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Sleepless nights, broken robots and mounting pressure: Musk offers rare glimpse inside Tesla’s ‘production hell’

Tesla has reported its biggest ever quarterly loss, as it spent more to speed up production of the Model 3 - it's first mass market car. (Video: Reuters)

In Dante’s “Inferno,” part of his 14th century epic poem, Hell is portrayed as nine concentric circles of torment, each with its own nightmarish form of suffering.

The allegory is a reflection of Renaissance-era morality, but surprisingly it’s also an apt metaphor for building the most sought-after electric car in the world from scratch.

During a call with investors earlier this week, Tesla chief executive Elon Musk made that much clear as he laid out the challenges plaguing the nearly stalled production of the Model 3, the company’s first mass-market vehicle.

“Let’s say Level 9 is the worst,” Musk said. “We were in Level 9, now we’re in Level 8, and I think we’re close to exiting Level 8. I thought we’d probably be more like in Level 7 by now.”

“And I have to tell you, I was really depressed about three or four weeks ago when I realized we were in Level 9,” he added. “Then we got to Level 8, and now I can see a clear path to sunshine.”

Tesla reports big loss as Model 3 production struggles continue

The particularities of the company’s challenge — many of them engineering problems involving robots and battery packs at Tesla’s sprawling Gigafactory 1 in Nevada — may have been unforeseen, but the arduous journey into the metaphorical underworld certainly wasn’t. Minutes after Musk took the stage to introduce the Model 3 at Tesla’s factory headquarters in July, he began warning of the incoming “production hell” a period that would test Tesla, the company’s employees and their leader like never before.

Three months later, Tesla is mired in what is probably the hardest portion of that test, and it’s beginning to show. Minutes after the company reported a loss of $671.1 million for the third quarter, Wednesday, Musk’s voice sounded monotone, dispassionate and a more than a tinge irritable. The company hoped to produce 1,500 Model 3s during that period, but managed only 260. At the moment, however, Musk was concerned with something else. He spent the first part of the call admonishing journalists for suggesting that recent layoffs were linked to production issues, punctuating his uncharacteristic rant about journalistic integrity with a single word: “Shame!”

Musk said a cold was to blame for his catatonic voice, but one couldn’t help but wonder whether the culprit was actually general fatigue. Based on Musk’s own description of the urgency surrounding the Model 3 rollout, it’s not a stretch of the imagination. To resolve nagging production issues, Musk told investors, he’s “reallocated” some of the company’s top engineers to Nevada, where he and his team are working seven days a week.

Musk said he’s there alongside them because he believes in leading “from the front lines.” Amid the pressure, he’s documented his sanity-stabilizing downtime on Instagram, in fact.

“I’ve personally been here on the Zone 2 module line at 2 a.m. on Sunday morning trying to diagnose robot calibration issues,” he said. “I’m doing everything I can.”

“We got it covered,” he added. “It’s just going to take us a few months longer than we expected.”

How long exactly?

It’s “difficult to predict” Musk acknowledged, pointing out that he’s now trying to avoid making production pronouncements that the rest of the world endlessly dissects.

The problems are so complicated that company officials — deeply versed in the company’s automated details — struggle to explain them succinctly, in non-engineering terms. Building a Model 3 involves thousands of processes, they say, noting that the car has 10,000 unique parts. Though the Model 3’s design on the whole is much easier to build than Tesla’s other models, they say, parts of that process are “intensely automated.” The upside of that means that the car’s automated assembly line is shorter and more streamlined than most. The downside (at this stage, anyway) is that the system “is designed as a very tightly integrated” fashion, according to Musk, meaning that when one element of that manufacturing process is broken, the ripple effects are profound.

Either the machine works, Musk said, or it doesn’t. Complicating matters was a subcontractor that failed miserably, he noted, forcing Tesla to rewrite a huge amount of the software from scratch. Minutes later, he blamed Tesla for failing to notice the failure, an oversight that still appears to pain him.

“We dropped the ball,” Musk said, “and did not realize what was dropped until quite recently.”

The timeline and the numbers remain fluid, but here’s the latest: Musk said he expects Tesla to produce 5,000 Model 3s per week by “sometime in March.”

Musk had previously said that the company would reach the same production rate by the end of 2017.

With the company’s profitability firmly staked in the Model 3’s liftoff, those expectations remain exceedingly high and pressure-filled, even if automotive analysts are right about prospective Tesla buyers being more patient and flexible than the typical car buyer. Ironically, the man who has made a habit out of warning the world about the perils of an artificially intelligent future, is already living in a robotic nightmare. The only way out, he maintains, is to keep going.

He’s come this far, after all.

“For the skeptics out there, I’d like to ask them, ‘Which one of you would’ve predicted that Tesla would go from 25,900 units delivered to 250,000 units delivered now?” Musk said, concealing all but a trace of the retributive fury you’d expect to find in a brilliant billionaire. “I suspect the answer is zero.”


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