Tesla pulled out all the stops to get 5,000 Model 3s built by July 1 including pulling workers from other assembly lines, halting Model S and X production to paint nothing but Model 3's, but also critically eliminating an industry standard brake test designed to ensure quality, according to a Reuters report.
One factory insider said the company had "factory gated" a large number of cars that had been built in prior weeks toward the total.
Investors took the sales report with a grain of salt, questioning whether the production pace was sustainable, as Tesla's stock dipped after the announcement.
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According to the sources who spoke with Reuters, it may not be, at least not yet.
In response to criticism about dropping the brake test, after earlier Model 3's brakes had not performed well in independent testing, a Tesla spokeswoman said in a statement emailed to Green Car Reports:
"Every car we build goes through rigorous quality checks and must meet exacting specifications, including brake tests. To be extremely clear, we drive *every* Model 3 on our test track to verify braking, torque, squeal and rattle. There are no exceptions. Tesla is in the process of optimizing its production line ... and in doing so we simply removed a test that was duplicative. Every Model 3 is driven on our test track, which allows us to thoroughly screen 100% of cars at higher speeds and with more aggressive rates of deceleration, while also testing for noise and vibration, as well as additional steering tests that can’t be conducted on the brake and roll machine. 100% of vehicles are confirmed for passing results before leaving the factory."
Tesla updated the brakes following Consumer Reports criticism, and the automaker retested its Model 3 after the update and found the brakes worked well.
A Tesla factory worker also said that the company borrowed employees from the Model S and Model X production lines to keep the Model 3 line running, and kept those higher-end models out of the paint booth to squeeze all the Model 3's it could through the process. The paint shop has been identified as a production bottleneck by several sources, and there have been at least two reports of fires in the paint shop in recent weeks. The source told Reuters the Model S line ran 800 cars behind for the week to try to reach the Model 3 production target.
Tesla Model 3 bought [Photo by reader AH]
Tesla earns more money from Model S and Model X sales than it does from sales of the Model 3. According to its sales report Monday, the company built more Model 3's than Model S's or Model X's for the first time last quarter.
The concern over factory gating could be larger. Tesla's official announcement that it had produced 5,000 cars during the last week of June measured the achievement at the "factory gate," where cars wait to be picked up for shipment to customers. Since some cars come off the assembly lines needing fixes or corrections, they are diverted for those repairs before being sent to the factory gate. The question has to do with when you count those cars as finished, and how many there are in a given week.
Tesla spokesman Dave Arnold told Business Insider the company did not change its practices for the last week of the quarter to meet the 5,000-unit production target.
"A small number of cars are built during a week but factory-gated the following week, just as a small number of cars built the prior week may not be factory-gated until the following week. Both of those points are true for this last week of production, just as it is true every week. We are reporting our production numbers the same way as we always have," he said.
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That doesn't necessarily preclude having a larger number of stockpiled cars needing rework one week than the next. Nor does it mean more cars might not legitimately need rework one week than the next.
Taken together, though, these questions do raise concerns about whether Tesla has reached the point that it can sustain production of 5,000 Model 3's per week, or whether the company just pulled out all the stops to cram as many Model 3's into one week as it could.
As it is, according to one of the Reuters sources, the 5,000th Model 3 was built at 5 a.m. Sunday—about five hours after Tesla's self-imposed deadline.
Following the production announcement, CEO Elon Musk set a new goal for Tesla to build 6,000 Model 3's per week by the end of August.