Tesla reportedly locks out contractors in midst of Model 3 ramp up


Tesla factory, Fremont, California

Tesla factory, Fremont, California

Last Wednesday, during Tesla's earnings call, we learned that CEO Elon Musk planned to restructure the company and to cut the number of contractors used at Tesla's factories.

That day came suddenly this morning. Electrek reported this morning that it had obtained an internal memo from Musk noting that contractors' time was up, and that a Tesla employee would have to vouch for every individual contract worker before that worker would be allowed into Tesla facilities this morning.

According to Electrek, the memo from Musk reads:

"Please note my comment below about contractor companies and consultants. I extended the performance evaluation deadline to provide more opportunity to demonstrate excellence, but now time is up.
Please send a note to HR before Monday justifying the excellence, necessity and trustworthiness by individual (not just the contractor company as a whole) of every non-Tesla person who has badge access to our buildings or network access to our systems.
By default, anyone who does not have a Tesla employee putting their reputation on the line for them will be denied access to our facilities and networks on Monday morning. This applies worldwide.
Time to scrub off the barnacles.
Thanks, Elon"

The "barnacles" are a reference to Tesla contractors, an analogy Musk first used publicly in the May 2 earnings call. Now Tesla employees are being asked to put their own careers on the line to justify any contractors they need.

The move comes at a surprising time in Tesla's efforts to ramp up production of its critical Model 3.

Musk has repeatedly targeted production of 5,000 Model 3s per week by the end of the first quarter of this year. That time has now come and gone, and the company last reported a peak production of just over 2,700 cars per week.

CHECK OUT: Tesla earnings, cash-burn up; Model 3 production, barely

Last month, Tesla shut down the Model 3 assembly line at its Fremont, Calif., factory to remove some conveyor belts and robots and replace them with human workers.

On the other hand, without having reached 5,000 Model 3s a week, the company is still facing a cash crunch, losing $780 million in the first quarter, with $2.7 billion cash on hand. Meanwhile, Musk has increased the production goal from 5,000 to 6,000 Model 3s per week by June.

Now the question is, will eliminating contractors save enough money to buy the company more time, or will it delay the goal of reaching full Model 3 production further?

We know that many of our own readers are eagerly awaiting their own cars that they have put deposits on and just want to see the company reach full production as soon as possible.

 
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