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Hi. Welcome to another ColdFusion video.
The Model 3: It's Tesla's affordable but capable
mass-market electric car.
It was supposed to be the automotive industry as equivalent to an iPhone moment
and the company's whole business plan hinges on its success.
But as many of you know, not all has gone according to plan.
The Model 3 has been "Production Hell", according to Elon Musk.
So what's the problem?
The main problem for Tesla, is their inability to produce enough Model 3s.
In July of 2017, Elon forecasted 5,000 cars per week by December 2017.
And, this wasn't to be.
Recently the production pipeline has been plagued with problems which hindered the output.
This isn't so great for your most critical product.
So how low were the numbers?
According to Tesla's shareholder report:
There was an average of 830 cars per week in the first quarter of 2018.
That's less than one-fifth of their goal.
In February, production was even halted for a week.
The forecast has now been pushed to 5,000 cars per week by June.
The good news is that things are starting to turn around.
In April, Tesla is making just over 2,000 Model 3s per week and is on track to increase production.
So for a wider perspective, at this rate, this will translate to about 220,000 total Tesla's
produced and delivered in 2018.
And thinking about it...
That's not too far off the 300,000 cars sold by BMW in the US in 2017.
Keep in mind BMW has a much bigger vehicle range than Tesla.
The bad news is that when the Tesla Model 3 was announced,
an estimated 400,000 pre-orders were initially made for the car.
And that's pretty cool because even if that number did drop, it is unprecedented in the auto industry.
No other manufacturer has had so many advanced vehicle orders.
But the bad part and the main question is: How much longer will they wait?
So what went wrong?
Ironically, for such a technically advanced company, excessive automation was what slowed the whole production pipeline down.
Musk has stated, quote:
"Excessive automation at Tesla was a mistake. To be precise, my mistake.
Humans are underrated.", end quote.
To see more and what he means, the CBS Morning Show gave an exclusive look into what's going on in the factory
And how Elon claims to fix the issues.
"The pioneering electric car company Tesla has suffered a series of very public challenges
since the beginning of this year."
"It's high-profile CEO Elon Musk calls this period, a 'Production Hell'."
"But the most important thing on his mind these days is solving production delays for the Tesla's new Model 3 sedan
here at his massive factory in Silicon Valley."
"You started saying 'We'll do 5,000 a week',
then 'Okay, that didn't work out, we'll do 2,500 a week', and now it's a little over 2,000 a week."
"Does that trouble you?"
"Yeah, no, that's true. I need to figure out how to be better, and
then we can, be better at beating goals."
"Why is it harder? What happened?"
"We got complacent about some of the things that we felt were on core technology."
"We've put too much new technology into the Model 3 all at once."
"But this should have been staged."
"High-tech goes in the cars, but it also builds them."
"This is widely regarded as one of the most robotics-driven auto assembly lines on the planet."
"Elon, one other the thing I heard about the Model 3 is that there's too many robots,
that may-" - "Yeah, yeah, I agree."
"You do? You think so too? Then maybe you need more people in here working."
"We do."
"In some cases the robots actually slow the production."
"Yes, they do. Where there's, crazy complex network of conveyor belts,
and it was not working, so we got rid of that whole thing."
"Painting core, really extreme levels of precision."
More than ever any vehicle in the world."
"He says he has resorted to pulling all-nighters at the plant."
"The thing's here are really intense, so I don't have time to go home and shower and change,
so I just sleep here."
"i wanna see, where is that?"
"I mean it's pretty boring. Overall, really."
"It's actually cold in here too." - "Yeah, I like it cold."
"So you have a- you like it cold?"
"I sleep on the couch over there." - "So you're just laying here, on the couch."
"Last time I was here, I actually slept literally on the floor because the couch was too narrow."
"And, Elon, I have to say it's not even a comfortable couch either." - "No, it's terrible. This is not a good couch."
"What does the numbers say for the last seven days? What is the number?"
"2,071" - "You're pleased with that, for the time being?" - "Yeah."
"Musk feels like all the overtime is paying off and now he says the Model 3 line is back on track."
"So, listen I have to say he really is on the case, when you hear about him sleeping at that factory go:
'Yeah sure right', but I asked employees when he wasn't around he actually does sleep in that room and I said:
"But why are you doing this? It's not like you're out there. You know painting a car or running a machine."
He said because I can solve the problems in real time.
I look at that board I can see where a problem is and go and make the correction and go check it out myself.
And he's very serious."
A lot of people may hate Elon for over promising and under-delivering, but I for one do respect his work ethic.
On the plus side for Tesla, the earlier reviews of the Model 3 are glowing. There's a Customer Satisfaction
Score of 93%, which is the highest score in Tesla's history, coupled with an infinite warranty for early adopters.
It seems like a lot of people might be happy with this car.
So looking at the big picture as you've already seen on this channel, Tesla's competition is rising.
In fact, the Jaguar 'I-PACE' is already in production and Prince Charles was spotted riding one into the Commonwealth Summit.
To add to this, Ferrari has just started testing electric cars and Buick has just stepped into the game as well.
As I've previously mentioned, this is ultimately a good thing for all of us
and Tesla has the advantage of a story and a strong brand image behind them, which the others don't.
But it's the question of investors; how much longer will they trust Tesla?
And it's risky, just because you're the first to do something doesn't mean you end up successful in the long run.
Just look at the case study of the Xerox Alto in 1973.
The company had the personal computer a decade before it became popular
but due to a stupid business decision, they lost it all.
I'm not saying that Tesla is doing that now
but I wouldn't like to see such a company
single-handedly change a 100 year old industry and fail.
They've come this far and a lot of people would say that they deserve success for that, and I'm not alone here.
Tesla's stock has become a very unusual trading case. It's what analysts are calling "A Story Stock".
There's a fascinating battle between those investors who love
the story of Tesla and strongly aligned with Elon Musk's vision.
And then there are those investors who see missed forecasts and deadlines and a company burning through cash.
And you can see the same battle occurring in YouTube comments on Tesla videos.
So which image of the company is the true one? Only time will tell.
Time and time again, it seems like Elon and Tesla have a habit of pulling a rabbit out of a hat.
So in conclusion, the Model 3 case is coming down to the wire for Tesla
but if the company is truly on track with production and has worked out all of its problems
I think they'll ultimately be successful, but that's just my opinion.
Let me know what you guys think in the comment section below, and be nice.
Anyway, that's all for this video. This has been Dagogo, you've been watching ColdFusion.
If you just stumbled across this channel feel free to Subscribe.
Thanks for watching, and I'll catch you again soon for the next video.
Cheers guys.
Have a good one. :)
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