Tesla’s California Plant Shutting Down for Six Days

Soros buys $35 million in convertible bonds.

by on May.16, 2018

Tesla CEO Elon Musk plans to shut down the Fremont, California plant for six days later this month.

Tesla CEO Elon Musk isn’t just sleeping on the plant floor at the company’s Fremont, California plant hoping a solution to increase Model 3 production will come to him by osmosis — he appears to be trying.

Just a days after changing the company’s management structure to improve communication, he’s going to shut the entire plant down for six days at the end of this month to make changes with the goal of increasing production of Tesla’s first “mainstream” car.

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Earlier, the EV maker warned the plant would shut down for a total of 10 days to tackle manufacturing issues at the site. The issues have put Model 3 production well behind schedule, angering some who plunked down deposits and irritating shareholders and analysts.

The shutdown is scheduled for May 26-31, according to Reuters.

(Tesla’s Musk orders “flattening” of management structure. Click Here for the story.)

Musk suggested the company would be producing as many as 6,000 Model 3s weekly the near future.

It has been an uphill battle from the start with production of the Model 3, which is considered the lynchpin of the company’s future success. Tesla has been struggling to find solutions to manufacturing bottlenecks on the new assembly line that produces the Model 3. Slowly he and his team have been working their way through problems, such as using too many robots to produce car.

Some of the changes have been working as Musk told employees the company would hit 3,500 Model 3 sedans a week starting this week. The shutdown is expected to increase that figure, but no speculation about how much it would help has been speculated on.

Musk is tackling this issue while he gets a new, high profile investor in the company: George Soros, the billionaire investor and head Soros Fund Management LLC. The fund took a $35 million stake in the convertible bonds of Tesla, which are due in March 2019, according to filings with the U.S. Securities and Exchange Commission.

(Click Here for more about Musk looking beyond Model 3 problems, but creating some headache in the process.)

Despite a variety of adjustments and new technology, Tesla is still behind on its Model 3 production schedule.

Investors have been putting pressure on Musk to get the production problems resolved and to ensure the company doesn’t need to raise more money to get it to market in previously predicted volumes. However, Soros is viewed more as an ally, who can keep the complainers at bay as Musk works through the problems.

In addition to the expected shutdown, later this month, Tesla shut down the Fremont assembly line last month, and also in February, for a few days to rework. All of the stoppages add up to the planned 10 days of stoppages.

Musk said the planned stoppages will provide the company time to perform needed updates to build 6,000 vehicles per week by the end of June. Musk last month said the company was producing 2,000 Model 3 cars a week.

(For more on Tesla’s first-quarter earnings, Click Here.)

In order to meet the goal, all Model 3 production is working around the clock, Musk said. General assembly have already switched to three shifts and teams working on the body of the vehicle – where the external shell of the car is assembled – are working in two 12-hour shifts, according to Reuters.

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6 Responses to “Tesla’s California Plant Shutting Down for Six Days”

  1. kent beuchert says:

    Musk promised to achieve that 5,000 per week using a single shift of workers. His high profit margins depended upon that level of assembly/factory expense. But now he has trippled that expense and destroyed his estimated high profit margins. So the 5,000 per week rate is really a 5,000/3 rate, or 1666 per week per single shift.

  2. Dick says:

    Musk must be desperate to make a deal with the devil. Soros is one of the most despicable people in the world.

  3. Allen says:

    “…angering some who plunked down deposits and irritating shareholders…”. Have heard before about angered depositors, but have any of them actually requested (and received) any of their deposit back? Shareholders may be irritated, but apparently not enough to actually do anything. Makes me wonder as to just how angry and irritated these people really are.

    • Paul A. Eisenstein says:

      Musk has confirmed some have bolted after getting money back. The numbers have not been released, however.

  4. Allen says:

    “…some have bolted…” Paul, is that a pun?

    • Paul A. Eisenstein says:

      Got you charged up with that one, Allen? Glad I plugged it in!

      Paul E.