, say there’s a larger pattern in which a company hellbent on making lots of cars tolerates unsafe conditions. A 2017 analysis by Worksafe Inc., a nonprofit, said that serious injuries at Tesla’s plant in 2015 and 2016 were well above industry averages. Tesla, which is a nonunion company that has been targeted by the United Auto Workers, points out that Worksafe has ties to labor. It says injury rates in 2017 fell 25 percent and were about the same as the industry average. In June, Musk said Tesla’s 2018 injury rates so far were 6 percent below the average, even as Model 3 production increased.
Tesla’s safety records were questioned again earlier this year when the Center for Investigative Reporting reported that Tesla had misclassified work-related injuries as personal medical issues, which made the plant seem safer than it is. Tesla argued that the report was “an ideologically motivated attack by an extremist organization,” but it retroactively added 13 injuries from 2017 to its safety logs, according to a subsequent article. Tesla says it routinely updates safety logs to ensure accuracy.
“An important error that Tesla has made is simply ignoring the extensive experience of the last 50 years in the auto industry,” says Harley Shaiken, a University of California at Berkeley professor who chaired a state commission that warned against the 2010 closure of the Fremont plant, which previously had been operated by Toyota and General Motors Co. as a joint venture. Tesla sought, Shaiken continues, “to start from scratch in a way that has resulted in meltdowns and near-meltdowns.”
Tesla says automation on the Model 3 line is making the factory safer. But when robots break down, employees have to pick up the slack. For instance, an enormously complex robotic conveyance system for bringing parts to the line had to be removed, and teams of human workers wound up doing the work. (Parts of the conveyance system, which had included 500 machines to lift parts, were used to build the new manual production line under the tent.)
Today, Tesla has about 10,000 workers at its Fremont plant. GM and Toyota had less than half that and produced more than 400,000 cars at the plant’s peak in 2006. Tesla argues that a larger workforce is justified given that more of the car is manufactured in-house, but interviews with workers suggest the company has stretched to ensure that there are enough workers on the floor. Current and former employees describe 12-hour shifts as common, with some going as long as 16 hours.
To battle exhaustion, employees drink copious amounts of Red Bull, sometimes provided free by Tesla. New employees develop what’s known as the “Tesla stare.” “They come in vibrant, energized,” says Mikey Catura, a Tesla production associate. “And then a couple weeks go by, and you’ll see them walking out of the building just staring out into space like zombies.”
Four current employees say the pressure they felt to avoid delays forced them to walk through raw sewage when it spilled onto the floor. Dennis Duran, who works in the paint shop, says that one time when workers balked, he and his peers were told, “Just walk through it. We have to keep the line going.” Tesla says it’s not aware of managers telling employees to walk through sewage and that plumbing issues have been handled promptly. It also notes that Duran and Catura have publicly supported unionization efforts at Tesla.
Musk and many Tesla employees dispute that workers are unhappy or unsafe. “There’s always going to be challenges from a safety standpoint and from a production standpoint—that’s all manufacturing,” says Dexter Siga, who started as a technician in 2011 and is now a manager. He adds that Tesla has “had our fair share of challenges” as a young and rapidly growing company, but it treats safety as “an overriding priority.”
For his part, Musk says Tesla demands hard work, but that’s because it’s the only way to survive as a U.S. car manufacturer. “I feel like I have a great debt to the people of Tesla,” he says, his voice cracking with emotion. “The reason I slept on the floor was not because I couldn’t go across the road and be at a hotel. It was because I wanted my circumstances to be worse than anyone else at the company. Whenever they felt pain, I wanted mine to be worse.
“You know,” he continues, “at GM they’ve got a special elevator for executives so they don’t have to mingle with anyone else.” (“Typical Elon, deflecting from the real issue, which is the ability to mass-produce at scale and with quality,” says GM spokesman Ray Wert.) “My desk is the smallest in the factory, and I am barely there,” he says. “The reason people in the paint shop were working their asses off was because I was with them. I’m not in some ivory tower.”
In July 2017, Musk delivered the first Model 3 sedans at a raucous party in Fremont. The car was celebrated by reviewers (“Driving Tesla’s Model 3 Changes Everything” was Bloomberg’s take), but it was almost immediately apparent that Tesla could never deliver it in the numbers Musk promised.
The first problem involved the batteries. Tesla and Panasonic Corp., which jointly operate a battery factory in Nevada, had designed cells that were slightly larger than the standard 18650 cells used in previous Teslas. The new batteries were better, but the automated manufacturing line for packing thousands of them together didn’t work, and the task had to be done by hand for a time. A new system, made by Grohmann, was eventually built and flown in.
In November, Musk told analysts he was “really depressed” but doing his best to fix the battery-packing issue. Other problems emerged, and Tesla had to shut down the Fremont plant for five days in February. In retrospect, Musk says, trying to automate so much of Tesla’s factory at once was overly ambitious. “We thought it would be good, but it was not good,” he says. “We were huge idiots and didn’t know what we were doing.”
This April, Musk took over manufacturing engineering personally. “I’m back to sleeping at factory,” he tweeted. “Car biz is hell.” Field, who’d been in charge of the factory, took a leave of absence the following month; he later left the company. In mid-June, Tesla announced it was laying off 9 percent of its workforce, more than 3,000 people.
Musk turned 47 in late June, during the final sprint to make 5,000 cars a week. “First bday I’ve spent in the factory,” he tweeted, “but it’s somehow the best.” On the Friday before the deadline, Musk seemed giddy with excitement about what he expected would be a spike in Tesla’s stock price. He tweeted a music video of the 1958 single Short Shorts, by the Royal Teens. On Sunday he announced that Tesla had hit the milestone and proclaimed his love for his employees. Tesla’s stock price gained 5 percent on Monday morning.
The exuberance was gone by lunchtime, and Tesla’s stock finished the day down 2 percent. It lost 7 percent on Tuesday. The “short burn of the century” that Musk had predicted had failed to come to pass, as skeptics pointed out that Tesla’s wild sprint would be unsustainable.
Musk projected confidence during an interview with Businessweek on July 8. “The past year has been very difficult, but I feel like the coming year is going to be really quite good,” he said. He still had “one foot in hell.” He said manufacturing hell will be over in a month.
At present, the Model 3 is selling more units in the U.S. than any comparably priced midsize sedan, including those offered by Mercedes-Benz, BMW, and Audi. It’s fast and fun to drive. When you stomp the accelerator, the Model 3 stomps back, and Tesla’s designers tried to replicate the feeling of instantaneous acceleration in every aspect of the driving experience. “Point and shoot,” says Lars Moravy, Tesla’s director of chassis dynamics. “There’s no overshoot, and there’s no delay. That’s the essence of the electric motor and our name.”
Of course, quick acceleration isn’t unique to the Model 3; it’s true of all electric cars. But the fact that there even is a market for these vehicles is to a large extent Musk’s doing. He set out to teach the world that consumers would pay for zero-emissions cars in huge numbers. Whatever happens to Tesla, he’s succeeded in that. Tesla is, as Musk says, “a real car company.” That’s glorious, and it’s also hell. —With Sohee Kim
Next:
Inside Tesla’s Model 3 Factory
Bloomberg Built Its Own Model to Estimate Tesla’s Output of the Model 3
‘The Last Bet-the-Company Situation’: Q&A With Elon Musk
'Nuclear attack': Investors sue Musk over 'misleading' tweet on making Tesla private
Edited time: 12 Aug, 2018 08:57
Two investors accuse Elon Musk of manipulating Tesla's share prices by teasing on Twitter that he might pull the company from public markets, and hurting short-sellers. He then took to Twitter to mock them.
Investors argue that the carmaker artificially inflated Tesla's stock price and broke federal securities laws. The lawsuits were filed three days after Musk unexpectedly tweeted to his 22.3 million followers that he is "considering" removing Tesla from public markets, making it a privately-held company.
Tesla's shares did go up by more than 10 percent after the controversial tweet, but the gain was wiped out two days later as the price began to decline.
The tweet surprised many observers and drew criticism that it was not the best way for Musk to announce important decisions. "I do not believe this is the appropriate way to suggest going private," Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, told CNBC.
The plaintiffs say Musk's tweet came as a "nuclear attack" brought on to "completely decimate" short-sellers – traders who make money by borrowing overpriced shares, sell them, and then repurchase the shares at a lower price.
The investors also accuse Musk of misleading the shareholders by claiming in the same tweet that he had "secured" the funds for making the company private, while failing to provide any proof of doing so. The US Securities and Trade Commission is now checking whether the tweet was factual, Bloomberg reported, citing its own sources.
Elon Musk has a long history of feuding with short-sellers. He is known for making sarcastic tweets in the past, such as "Stormy weather in Shortville," after reports of Tesla stocks going up.
Sources familiar with the matter confirmed to Bloomberg that Musk and his advisers are seeking investors to back the possible transformation and are holding "early discussions" with banks about the "feasibility" of it.
"A final decision has not yet been made," the Tesla founder said in an email sent to employees.
Musk said he is thinking about pulling Tesla out of the stock market, citing "wild swings" in the company's stock price which can be "a major distraction for everyone working at Tesla." He added that being public "puts enormous pressure" on Tesla, forcing it to make decisions "not necessarily right for the long-term."
The Tesla CEO wrote that he would like to provide the shareholders with two options – staying as investors in Tesla as a privately-held company or selling their stock at $420 per share. "My hope is for all shareholders to remain," Musk said.
Always had the feeling that Tesla was front for some shady operations.
A second former Tesla employee has filed a formal whistleblower complaint with the Securities and Exchange Commission, alleging the automaker failed to disclose to shareholders that law enforcement uncovered an alleged drug trafficking ring involving employees at its Gigafactory plant in Nevada.
Karl Hansen, a former member of Tesla’s internal security department and its investigations division, joins ex-Gigafactory technician Martin Tripp as the second Tesla employee seeking whistleblower status with the SEC. But Hansen’s offering up claims that go far beyond the alleged manufacturing issues highlighted by Tripp.
“I hope that shining a light on Tesla’s practices will cause appropriate governmental action against the company and its management,” Hansen said in a statement.
Tesla didn’t immediately respond to a request for comment. A DEA spokesperson didn’t have an immediate comment when reached by Jalopnik.
A summary of Hansen’s complaint, which was filed Aug. 9, was released Thursday by attorney Stuart Meissner, who’s also representing Tripp. One of the former employee’s most startling claims is that Tesla failed to reveal information sent by the U.S. Drug Enforcement Administration, regarding evidence of “substantial drug trafficking” by Tesla employees at the Gigafactory.
Hansen claims Tesla received a written notification from the U.S. Drug Enforcement Administration/Storey County Sheriff’s Office Task Force in May, “alleging that several Tesla employees may be participants in a narcotics trafficking ring involving the sale of significant quantities of cocaine and possibly crystal methamphetamine at the Gigafactory on behalf of a Mexican drug cartel from Sonora Mexico.”
Hansen said that he told Tesla on June 12 that he had “corroborated connections between certain Tesla employees at the time and various alleged members of the Mexican drug cartel identified in the DEA report as located in Mexico, that he urged Tesla to disclose his findings to law enforcement and to the DEA task force, but that Tesla refused to do so and instead advised him that Tesla would hire ‘outside vendors’ to further investigate the issue.”
Hansen claims he reported the results to three supervisors, but says that the public nor Tesla’s board of directors were notified of the findings.
A message was left seeking comment with the Storey County sheriff’s office. A spokesperson for the DEA didn’t have an immediate comment when reached by Jalopnik.
Hansen also alleges that he discovered that $37 million of copper and raw materials had been stolen from Tesla’s Gigafactory between January and June. But he claims that he was “instructed not to report the thefts to outside law enforcement” and “that he was directed to cease his internal investigation into the issue,” according to the summary of his claims.
An SEC tip is a formal whistleblower complaint that could lead to Hansen becoming eligible for a financial award, if securities laws violations are confirmed by the agency.
More as we get it.
Meanwhile:
A second former Tesla employee has filed a formal whistleblower complaint with the Securities and Exchange Commission, alleging the automaker failed to disclose to shareholders that law enforcement uncovered an alleged drug trafficking ring involving employees at its Gigafactory plant in Nevada.
Karl Hansen, a former member of Tesla’s internal security department and its investigations division, joins ex-Gigafactory technician Martin Tripp as the second Tesla employee seeking whistleblower status with the SEC. But Hansen’s offering up claims that go far beyond the alleged manufacturing issues highlighted by Tripp.
“I hope that shining a light on Tesla’s practices will cause appropriate governmental action against the company and its management,” Hansen said in a statement.
Tesla didn’t immediately respond to a request for comment. A DEA spokesperson didn’t have an immediate comment when reached by Jalopnik.
A summary of Hansen’s complaint, which was filed Aug. 9, was released Thursday by attorney Stuart Meissner, who’s also representing Tripp. One of the former employee’s most startling claims is that Tesla failed to reveal information sent by the U.S. Drug Enforcement Administration, regarding evidence of “substantial drug trafficking” by Tesla employees at the Gigafactory.
Hansen claims Tesla received a written notification from the U.S. Drug Enforcement Administration/Storey County Sheriff’s Office Task Force in May, “alleging that several Tesla employees may be participants in a narcotics trafficking ring involving the sale of significant quantities of cocaine and possibly crystal methamphetamine at the Gigafactory on behalf of a Mexican drug cartel from Sonora Mexico.”
Hansen said that he told Tesla on June 12 that he had “corroborated connections between certain Tesla employees at the time and various alleged members of the Mexican drug cartel identified in the DEA report as located in Mexico, that he urged Tesla to disclose his findings to law enforcement and to the DEA task force, but that Tesla refused to do so and instead advised him that Tesla would hire ‘outside vendors’ to further investigate the issue.”
Hansen claims he reported the results to three supervisors, but says that the public nor Tesla’s board of directors were notified of the findings.
A message was left seeking comment with the Storey County sheriff’s office. A spokesperson for the DEA didn’t have an immediate comment when reached by Jalopnik.
Hansen also alleges that he discovered that $37 million of copper and raw materials had been stolen from Tesla’s Gigafactory between January and June. But he claims that he was “instructed not to report the thefts to outside law enforcement” and “that he was directed to cease his internal investigation into the issue,” according to the summary of his claims.
An SEC tip is a formal whistleblower complaint that could lead to Hansen becoming eligible for a financial award, if securities laws violations are confirmed by the agency.
More as we get it.
Meanwhile:
In keeping with their scheme business model of having the cart well in front of the horse, Tesla has just announced that they’re going to begin taking orders for the Model 3 in China. But as a New York Times expose recently pointed out, many of those who ordered Model 3s in the United States - like 44 year old Jim Fyfe - are still being rope-a-doped, misled and confused (if not outright deceived) when it comes to taking delivery of their new cars. For traditional automakers, such behavior would be embarrassing and totally unacceptable. For Tesla, it just seems to be one more thing that the company, stockholders, the Board and cultists customers have not problem tolerating.
Fyfe put down a $2500 deposit in June to order a $70,000 black performance Model 3. He was given a delivery day in early September, but when he tried to go get his car he was told by the company that it was still in California. Two more weeks went by without an update from the company, so he took the initiative and called the delivery center, who then told him his vehicle had been involved in an accident during transit.
In keeping with theirscheme business model of having the cart well in front of the horse, Tesla has just announced that they’re going to begin taking orders for the Model 3 in China. But as a New York Times expose recently pointed out, many of those who ordered Model 3s in the United States - like 44 year old Jim Fyfe - are still being rope-a-doped, misled and confused (if not outright deceived) when it comes to taking delivery of their new cars. For traditional automakers, such behavior would be embarrassing and totally unacceptable. For Tesla, it just seems to be one more thing that the company, stockholders, the Board and cultists customers have not problem tolerating.
Fyfe put down a $2500 deposit in June to order a $70,000 black performance Model 3. He was given a delivery day in early September, but when he tried to go get his car he was told by the company that it was still in California. Two more weeks went by without an update from the company, so he took the initiative and called the delivery center, who then told him his vehicle had been involved in an accident during transit.
After walking to work for two weeks, he then checked in on the status of his new vehicle. Tesla told him that they had one for him but it was still at the Fremont, California factory. In the interim, Tesla rented him a Cadillac to drive and he finally got his Model 3 on October 26.
Another buyer, Jonathan Berent, paid $1000 in 2016 to reserve the right to order a Model 3, then paid an additional $2500 this year as a deposit. In early September, he was told by the company that his car was near a delivery center by the Fremont plant and, after heading there with a check for the balance, he was given a VIN number and shown his car.
While the car was being detailed to be given to him he was told there was a mixup. The car that he was shown was apparently assigned to another customer who shared not the same last name but the same first name. They eventually found another car an hour away and when it arrived, it had paint defects that needed to be repaired. When he decided to cancel his order, he was contacted repeatedly over the coming weeks by sales representatives who told him they had a car ready for him. The company even went so far as to say they would deliver it to his home or to a nearby coffee shop if he wanted.
It's Elon Musk's genius and Tesla's outside the box thinking that have made these embarrassing complications possible, according to Mike Ramsey, a Gartner analyst.
He stated: "Tesla had a huge volume push in the third quarter, and they probably could have avoided a lot of this if they had traditional dealers."
Of course, if Tesla had a traditional dealership network, its cash burn would be orders of magnitude higher and probably would be out of business long ago, and while we doubt that this is what Elon meant when he said he wanted Tesla to be a "disruptor", we are quite confident that as Tesla ramps up production, this is only a glimpse of the first circle of delivery logistics hell" that Elon has warned about.
Flashback: July 17, 2017
Tesla Welcomes Linda Johnson Rice and James Murdoch as New Independent Directors to its Board
Fyfe put down a $2500 deposit in June to order a $70,000 black performance Model 3. He was given a delivery day in early September, but when he tried to go get his car he was told by the company that it was still in California. Two more weeks went by without an update from the company, so he took the initiative and called the delivery center, who then told him his vehicle had been involved in an accident during transit.
In keeping with their
Fyfe put down a $2500 deposit in June to order a $70,000 black performance Model 3. He was given a delivery day in early September, but when he tried to go get his car he was told by the company that it was still in California. Two more weeks went by without an update from the company, so he took the initiative and called the delivery center, who then told him his vehicle had been involved in an accident during transit.
After walking to work for two weeks, he then checked in on the status of his new vehicle. Tesla told him that they had one for him but it was still at the Fremont, California factory. In the interim, Tesla rented him a Cadillac to drive and he finally got his Model 3 on October 26.
Another buyer, Jonathan Berent, paid $1000 in 2016 to reserve the right to order a Model 3, then paid an additional $2500 this year as a deposit. In early September, he was told by the company that his car was near a delivery center by the Fremont plant and, after heading there with a check for the balance, he was given a VIN number and shown his car.
While the car was being detailed to be given to him he was told there was a mixup. The car that he was shown was apparently assigned to another customer who shared not the same last name but the same first name. They eventually found another car an hour away and when it arrived, it had paint defects that needed to be repaired. When he decided to cancel his order, he was contacted repeatedly over the coming weeks by sales representatives who told him they had a car ready for him. The company even went so far as to say they would deliver it to his home or to a nearby coffee shop if he wanted.
It's Elon Musk's genius and Tesla's outside the box thinking that have made these embarrassing complications possible, according to Mike Ramsey, a Gartner analyst.
He stated: "Tesla had a huge volume push in the third quarter, and they probably could have avoided a lot of this if they had traditional dealers."
Of course, if Tesla had a traditional dealership network, its cash burn would be orders of magnitude higher and probably would be out of business long ago, and while we doubt that this is what Elon meant when he said he wanted Tesla to be a "disruptor", we are quite confident that as Tesla ramps up production, this is only a glimpse of the first circle of delivery logistics hell" that Elon has warned about.
Flashback: July 17, 2017
Tesla Welcomes Linda Johnson Rice and James Murdoch as New Independent Directors to its Board
Built And Tested in Southern California, Tesla's Model 3 Meets Its Enemy: The Winter
Inside Tesla’s factory, a medical clinic designed to ignore injured workers
By Will Evans / November 5, 2018
Snip:
When a worker gets smashed by a car part on Tesla’s factory floor, medical staff are forbidden from calling 911 without permission.
The electric carmaker’s contract doctors rarely grant it, instead often insisting that seriously injured workers – including one who severed the top of a finger – be sent to the emergency room in a Lyft.
Injured employees have been systematically sent back to the production line to work through their pain with no modifications, according to former clinic employees, Tesla factory workers and medical records. Some could barely walk.
The on-site medical clinic serving some 10,000 employees at Tesla Inc.’s California assembly plant has failed to properly care for seriously hurt workers, an investigation by Reveal from The Center for Investigative Reporting has found.
The clinic’s practices are unsafe and unethical, five former clinic employees said.
But denying medical care and work restrictions to injured workers is good for one thing: making real injuries disappear.
“The goal of the clinic was to keep as many patients off of the books as possible,” said Anna Watson, a physician assistant who worked at Tesla’s medical clinic for three weeks in August.
Watson has nearly 20 years of experience as a medical professional, examining patients, diagnosing ailments and prescribing medications. She’s treated patients at a petroleum refinery, a steel plant, emergency rooms and a trauma center. But she said she’s never seen anything like what’s happening at Tesla.
Anna Watson was a physician assistant at the medical clinic inside Tesla’s electric car factory in Fremont, Calif. She was fired in August after raising concerns.Credit: Paul Kuroda for Reveal
“The way they were implementing it was very out of control,” said Watson, who was fired in August after she raised her concerns. “Every company that I’ve worked at is motivated to keep things not recordable. But I’ve never seen anybody do it at the expense of treating the patient.”
Workers with chest pain, breathing problems or extreme headaches have been dismissed as having issues unrelated to their work, without being fully evaluated or having workplace exposures considered, former employees said. The clinic has turned away temp workers who got hurt on Tesla’s assembly lines, leaving them without on-site care. And medical assistants, who are supposed to have on-site supervision, say they were left on their own at night, unprepared to deal with a stream of night-shift injuries.
If a work injury requires certain medical equipment – such as stitches or hard braces – then it has to be counted in legally mandated logs. But some employees who needed stitches for a cut instead were given butterfly bandages, said Watson and another former clinic employee. At one point, hard braces were removed from the clinic so they wouldn’t be used, according to Watson and a former medical assistant.
As Tesla races to revolutionize the automobile industry and build a more sustainable future, it has left its factory workers in the past, still painfully vulnerable to the dangers of manufacturing.
An investigation by Reveal in April showed that Tesla prioritized style and speed over safety, undercounted injuries and ignored the concerns of its own safety professionals. CEO Elon Musk’s distaste for the color yellow and beeping forklifts eroded factory safety, former safety team members said.
The new revelations about the on-site clinic show that even as the company forcefully pushed back against Reveal’s reporting, behind the scenes, it doubled down on its efforts to hide serious injuries from the government and public.
In June, Tesla hired a new company, Access Omnicare, to run its factory health center after the company promised Tesla it could help reduce the number of recordable injuries and emergency room visits, according to records.
A former high-level Access Omnicare employee said Tesla pressured the clinic’s owner, who then made his staff dismiss injuries as minor or not related to work.
“It was bullying and pressuring to do things people didn’t believe were correct,” said the former employee, whom Reveal granted anonymity because of the worker’s fear of being blackballed in the industry.
Dr. Basil Besh, the Fremont, California, hand surgeon who owns Access Omnicare, said the clinic drives down Tesla’s injury count with more accurate diagnoses, not because of pressure from Tesla. Injured workers, he said, don’t always understand what’s best for them.
“We treat the Tesla employees just the same way we treat our professional athletes,” he said. “If Steph Curry twists his knee on a Thursday night game, that guy’s in the MRI scanner on Friday morning.”
Yet at one point, Watson said a Tesla lawyer and a company safety official told her and other clinic staff to stop prescribing exercises to injured workers so they wouldn’t have to count the injuries. Recommending stretches to treat an injured back or range-of-motion exercises for an injured shoulder was no longer allowed, she said.
The next day, she wrote her friend a text message in outrage: “I had to meet with lawyers yesterday to literally learn how not to take care of people.”
Tesla declined interview requests for this story and said it had no comment in response to detailed questions. But after Reveal pressed the company for answers, Tesla officials took time on their October earnings call to enthusiastically praise the clinic.
“I’m really super happy with the care they’re giving, and I think the employees are as well,” said Laurie Shelby, Tesla’s vice president for environment, health and safety.
Musk complained about “unfair accusations” that Tesla undercounts its injuries and promised “first-class health care available right on the spot when people need it.”
Welcome to the new Tesla clinic
Injured workers sent back to work
Other ways Tesla’s clinic avoids treating workers
State regulators not interested
Clinic source: Tesla pressured doctor
By Will Evans / November 5, 2018
Snip:
When a worker gets smashed by a car part on Tesla’s factory floor, medical staff are forbidden from calling 911 without permission.
The electric carmaker’s contract doctors rarely grant it, instead often insisting that seriously injured workers – including one who severed the top of a finger – be sent to the emergency room in a Lyft.
Injured employees have been systematically sent back to the production line to work through their pain with no modifications, according to former clinic employees, Tesla factory workers and medical records. Some could barely walk.
The on-site medical clinic serving some 10,000 employees at Tesla Inc.’s California assembly plant has failed to properly care for seriously hurt workers, an investigation by Reveal from The Center for Investigative Reporting has found.
The clinic’s practices are unsafe and unethical, five former clinic employees said.
But denying medical care and work restrictions to injured workers is good for one thing: making real injuries disappear.
“The goal of the clinic was to keep as many patients off of the books as possible,” said Anna Watson, a physician assistant who worked at Tesla’s medical clinic for three weeks in August.
Watson has nearly 20 years of experience as a medical professional, examining patients, diagnosing ailments and prescribing medications. She’s treated patients at a petroleum refinery, a steel plant, emergency rooms and a trauma center. But she said she’s never seen anything like what’s happening at Tesla.
Anna Watson was a physician assistant at the medical clinic inside Tesla’s electric car factory in Fremont, Calif. She was fired in August after raising concerns.Credit: Paul Kuroda for Reveal
“The way they were implementing it was very out of control,” said Watson, who was fired in August after she raised her concerns. “Every company that I’ve worked at is motivated to keep things not recordable. But I’ve never seen anybody do it at the expense of treating the patient.”
Workers with chest pain, breathing problems or extreme headaches have been dismissed as having issues unrelated to their work, without being fully evaluated or having workplace exposures considered, former employees said. The clinic has turned away temp workers who got hurt on Tesla’s assembly lines, leaving them without on-site care. And medical assistants, who are supposed to have on-site supervision, say they were left on their own at night, unprepared to deal with a stream of night-shift injuries.
If a work injury requires certain medical equipment – such as stitches or hard braces – then it has to be counted in legally mandated logs. But some employees who needed stitches for a cut instead were given butterfly bandages, said Watson and another former clinic employee. At one point, hard braces were removed from the clinic so they wouldn’t be used, according to Watson and a former medical assistant.
As Tesla races to revolutionize the automobile industry and build a more sustainable future, it has left its factory workers in the past, still painfully vulnerable to the dangers of manufacturing.
An investigation by Reveal in April showed that Tesla prioritized style and speed over safety, undercounted injuries and ignored the concerns of its own safety professionals. CEO Elon Musk’s distaste for the color yellow and beeping forklifts eroded factory safety, former safety team members said.
The new revelations about the on-site clinic show that even as the company forcefully pushed back against Reveal’s reporting, behind the scenes, it doubled down on its efforts to hide serious injuries from the government and public.
In June, Tesla hired a new company, Access Omnicare, to run its factory health center after the company promised Tesla it could help reduce the number of recordable injuries and emergency room visits, according to records.
A former high-level Access Omnicare employee said Tesla pressured the clinic’s owner, who then made his staff dismiss injuries as minor or not related to work.
“It was bullying and pressuring to do things people didn’t believe were correct,” said the former employee, whom Reveal granted anonymity because of the worker’s fear of being blackballed in the industry.
Dr. Basil Besh, the Fremont, California, hand surgeon who owns Access Omnicare, said the clinic drives down Tesla’s injury count with more accurate diagnoses, not because of pressure from Tesla. Injured workers, he said, don’t always understand what’s best for them.
“We treat the Tesla employees just the same way we treat our professional athletes,” he said. “If Steph Curry twists his knee on a Thursday night game, that guy’s in the MRI scanner on Friday morning.”
Yet at one point, Watson said a Tesla lawyer and a company safety official told her and other clinic staff to stop prescribing exercises to injured workers so they wouldn’t have to count the injuries. Recommending stretches to treat an injured back or range-of-motion exercises for an injured shoulder was no longer allowed, she said.
The next day, she wrote her friend a text message in outrage: “I had to meet with lawyers yesterday to literally learn how not to take care of people.”
Tesla declined interview requests for this story and said it had no comment in response to detailed questions. But after Reveal pressed the company for answers, Tesla officials took time on their October earnings call to enthusiastically praise the clinic.
“I’m really super happy with the care they’re giving, and I think the employees are as well,” said Laurie Shelby, Tesla’s vice president for environment, health and safety.
Musk complained about “unfair accusations” that Tesla undercounts its injuries and promised “first-class health care available right on the spot when people need it.”
Welcome to the new Tesla clinic
Injured workers sent back to work
Other ways Tesla’s clinic avoids treating workers
State regulators not interested
Clinic source: Tesla pressured doctor
Follow Up and Update:
California officials grill Tesla on safety problems exposed in Reveal investigation
November 15, 2018
Snip:
California officials doling out lucrative tax exemptions to Tesla Inc. grilled the electric carmaker’s top safety executive on its treatment of injured workers at a meeting in the state capital this week.
Tesla is the biggest beneficiary of a state program providing financial incentives to manufacturers that help lower greenhouse gas emissions. It has received more than $200 million in sales and use tax exemptions since 2009 from the California Alternative Energy and Advanced Transportation Financing Authority.
Members of the state board on Tuesday questioned Tesla officials about an investigation by Reveal from The Center for Investigative Reporting that found the company’s medical clinic failed to properly care for injured workers as part of a strategy to avoid counting injuries.
“I have to tell you, I feel personally that it’s necessary for us to do a little more digging before we’d be in the position to make any further allocations,” said Steve Juarez, a deputy state treasurer. “It’s very serious allegations that have been made in that article, and we need to get to the bottom of it.”
We reported earlier this month that Tesla’s medical clinic systematically sent injured employees back to the production line, even when some could barely walk. The clinic also inappropriately dismissed injuries as not relating to work and sent injured workers to the emergency room in a Lyft instead of an ambulance.
Tesla pressured the clinic to minimize injuries and instructed clinic staff to stop prescribing exercises so the injuries didn’t have to be counted, we found. Five former clinic employees said the clinic’s practices were unsafe and unethical. Our earlier investigation found that Tesla undercounted injuries and ignored the concerns of its own safety professionals.
Laurie Shelby, Tesla’s vice president for environment, health and safety, responded to the board’s questions by phone, disputing our reporting and praising CEO Elon Musk for inviting her to talk about safety on an earnings call.
“The article is false and it’s also disingenuous,” she said. “There is no intentional, no underreporting of injuries. It’s just not who we are. And I’m a transparent leader, and it will never occur. And Elon wouldn’t stand for it either. Nobody, nobody at Tesla gets anything for having injury rates go down.”
Concerned about previous reports of safety problems, the board imposed a requirement in March for Tesla to report back every four months on its efforts to improve health and safety issues. In July and again on Tuesday, Shelby cited a declining injury rate and said it’s aiming to become “the safest factory in the world.”
Shelby also trumpetted Tesla’s “new and improved” health clinic, managed since June by Dr. Basil Besh of Access Omnicare.
“Tesla’s new clinic offers more specialized on-site care, and it’s staffed by three full-time physicians,” Shelby said.
It was one of several misleading statements Shelby made to the financing authority. The clinic has had only one on-site doctor, who works during the day, according to former clinic employees. On the night shift, medical assistants were often left on their own, sometimes acting outside their scope of practice, while a doctor was on-call by phone.
Jacqueline Wong-Hernandez, the California Department of Finance’s chief deputy director for policy, told Shelby that she was contacted “by people who have essentially said this clinic exists to stop reporting” of injuries. Shelby denied that.
Board members said they were struggling with how to judge our findings and Tesla’s claims without the ability to investigate.
State Treasurer John Chiang, chairman of the financing authority, said in a statement that his office “unfortunately, does not have the legal authority or auditing resources to validate or dismiss these charges through an investigation.” Chiang said he will refer it to the California Division of Occupational Safety and Health, or Cal/OSHA, and the state labor department.
“We will continue to monitor the situation and revisit the issue, as needed, and future awards may rely on the results,” the statement said.
Michael Picker, president of the California Public Utilities Commission, asked Tesla to provide more specific data on the most injury-prone parts of the factory so that he could evaluate progress over time. He said he was concerned when Shelby told him such information is not reported to Tesla’s board.
“I’m worried that there’s not people paying attention to that at the highest levels,” he said.
Tesla is due to report back to the financing authority in the spring.
Anna Watson (in floral top), a physician assistant who worked at Tesla’s on-site medical clinic for three weeks in August, decried the lack of medical care the carmaker provided to injured workers at a meeting of the California Alternative Energy and Advanced Transportation Financing Authority.Credit: Paul Kuroda for Reveal
Snip:
Claim: Access Omnicare’s clinic is better than an emergency room
Shelby said Access Omnicare’s main clinic, about 5 miles from the factory, “has everything you would need, so you don’t have to send somebody to an emergency room and wait hours upon hours to get care.
Claim: Nobody is denied treatment
Shelby said the clinic doesn’t provide follow-up care for some temporary workers because their employment agencies need to add Access Omnicare as a provider. But she said, “Nobody’s ever denied immediate treatment.”
Claim: All workers get treatment
This week, Shelby said the clinic provides treatment to all workers, even those who are determined to have injuries or illnesses not related to work. “We still treat them,” she said.
Claim: Tesla’s clinic provides care for injured workers
Shelby repeatedly has cited the clinic’s on-site “24/7” care in presentations to the board. On Tuesday, she said: “The clinic is not there to stop reporting. It’s there to provide care for the employees who are injured on the job.”
Claim: Cal/OSHA investigation cleared Tesla
Shelby said Cal/OSHA conducted an extensive review and “identified only two minor issues – an extension cord and an item that we recorded too early on our logs.” In fact, Cal/OSHA said in an email to us that its “investigation identified several instances of injury recording violations, however they could not be cited as they were outside of the six-month statute of limitations.”
Claim: Reveal unfairly left out Tesla’s safety consultants
Shelby faulted us for not including comments from two safety consultants hired by the company. She said the experts, Rich Fairfax and Stephen Newell, visited the plant, conducted a recordkeeping audit and “substantiated that we have a good process.”
Collusion: May 11, 2018
11:19
California officials grill Tesla on safety problems exposed in Reveal investigation
November 15, 2018
Snip:
California officials doling out lucrative tax exemptions to Tesla Inc. grilled the electric carmaker’s top safety executive on its treatment of injured workers at a meeting in the state capital this week.
Tesla is the biggest beneficiary of a state program providing financial incentives to manufacturers that help lower greenhouse gas emissions. It has received more than $200 million in sales and use tax exemptions since 2009 from the California Alternative Energy and Advanced Transportation Financing Authority.
Members of the state board on Tuesday questioned Tesla officials about an investigation by Reveal from The Center for Investigative Reporting that found the company’s medical clinic failed to properly care for injured workers as part of a strategy to avoid counting injuries.
“I have to tell you, I feel personally that it’s necessary for us to do a little more digging before we’d be in the position to make any further allocations,” said Steve Juarez, a deputy state treasurer. “It’s very serious allegations that have been made in that article, and we need to get to the bottom of it.”
We reported earlier this month that Tesla’s medical clinic systematically sent injured employees back to the production line, even when some could barely walk. The clinic also inappropriately dismissed injuries as not relating to work and sent injured workers to the emergency room in a Lyft instead of an ambulance.
Tesla pressured the clinic to minimize injuries and instructed clinic staff to stop prescribing exercises so the injuries didn’t have to be counted, we found. Five former clinic employees said the clinic’s practices were unsafe and unethical. Our earlier investigation found that Tesla undercounted injuries and ignored the concerns of its own safety professionals.
Laurie Shelby, Tesla’s vice president for environment, health and safety, responded to the board’s questions by phone, disputing our reporting and praising CEO Elon Musk for inviting her to talk about safety on an earnings call.
“The article is false and it’s also disingenuous,” she said. “There is no intentional, no underreporting of injuries. It’s just not who we are. And I’m a transparent leader, and it will never occur. And Elon wouldn’t stand for it either. Nobody, nobody at Tesla gets anything for having injury rates go down.”
Concerned about previous reports of safety problems, the board imposed a requirement in March for Tesla to report back every four months on its efforts to improve health and safety issues. In July and again on Tuesday, Shelby cited a declining injury rate and said it’s aiming to become “the safest factory in the world.”
Shelby also trumpetted Tesla’s “new and improved” health clinic, managed since June by Dr. Basil Besh of Access Omnicare.
“Tesla’s new clinic offers more specialized on-site care, and it’s staffed by three full-time physicians,” Shelby said.
It was one of several misleading statements Shelby made to the financing authority. The clinic has had only one on-site doctor, who works during the day, according to former clinic employees. On the night shift, medical assistants were often left on their own, sometimes acting outside their scope of practice, while a doctor was on-call by phone.
Jacqueline Wong-Hernandez, the California Department of Finance’s chief deputy director for policy, told Shelby that she was contacted “by people who have essentially said this clinic exists to stop reporting” of injuries. Shelby denied that.
Board members said they were struggling with how to judge our findings and Tesla’s claims without the ability to investigate.
State Treasurer John Chiang, chairman of the financing authority, said in a statement that his office “unfortunately, does not have the legal authority or auditing resources to validate or dismiss these charges through an investigation.” Chiang said he will refer it to the California Division of Occupational Safety and Health, or Cal/OSHA, and the state labor department.
“We will continue to monitor the situation and revisit the issue, as needed, and future awards may rely on the results,” the statement said.
Michael Picker, president of the California Public Utilities Commission, asked Tesla to provide more specific data on the most injury-prone parts of the factory so that he could evaluate progress over time. He said he was concerned when Shelby told him such information is not reported to Tesla’s board.
“I’m worried that there’s not people paying attention to that at the highest levels,” he said.
Tesla is due to report back to the financing authority in the spring.
Anna Watson (in floral top), a physician assistant who worked at Tesla’s on-site medical clinic for three weeks in August, decried the lack of medical care the carmaker provided to injured workers at a meeting of the California Alternative Energy and Advanced Transportation Financing Authority.Credit: Paul Kuroda for Reveal
Snip:
Claim: Access Omnicare’s clinic is better than an emergency room
Shelby said Access Omnicare’s main clinic, about 5 miles from the factory, “has everything you would need, so you don’t have to send somebody to an emergency room and wait hours upon hours to get care.
Claim: Nobody is denied treatment
Shelby said the clinic doesn’t provide follow-up care for some temporary workers because their employment agencies need to add Access Omnicare as a provider. But she said, “Nobody’s ever denied immediate treatment.”
Claim: All workers get treatment
This week, Shelby said the clinic provides treatment to all workers, even those who are determined to have injuries or illnesses not related to work. “We still treat them,” she said.
Claim: Tesla’s clinic provides care for injured workers
Shelby repeatedly has cited the clinic’s on-site “24/7” care in presentations to the board. On Tuesday, she said: “The clinic is not there to stop reporting. It’s there to provide care for the employees who are injured on the job.”
Claim: Cal/OSHA investigation cleared Tesla
Shelby said Cal/OSHA conducted an extensive review and “identified only two minor issues – an extension cord and an item that we recorded too early on our logs.” In fact, Cal/OSHA said in an email to us that its “investigation identified several instances of injury recording violations, however they could not be cited as they were outside of the six-month statute of limitations.”
Claim: Reveal unfairly left out Tesla’s safety consultants
Shelby faulted us for not including comments from two safety consultants hired by the company. She said the experts, Rich Fairfax and Stephen Newell, visited the plant, conducted a recordkeeping audit and “substantiated that we have a good process.”
Collusion: May 11, 2018
Did Elon Musk Forget About Buffalo?
Updated on November 20, 2018, 9:11 PM GMT+1
After $750 million in subsidies and years of delays, critics say the Tesla CEO hasn’t done enough for the Gigafactory 2 solar panel factory.
Just south of downtown Buffalo, near abandoned factories and crumbling brick warehouses, is a 1.2-million-square-foot white box with Tesla Inc.’s solar panel factory inside. The state of New York paid $750 million to fund this place, based on a commitment to create nearly 1,500 jobs here. On a Tuesday morning in mid-November, a group of two dozen of these workers is monitoring several rows of robots that are stamping out materials for the Solar Roof, a new kind of solar panel that Tesla Chief Executive Officer Elon Musk is very excited about. Or was, anyway.
The Solar Roof is designed to look and act like regular house shingles, but Tesla’s are textured glass with solar cells hidden inside. On the factory line in Buffalo, these glass tiles slide on a conveyor belt toward a gigantic laminator, where components are heated and vacuumed together into a single module, a “solar sandwich,” as employees call it.
“By the time we’re done, this factory will not have much floor space,” says Sanjay Shah, who oversees solar for Musk as Tesla’s head of energy operations and is based at the company’s Bay Area offices. Wearing protective rubber shoes and a constant smile, Shah gives reporters from Bloomberg Businessweek a tour of the Tesla production line, which until then had been closed to the media. He also rebuts criticism from investors and local politicians who’ve said Tesla’s entrance into the solar business has been a boondoggle.
Tesla has presented the Buffalo operation as a sort of sequel to the Gigafactory, the company’s enormous battery plant near Reno, Nev. But where that factory employs more than 7,000 people and has helped Musk transform Tesla into a major automotive manufacturer, large portions of Gigafactory 2, as this place is known, resemble an empty Walmart Supercenter. Tesla was supposed to be operating multiple production lines by now. Only one is set up, and it’s not yet fully automated. A mess of wooden crates filled with unused manufacturing equipment sits nearby.
The factory had been developed for another company, SolarCity, which Tesla bought in 2016 in a $2.6 billion deal. At the time, SolarCity was the country’s dominant installer of rooftop solar panels, and Musk called the purchase a “no-brainer,” arguing that the two companies were complementary. Critics pointed out that SolarCity had $2.9 billion in debt, and that Musk, as the chairman and largest shareholder in both companies, had serious potential conflicts of interest. (Musk recused himself from the board votes.) On top of the debt, Tesla inherited an agreement SolarCity had struck with New York state, which required it to spend $5 billion in the area over the course of a decade, in addition to meeting hiring targets.
Projects like this are increasingly controversial. “It’s a complete hoo-ha,” says John Kaehny, executive director of Reinvent Albany, a New York nonprofit focused on government accountability. “These mega subsidy deals take place in complete secrecy, without scrutiny from the public.” Kaehny’s critique could apply in Wisconsin, where Governor Scott Walker lost his reelection bid on Nov. 6 in part because of outcry over his support for a $3 billion incentive package to attract Foxconn Technology Co., a Taiwanese contract manufacturer—or in New York City and Alexandria, Va., which together offered Amazon.com Inc. an estimated $2.8 billion in tax breaks in exchange for a promise to open offices there.
Although Tesla’s main patron, New York Governor Andrew Cuomo, a Democrat, easily won reelection, his opponents have pointed to the Gigafactory 2 deal as a sign of his coziness with moneyed interests. Raymond Walter, a Republican in the New York State Assembly who lost his own reelection bid, says he’s concerned the state has too many “eggs in the Tesla basket, which doesn’t seem like a very strong basket at this point.” When Walter toured the factory in March, he recalls, “it was mostly empty. I would say 10 percent to 15 percent of the floor was being utilized for production. It was not an impressive use of $750 million in taxpayer funds.”
Tesla says it’s now exceeding its hiring commitments to the state. Shah says Gigafactory 2 employs about 800 workers. Yet in many ways, Musk’s solar plans have failed to live up to his lofty plans. The company’s solar deployments are down more than 60 percent from their peak under SolarCity, and Tesla has laid off thousands of solar employees around the U.S. Shah says the company has hired solar workers since then, but half of the Gigafactory 2 employees don’t work for Tesla, which subcontracts part of the factory to Japanese manufacturer Panasonic Corp. for solar panel and cell production.
With Musk focused on shoring up production of the Model 3 sedan, Gigafactory 2 has often seemed like an afterthought, a “stepchild,” as three people who’ve worked there called it. Musk has said he’s clocked 120 hours per week at Tesla’s car factory, yet he’s never so much as visited his Buffalo plant. And while Model 3 production is up to 4,500 cars per week, delays and manufacturing challenges at Gigafactory 2 have meant that earlier this year the company was making enough Solar Roof shingles for only three to five homes a week, according to two former employees. Tesla declined to comment on production figures.
Tesla’s efforts in solar, recounted here based on interviews with more than two dozen current and former employees familiar with the company’s energy business and workers at its New York factory, have followed a familiar playbook. Start with wild promises, followed by product delays, production hell, shareholder anger, and finally, hopefully, redemption. Musk assumed an optimistic note in a recent earnings call, boasting of his “best quarter ever for solar” in terms of profitability, while assuring shareholders that Tesla would accelerate Solar Roof production in 2019. If he’s right, he’ll vindicate Cuomo’s bet on the company and maybe even make Buffalo great again. If he’s wrong, Gigafactory 2 may be seen as a disaster for Tesla and a warning for other local governments seeking to lure big tech companies.
Tesla’s Solar Roof was introduced to the world in October 2016 at Hollywood’s Universal Studios. It was just weeks before shareholders were to vote on whether to approve the SolarCity acquisition, and Musk set out to wow them. On a set once used for Desperate Housewives, a team retrofitted four homes with Solar Roof demos, including Tuscan- and slate-style shingles. “The interesting thing is that the houses you see around you are all solar houses,” Musk teased onstage in front of hundreds of attendees. “Did you notice?”
The presentation impressed the audience—and stunned SolarCity employees, many of whom had never seen the product Musk revealed. Various teams at the company had been at work on a related idea, code-named “Steel Pulse,” a metal-based solar rooftop. But when Musk saw an early concept two months before the event, he found it hideous and ordered a skunk-works group to prototype something sexier, according to multiple former Tesla and SolarCity employees. They rushed out a glass-based version up to the standards of Musk, who neglected to mention that the shingles he showed off at Universal weren’t yet able to generate electricity. Shareholders overwhelmingly voted in favor of the deal.
The idea of a solar shingle had been around for more than a decade, but nobody had been able to pull it off at scale. The trick requires an optical illusion: camouflaging photovoltaic cells beneath transparent tiles, which, at a sidewalk level, need to appear opaque without letting the cosmetics interfere with the cells’ performance.
Musk initially tapped his cousin Peter Rive, previously SolarCity’s chief technology officer, to run the project. Rive’s team focused first on developing a textured black shingle, one of four designs Musk had showed off at Universal. But according to several people familiar with the project, Rive struggled with its scope. “There was a meeting where Pete was like, ‘Well, we’ve pretty much done it. We just have a few kinks to work out,’ ” recalls a former senior employee involved the effort. “Everyone was looking at each other like, ‘What? Are you kidding me?’ ” (Rive left Tesla in mid-2017. He could not be reached for comment.)
Throughout 2017 the Solar Roof team played with optics and color consistency in a research and development lab in Fremont, Calif., not far from where Tesla makes its cars. They tested prototypes on mock rooftops erected in a parking lot. Part of the problem was that the solar cells embedded inside the tiles were refracting light in a way that created what some sources describe as a glowing effect.
When Musk zoomed over in his Model S from the car factory for a weekly update, he would inevitably complain that the Solar Roof didn’t look right. He said it appeared “glittery” or “sparkled too much,” according to sources present. “He’d only be there for an hour, max,” says a former engineer on the project. “But once [Tesla] started having issues with the Model 3, we started seeing Elon less and less.” In his stead, Carl Peterson, a former Apple Inc. engineer who took over the product group from Rive, started showing up. Tesla says Musk stayed closely involved.
With pressure increasing on Tesla to turn a profit, it moved further away from SolarCity’s main business, which involved installing traditional solar panels on homes and businesses for no money upfront. The arrangement, known as a solar lease, required tremendous amounts of capital to deliver roofs to customers, who would pay the company back over the course of decades. SolarCity had grown quickly, in part, by selling solar systems door-to-door and at Home Depot stores.
But soon after the acquisition, Tesla cut back on these channels through reorganizations and layoffs. And for the fourth quarter of 2017, Tesla reported a 56 percent year-over-year drop in solar deployments. Shah, the Tesla executive, says this was part of a long-term strategy, devised before the merger, to let Tesla’s reputation and its existing network of stores sell consumers on the benefits of solar rather than rely on expensive consumer outreach, which had weighed down SolarCity’s balance sheet.
By the end of last year, the company was making progress on the Solar Roof. Musk had given his blessing on a design employees internally referred to as the “gold sample roof,” and Tesla spent months refining the technical specs to match Musk’s aesthetic requirements. He even had a prototype installed on his guesthouse in Los Angeles. All they had to do next was figure out how to mass-produce it.
On the other side of the country, workers at the Buffalo Gigafactory were wondering whether it would ever mass-produce anything. From late 2016, when Tesla started holding job fairs at local schools and churches, to the fall of 2017, according to more than a half-dozen former employees, the factory was basically a ghost town, a smattering of people occupying what felt like a chain of airplane hangars. At some points, thousands of massive crates of unused machinery crowded the floors. Tesla declined to comment on the number of crates; the company says there were hundreds of employees in the facility by late 2017.
New York had gone all-in on the SolarCity factory in 2014, initially hoping the partnership would generate 1,460 manufacturing jobs at the plant, a goal the state cut to 500 in 2015, with the remaining workers in support roles within the city of Buffalo. It was a risky investment: SolarCity was an installation-and-financing company with little track record in manufacturing. The company had spent years trying to develop a high-efficiency solar panel, called “Project Whitney,” with the aim of churning out 10,000 units per day in Buffalo by mid-2016, but it struggled to manufacture dozens per day in trial tests. In a 2016 incident, previously unreported, a panel installed on a pilot roof malfunctioned and started burning; crew members had to stamp it out with their feet to keep the panel from catching fire, according to two sources familiar with what happened. SolarCity eventually scrapped Project Whitney, though Tesla says it had nothing to do with the incident.
For months in 2017, the factory was mostly idle while teams in Fremont figured out what they wanted to build. Part of the challenge was that the $274 million in equipment the state had purchased for SolarCity was designed for a completely different product—conventional solar panels—and needed to be retooled for Tesla’s Solar Roof. Layouts and production processes for Buffalo changed constantly. “We didn’t even know if any of these tools were going to be viable,” says a former factory engineer. Tesla says the factory is now using the majority of the equipment originally purchased in 2014.
Some Buffalo workers felt there was little guidance from Tesla’s leadership, especially Musk, who they believed was focused on the car factory in California and battery plant in Nevada. They would sometimes joke that the “Eye of Sauron” was always drawn elsewhere, a reference to the omniscient gaze of the villain in The Lord of the Rings.
Shortly after the acquisition closed, Tesla had struck a deal with Panasonic, which agreed to take over some manufacturing at Gigafactory 2 and help Tesla meet its hiring commitments to the state. The Japanese company installed and staffed a production line, and by September 2017 the factory’s hallways were dotted with employees in blue Panasonic baseball hats. Tesla presented this setup as a close partnership, but multiple people familiar with both operations say there was little collaboration between the two companies, which operated their production lines related to the Solar Roof at opposite ends of the building, roughly a quarter-mile apart.
Although Panasonic still makes cells for the Solar Roof, Tesla took issue with their aesthetics and cost, several sources say, and bought them from a Chinese supplier, JA Solar Holdings Co., instead. Tesla says its long-term plan is to use Panasonic cells in the Solar Roof. It also notes that other parts of its operation are located much closer together. A Panasonic spokeswoman says, “We closely collaborate with our colleagues at Tesla, and truly value the relationship.”
Workers for Tesla’s own Solar Roof production line, which was set up at the end of 2017, were warned there might be days when they would have nothing to do. When VIPs would come by in early 2018, a source says, the company would map out a tour that put the facility in its best light, which often included focusing on the Panasonic side of the operation. For the factory tour Tesla gave Bloomberg Businessweek in mid-November, a knowledgeable source says the company erected a wall inside the building to block much of its idle machinery from view. Tesla says certain parts of the factory contain confidential operations and that the new wall is part of a storage area for unused equipment.
One of the key problems was the solar-sandwich process. The laminator requires precise timing, heating, and vacuum pressure to, as employees say, “cheese melt” the shingle components. If any of the processes are slightly off, bubbles can be introduced into the shingle, making it less reliable. According to several people familiar with the matter, Tesla struggled with low yield rates for the Solar Roof, at times scrapping 70 percent of its production, which it shipped to a recycling plant by the truckload. The company went through at least 74 recipes before landing on the right sandwiching process.
As summer neared this year, output remained small: Several people say the factory got up to producing about 480 tiles per shift, which would equate to 6,720 shingles a week, about enough to cover a handful of customer homes—if the system were operating perfectly. On the other hand, Tesla had received about 11,000 customer orders for Solar Roof by May, a backlog that was both encouraging and daunting.
Tesla has worked to improve its manufacturing processes, and has accelerated hiring. The facility is now operating 24/7, with about 80 employees a shift on Tesla’s side. While the company declined to provide production numbers, Tesla says it resolved the bubble issue by the second quarter of 2018 and that yield rates have since gone up to 90 percent. The company also says its Solar Roof orders have increased. “We are gearing up for tremendous growth in 2019,” Shah says. “We have a product, we have the customers, we are just ramping it up to a point where [the business] is sustainable.”
After the tour of Gigafactory 2, Shah settles into a chair in a conference room as snow flurries begin to fall outside. “We had struggles,” he says. “The reason we’ve taken longer is because we want to be 100 percent confident in this product.”
Shah, whom Musk recruited from Amazon in May, looks out the window to a sample rooftop set up in the parking lot. The product is beautiful, a marvel of high design and sustainable engineering. It’s also expensive: it can cost as much as $100,000 for each installation, which can take several weeks. Tesla says the price and installation time will come down in the future.
Shah says cutting marketing expenses, the biggest single budget item for most solar companies, has allowed Tesla to reduce the average cost of its systems by 10 to 15 percent. He doesn’t seem fazed that Tesla recently ceded its status as the largest U.S. residential-solar company to Sunrun Inc., based in San Francisco. “We don’t want to grow the business just by chasing volume,” he says. “It’s not sustainable.”
What he seems to stress most, though, is that Musk is still very involved in solar. In a recent meeting, he says, Musk brainstormed ways to simplify module shipping processes for Gigafactory 2. According to Shah, the Model 3 didn’t distract Musk’s attention from the solar business. “Anytime I needed his time or mindshare, he was available by text, phone, or face-to-face,” he says, adding that Musk believes that energy will ultimately be a bigger business for Tesla than cars.
For residents of Buffalo, though, there’s a sense that Musk still owes them more time and mindshare. Tesla is fulfilling its hiring obligations to the state, yes, but for locals who’ve heard promises that the solar factory would be “ramping up” for a half-decade under two of Musk’s companies, there’s a feeling Tesla still isn’t living up to its end of the bargain.
This fall, at the Tim Hortons across from the factory, cashiers note that Panasonic, not Tesla, has the greater presence in the area. The curator of the Steel Plant Museum, just around the corner from the factory, says that she’s never seen a Solar Roof on a home in Buffalo. Almost every person interviewed for this article who’s worked at the factory suggested Tesla was doing the bare minimum to meet its investment commitments to the state. The company, for example, isn’t even sourcing its Solar Roof glass from Corning Inc., just two hours south, and is instead importing it from Asia. For a time, it was even shipping in supplies for its vending machines from California rather than using a local supplier. (Tesla says it’s now using a New York-based service for the snack machines. The company declined to comment on its glass sourcing.)
When asked about these types of concerns, Howard Zemsky, CEO of Empire State Development, the economic agency that oversees the Tesla partnership for the Cuomo administration, says he’s holding the company to its commitments. “The goal posts haven’t changed,” he says. He’s “extraordinarily proud” of the turnaround he’s seen in Buffalo, especially the “striking” and “modern” factory now operating on a site formerly home to Republic Steel Inc., which once employed thousands of people in western New York. But, he adds, “we have moved away from thinking about notions of silver bullet projects that will change the fortunes of a region.”
Across the street from Gigafactory 2 is a tidy, gable-front home owned by Carol and Gerry Grandy. They’ve been in the neighborhood for 26 years and say they were excited for what Tesla would mean for the community. But it hasn’t worked out. A nearby fish-and-chips shop opened but soon shuttered, and they say there are few other signs of economic improvement. Gerry called Tesla to inquire about getting solar installed on their roof but was told their home wasn’t in a service area. “I said, ‘Are you kidding me? I could throw a rock and hit your factory,’ ” he recalls.
It particularly irks the Grandys that Musk still hasn’t been to Buffalo after all these years. “We feel neglected,” Carol says. “Elon could take his spaceship and be here in two minutes.”—With Dana Hull and Kiel Porter
(Updates with additional information about a wall in the Tesla factory in the 26th paragraph.)
"Elon Says" on Twitter
https://www.bloomberg.com/news/features/2018-11-20/inside-elon-musk-s-forgotten-gigafactory-2-in-buffaloUpdated on November 20, 2018, 9:11 PM GMT+1
After $750 million in subsidies and years of delays, critics say the Tesla CEO hasn’t done enough for the Gigafactory 2 solar panel factory.
Just south of downtown Buffalo, near abandoned factories and crumbling brick warehouses, is a 1.2-million-square-foot white box with Tesla Inc.’s solar panel factory inside. The state of New York paid $750 million to fund this place, based on a commitment to create nearly 1,500 jobs here. On a Tuesday morning in mid-November, a group of two dozen of these workers is monitoring several rows of robots that are stamping out materials for the Solar Roof, a new kind of solar panel that Tesla Chief Executive Officer Elon Musk is very excited about. Or was, anyway.
The Solar Roof is designed to look and act like regular house shingles, but Tesla’s are textured glass with solar cells hidden inside. On the factory line in Buffalo, these glass tiles slide on a conveyor belt toward a gigantic laminator, where components are heated and vacuumed together into a single module, a “solar sandwich,” as employees call it.
“By the time we’re done, this factory will not have much floor space,” says Sanjay Shah, who oversees solar for Musk as Tesla’s head of energy operations and is based at the company’s Bay Area offices. Wearing protective rubber shoes and a constant smile, Shah gives reporters from Bloomberg Businessweek a tour of the Tesla production line, which until then had been closed to the media. He also rebuts criticism from investors and local politicians who’ve said Tesla’s entrance into the solar business has been a boondoggle.
Tesla has presented the Buffalo operation as a sort of sequel to the Gigafactory, the company’s enormous battery plant near Reno, Nev. But where that factory employs more than 7,000 people and has helped Musk transform Tesla into a major automotive manufacturer, large portions of Gigafactory 2, as this place is known, resemble an empty Walmart Supercenter. Tesla was supposed to be operating multiple production lines by now. Only one is set up, and it’s not yet fully automated. A mess of wooden crates filled with unused manufacturing equipment sits nearby.
The factory had been developed for another company, SolarCity, which Tesla bought in 2016 in a $2.6 billion deal. At the time, SolarCity was the country’s dominant installer of rooftop solar panels, and Musk called the purchase a “no-brainer,” arguing that the two companies were complementary. Critics pointed out that SolarCity had $2.9 billion in debt, and that Musk, as the chairman and largest shareholder in both companies, had serious potential conflicts of interest. (Musk recused himself from the board votes.) On top of the debt, Tesla inherited an agreement SolarCity had struck with New York state, which required it to spend $5 billion in the area over the course of a decade, in addition to meeting hiring targets.
Projects like this are increasingly controversial. “It’s a complete hoo-ha,” says John Kaehny, executive director of Reinvent Albany, a New York nonprofit focused on government accountability. “These mega subsidy deals take place in complete secrecy, without scrutiny from the public.” Kaehny’s critique could apply in Wisconsin, where Governor Scott Walker lost his reelection bid on Nov. 6 in part because of outcry over his support for a $3 billion incentive package to attract Foxconn Technology Co., a Taiwanese contract manufacturer—or in New York City and Alexandria, Va., which together offered Amazon.com Inc. an estimated $2.8 billion in tax breaks in exchange for a promise to open offices there.
Although Tesla’s main patron, New York Governor Andrew Cuomo, a Democrat, easily won reelection, his opponents have pointed to the Gigafactory 2 deal as a sign of his coziness with moneyed interests. Raymond Walter, a Republican in the New York State Assembly who lost his own reelection bid, says he’s concerned the state has too many “eggs in the Tesla basket, which doesn’t seem like a very strong basket at this point.” When Walter toured the factory in March, he recalls, “it was mostly empty. I would say 10 percent to 15 percent of the floor was being utilized for production. It was not an impressive use of $750 million in taxpayer funds.”
Tesla says it’s now exceeding its hiring commitments to the state. Shah says Gigafactory 2 employs about 800 workers. Yet in many ways, Musk’s solar plans have failed to live up to his lofty plans. The company’s solar deployments are down more than 60 percent from their peak under SolarCity, and Tesla has laid off thousands of solar employees around the U.S. Shah says the company has hired solar workers since then, but half of the Gigafactory 2 employees don’t work for Tesla, which subcontracts part of the factory to Japanese manufacturer Panasonic Corp. for solar panel and cell production.
With Musk focused on shoring up production of the Model 3 sedan, Gigafactory 2 has often seemed like an afterthought, a “stepchild,” as three people who’ve worked there called it. Musk has said he’s clocked 120 hours per week at Tesla’s car factory, yet he’s never so much as visited his Buffalo plant. And while Model 3 production is up to 4,500 cars per week, delays and manufacturing challenges at Gigafactory 2 have meant that earlier this year the company was making enough Solar Roof shingles for only three to five homes a week, according to two former employees. Tesla declined to comment on production figures.
Tesla’s efforts in solar, recounted here based on interviews with more than two dozen current and former employees familiar with the company’s energy business and workers at its New York factory, have followed a familiar playbook. Start with wild promises, followed by product delays, production hell, shareholder anger, and finally, hopefully, redemption. Musk assumed an optimistic note in a recent earnings call, boasting of his “best quarter ever for solar” in terms of profitability, while assuring shareholders that Tesla would accelerate Solar Roof production in 2019. If he’s right, he’ll vindicate Cuomo’s bet on the company and maybe even make Buffalo great again. If he’s wrong, Gigafactory 2 may be seen as a disaster for Tesla and a warning for other local governments seeking to lure big tech companies.
Tesla’s Solar Roof was introduced to the world in October 2016 at Hollywood’s Universal Studios. It was just weeks before shareholders were to vote on whether to approve the SolarCity acquisition, and Musk set out to wow them. On a set once used for Desperate Housewives, a team retrofitted four homes with Solar Roof demos, including Tuscan- and slate-style shingles. “The interesting thing is that the houses you see around you are all solar houses,” Musk teased onstage in front of hundreds of attendees. “Did you notice?”
The presentation impressed the audience—and stunned SolarCity employees, many of whom had never seen the product Musk revealed. Various teams at the company had been at work on a related idea, code-named “Steel Pulse,” a metal-based solar rooftop. But when Musk saw an early concept two months before the event, he found it hideous and ordered a skunk-works group to prototype something sexier, according to multiple former Tesla and SolarCity employees. They rushed out a glass-based version up to the standards of Musk, who neglected to mention that the shingles he showed off at Universal weren’t yet able to generate electricity. Shareholders overwhelmingly voted in favor of the deal.
The idea of a solar shingle had been around for more than a decade, but nobody had been able to pull it off at scale. The trick requires an optical illusion: camouflaging photovoltaic cells beneath transparent tiles, which, at a sidewalk level, need to appear opaque without letting the cosmetics interfere with the cells’ performance.
Musk initially tapped his cousin Peter Rive, previously SolarCity’s chief technology officer, to run the project. Rive’s team focused first on developing a textured black shingle, one of four designs Musk had showed off at Universal. But according to several people familiar with the project, Rive struggled with its scope. “There was a meeting where Pete was like, ‘Well, we’ve pretty much done it. We just have a few kinks to work out,’ ” recalls a former senior employee involved the effort. “Everyone was looking at each other like, ‘What? Are you kidding me?’ ” (Rive left Tesla in mid-2017. He could not be reached for comment.)
Throughout 2017 the Solar Roof team played with optics and color consistency in a research and development lab in Fremont, Calif., not far from where Tesla makes its cars. They tested prototypes on mock rooftops erected in a parking lot. Part of the problem was that the solar cells embedded inside the tiles were refracting light in a way that created what some sources describe as a glowing effect.
When Musk zoomed over in his Model S from the car factory for a weekly update, he would inevitably complain that the Solar Roof didn’t look right. He said it appeared “glittery” or “sparkled too much,” according to sources present. “He’d only be there for an hour, max,” says a former engineer on the project. “But once [Tesla] started having issues with the Model 3, we started seeing Elon less and less.” In his stead, Carl Peterson, a former Apple Inc. engineer who took over the product group from Rive, started showing up. Tesla says Musk stayed closely involved.
With pressure increasing on Tesla to turn a profit, it moved further away from SolarCity’s main business, which involved installing traditional solar panels on homes and businesses for no money upfront. The arrangement, known as a solar lease, required tremendous amounts of capital to deliver roofs to customers, who would pay the company back over the course of decades. SolarCity had grown quickly, in part, by selling solar systems door-to-door and at Home Depot stores.
But soon after the acquisition, Tesla cut back on these channels through reorganizations and layoffs. And for the fourth quarter of 2017, Tesla reported a 56 percent year-over-year drop in solar deployments. Shah, the Tesla executive, says this was part of a long-term strategy, devised before the merger, to let Tesla’s reputation and its existing network of stores sell consumers on the benefits of solar rather than rely on expensive consumer outreach, which had weighed down SolarCity’s balance sheet.
By the end of last year, the company was making progress on the Solar Roof. Musk had given his blessing on a design employees internally referred to as the “gold sample roof,” and Tesla spent months refining the technical specs to match Musk’s aesthetic requirements. He even had a prototype installed on his guesthouse in Los Angeles. All they had to do next was figure out how to mass-produce it.
On the other side of the country, workers at the Buffalo Gigafactory were wondering whether it would ever mass-produce anything. From late 2016, when Tesla started holding job fairs at local schools and churches, to the fall of 2017, according to more than a half-dozen former employees, the factory was basically a ghost town, a smattering of people occupying what felt like a chain of airplane hangars. At some points, thousands of massive crates of unused machinery crowded the floors. Tesla declined to comment on the number of crates; the company says there were hundreds of employees in the facility by late 2017.
New York had gone all-in on the SolarCity factory in 2014, initially hoping the partnership would generate 1,460 manufacturing jobs at the plant, a goal the state cut to 500 in 2015, with the remaining workers in support roles within the city of Buffalo. It was a risky investment: SolarCity was an installation-and-financing company with little track record in manufacturing. The company had spent years trying to develop a high-efficiency solar panel, called “Project Whitney,” with the aim of churning out 10,000 units per day in Buffalo by mid-2016, but it struggled to manufacture dozens per day in trial tests. In a 2016 incident, previously unreported, a panel installed on a pilot roof malfunctioned and started burning; crew members had to stamp it out with their feet to keep the panel from catching fire, according to two sources familiar with what happened. SolarCity eventually scrapped Project Whitney, though Tesla says it had nothing to do with the incident.
For months in 2017, the factory was mostly idle while teams in Fremont figured out what they wanted to build. Part of the challenge was that the $274 million in equipment the state had purchased for SolarCity was designed for a completely different product—conventional solar panels—and needed to be retooled for Tesla’s Solar Roof. Layouts and production processes for Buffalo changed constantly. “We didn’t even know if any of these tools were going to be viable,” says a former factory engineer. Tesla says the factory is now using the majority of the equipment originally purchased in 2014.
Some Buffalo workers felt there was little guidance from Tesla’s leadership, especially Musk, who they believed was focused on the car factory in California and battery plant in Nevada. They would sometimes joke that the “Eye of Sauron” was always drawn elsewhere, a reference to the omniscient gaze of the villain in The Lord of the Rings.
Shortly after the acquisition closed, Tesla had struck a deal with Panasonic, which agreed to take over some manufacturing at Gigafactory 2 and help Tesla meet its hiring commitments to the state. The Japanese company installed and staffed a production line, and by September 2017 the factory’s hallways were dotted with employees in blue Panasonic baseball hats. Tesla presented this setup as a close partnership, but multiple people familiar with both operations say there was little collaboration between the two companies, which operated their production lines related to the Solar Roof at opposite ends of the building, roughly a quarter-mile apart.
Although Panasonic still makes cells for the Solar Roof, Tesla took issue with their aesthetics and cost, several sources say, and bought them from a Chinese supplier, JA Solar Holdings Co., instead. Tesla says its long-term plan is to use Panasonic cells in the Solar Roof. It also notes that other parts of its operation are located much closer together. A Panasonic spokeswoman says, “We closely collaborate with our colleagues at Tesla, and truly value the relationship.”
Workers for Tesla’s own Solar Roof production line, which was set up at the end of 2017, were warned there might be days when they would have nothing to do. When VIPs would come by in early 2018, a source says, the company would map out a tour that put the facility in its best light, which often included focusing on the Panasonic side of the operation. For the factory tour Tesla gave Bloomberg Businessweek in mid-November, a knowledgeable source says the company erected a wall inside the building to block much of its idle machinery from view. Tesla says certain parts of the factory contain confidential operations and that the new wall is part of a storage area for unused equipment.
One of the key problems was the solar-sandwich process. The laminator requires precise timing, heating, and vacuum pressure to, as employees say, “cheese melt” the shingle components. If any of the processes are slightly off, bubbles can be introduced into the shingle, making it less reliable. According to several people familiar with the matter, Tesla struggled with low yield rates for the Solar Roof, at times scrapping 70 percent of its production, which it shipped to a recycling plant by the truckload. The company went through at least 74 recipes before landing on the right sandwiching process.
As summer neared this year, output remained small: Several people say the factory got up to producing about 480 tiles per shift, which would equate to 6,720 shingles a week, about enough to cover a handful of customer homes—if the system were operating perfectly. On the other hand, Tesla had received about 11,000 customer orders for Solar Roof by May, a backlog that was both encouraging and daunting.
Tesla has worked to improve its manufacturing processes, and has accelerated hiring. The facility is now operating 24/7, with about 80 employees a shift on Tesla’s side. While the company declined to provide production numbers, Tesla says it resolved the bubble issue by the second quarter of 2018 and that yield rates have since gone up to 90 percent. The company also says its Solar Roof orders have increased. “We are gearing up for tremendous growth in 2019,” Shah says. “We have a product, we have the customers, we are just ramping it up to a point where [the business] is sustainable.”
After the tour of Gigafactory 2, Shah settles into a chair in a conference room as snow flurries begin to fall outside. “We had struggles,” he says. “The reason we’ve taken longer is because we want to be 100 percent confident in this product.”
Shah, whom Musk recruited from Amazon in May, looks out the window to a sample rooftop set up in the parking lot. The product is beautiful, a marvel of high design and sustainable engineering. It’s also expensive: it can cost as much as $100,000 for each installation, which can take several weeks. Tesla says the price and installation time will come down in the future.
Shah says cutting marketing expenses, the biggest single budget item for most solar companies, has allowed Tesla to reduce the average cost of its systems by 10 to 15 percent. He doesn’t seem fazed that Tesla recently ceded its status as the largest U.S. residential-solar company to Sunrun Inc., based in San Francisco. “We don’t want to grow the business just by chasing volume,” he says. “It’s not sustainable.”
What he seems to stress most, though, is that Musk is still very involved in solar. In a recent meeting, he says, Musk brainstormed ways to simplify module shipping processes for Gigafactory 2. According to Shah, the Model 3 didn’t distract Musk’s attention from the solar business. “Anytime I needed his time or mindshare, he was available by text, phone, or face-to-face,” he says, adding that Musk believes that energy will ultimately be a bigger business for Tesla than cars.
For residents of Buffalo, though, there’s a sense that Musk still owes them more time and mindshare. Tesla is fulfilling its hiring obligations to the state, yes, but for locals who’ve heard promises that the solar factory would be “ramping up” for a half-decade under two of Musk’s companies, there’s a feeling Tesla still isn’t living up to its end of the bargain.
This fall, at the Tim Hortons across from the factory, cashiers note that Panasonic, not Tesla, has the greater presence in the area. The curator of the Steel Plant Museum, just around the corner from the factory, says that she’s never seen a Solar Roof on a home in Buffalo. Almost every person interviewed for this article who’s worked at the factory suggested Tesla was doing the bare minimum to meet its investment commitments to the state. The company, for example, isn’t even sourcing its Solar Roof glass from Corning Inc., just two hours south, and is instead importing it from Asia. For a time, it was even shipping in supplies for its vending machines from California rather than using a local supplier. (Tesla says it’s now using a New York-based service for the snack machines. The company declined to comment on its glass sourcing.)
When asked about these types of concerns, Howard Zemsky, CEO of Empire State Development, the economic agency that oversees the Tesla partnership for the Cuomo administration, says he’s holding the company to its commitments. “The goal posts haven’t changed,” he says. He’s “extraordinarily proud” of the turnaround he’s seen in Buffalo, especially the “striking” and “modern” factory now operating on a site formerly home to Republic Steel Inc., which once employed thousands of people in western New York. But, he adds, “we have moved away from thinking about notions of silver bullet projects that will change the fortunes of a region.”
Across the street from Gigafactory 2 is a tidy, gable-front home owned by Carol and Gerry Grandy. They’ve been in the neighborhood for 26 years and say they were excited for what Tesla would mean for the community. But it hasn’t worked out. A nearby fish-and-chips shop opened but soon shuttered, and they say there are few other signs of economic improvement. Gerry called Tesla to inquire about getting solar installed on their roof but was told their home wasn’t in a service area. “I said, ‘Are you kidding me? I could throw a rock and hit your factory,’ ” he recalls.
It particularly irks the Grandys that Musk still hasn’t been to Buffalo after all these years. “We feel neglected,” Carol says. “Elon could take his spaceship and be here in two minutes.”—With Dana Hull and Kiel Porter
(Updates with additional information about a wall in the Tesla factory in the 26th paragraph.)
"Elon Says" on Twitter
Indicator's say that there are many complaints, with warranty's, and delivery defects.
Tesla cuts jobs as it looks to make Model 3 more affordable | Reuters
January 18, 2019 / 11:15 AM 4-5 minute Read
"You cursed brat, look what you've done! I'm melting!"
Currently
Here’s some good news that will make Tesla owners smile (if not investors)
Published: Jan 18, 2019 9:49 a.m. ET
7-9 minute Read
Snip:
Tesla cuts jobs as it looks to make Model 3 more affordable | Reuters
January 18, 2019 / 11:15 AM 4-5 minute Read
How did the wicked witch of the North say:
"You cursed brat, look what you've done! I'm melting!"
Currently
Here’s some good news that will make Tesla owners smile (if not investors)
Published: Jan 18, 2019 9:49 a.m. ET
7-9 minute Read
Snip:
Tesla stock falls as layoffs, profit comment ignite demand fears
Published: Jan 20, 2019 12:26 p.m. ET 6-8 minute Read
Excellent, and eye opening podcast of the underbelly of Musk, Tesla, SpaceX, and other tidbits. The interviewee goes incognito, out of concerns for his personal safety.
TSLAQ Podcast
Discussion of SpaceX Photoshop and Frenchy Thoughts on Doxxing Immaculate Quarter (Q3 18) & More (including a few fun questions)
58:24 Minutes January 19, 2019
Published: Jan 20, 2019 12:26 p.m. ET 6-8 minute Read
Excellent, and eye opening podcast of the underbelly of Musk, Tesla, SpaceX, and other tidbits. The interviewee goes incognito, out of concerns for his personal safety.
TSLAQ Podcast
Discussion of SpaceX Photoshop and Frenchy Thoughts on Doxxing Immaculate Quarter (Q3 18) & More (including a few fun questions)
58:24 Minutes January 19, 2019
