OM in the News: Tesla Suspends Production (Again)

Tesla is temporarily suspending production of the Model 3 sedan for at least the second time in 2 months, just after Elon Musk admitted to mistakes that hindered his most important car. The company informed employees that the pause will last 4-5 days. The hiatus is another setback for the first model Musk has tried to mass manufacture, writes New Equipment Digest (April 17, 2018). In addition to trying to bring electric vehicles to the mainstream, Tesla had sought to build a competitive advantage over established automakers by installing more robots to quickly produce vehicles. Last week, Musk acknowledged “excessive” automation at Tesla was a mistake.

“Traditional automakers adjust bottlenecks on the fly during a launch,” said an industry analyst. “This is totally out of the ordinary.” The shutdown is taking place a week after Musk gave CBS This Morning a tour of Tesla’s assembly plant and said the company should be able to sustain producing 2,000 Model 3 sedans a week. He said manufacturing issues that had been crimping output were being resolved and that Tesla probably will make three or four times as many of the cars in the second quarter.

Tesla built 9,766 Model 3 sedans in the first quarter. The company said in an April 3 statement that the process of boosting production and addressing bottlenecks during the first three months of the year included “several short factory shutdowns to upgrade equipment.” But shutting down for days on end during ramp is far from normal.

Getting Model 3 output up to speed is crucial to generating revenue after the billions of dollars Tesla has spent to manufacture, recharge, service and repair more cars.

Classroom discussion questions:

1. What is the problem with shutting the factory for 4-5 days?
2. How does Tesla differ from a traditional auto manufacturer?