Episode 3: Production Hell

Since the original Roadster, Tesla has struggled to produce enough cars to meet the demand from customers. Building a car manufacturer from scratch is hard, and if there was any car to highlight that difficulty it was the popular Model 3. As Elon would say, 'Welcome to Production Hell'.

References:

Lora Kolodny's CNBC Investigation into GA4

Reveal's 'Tesla and Beyond'

The City Podcast 'West World'

Ford Spent $200,000 to Dissect a Limited-Edition Tesla Model X

Tesla unveils its $35,000 Model 3

Tesla Model 3 pre-orders stack up as Elon Musk unveils lower-priced car

Tesla’s Model 3 Reservations Rise to Almost 400,000

Elon Musk Confirms Tesla’s Model 3 Has Nearly 400,000 Orders

Tesla saw about 63,000 cancellations of Model 3 preorders

Tesla Second Quarter 2016 Update

Tesla Model X - Consumer Reports

First Model 3 Handovers

Tesla Built an Assembly Line Inside a Tent for Making Model 3 Cars

Tesla CEO: New “tent” assembly line is “way better” than conventional factory

Tesla CEO Elon Musk Admits ‘Humans Are Underrated’

Ford Introduced North America's Largest Electric Vehicle Charging Network

Credits

Executive Producer & Host: Kristofor Lawson.

Mixing & Production by James Parkinson.

Jasmine Mee Lee is our assistant producer.

Artwork by Andrew Millist.

Theme Music by Nic Buchanan.

Other music in the episode from Breakmaster Cylinder, and our ad music comes from Epidemic Sound.

Transcript

Elon Musk at Model 3 Launch: So do you want to see the car? [Crowd: YEAH] Well we don’t have it for you tonight… [ohhhh] I’m just kidding of course. [crowd laughs] It’s April Fools somewhere. Alright let’s bring them out.

KRIS: It’s March 31st 2016, and Tesla CEO Elon Musk is standing in front of a crowd at the Tesla Design Studio in Hawthorne, California. And he’s there to reveal Tesla’s new vehicle, the Model 3.

Elon Musk at Model 3 Launch: Do you like the car? Looking good?

KRIS: The Tesla Model 3 launch was one of the most important days for the company. Since the original roadster… Tesla’s strategy had been to produce vehicles for the early adopters at the top end of the market. The people who might be willing to spend $100, or even $200,000 on a car, and then work down to the everyday consumer. And the Model 3 was Tesla’s opportunity to reach that mass market, so Elon made sure to thank everyone that had helped Tesla get to this moment in time.

Elon Musk at Model 3 Launch: So the S and the X are what pay for that Model 3 development. So I just want to say, for all of you that have bought an S and an X - thank you for helping pay for the Model 3.

KRIS: The Model 3 was designed to be more of a people's car. It had some of the iconic Tesla features like Autopilot as standard, 215 miles of range, and could fit a family of five. And Elon wanted to make sure it had a price tag to match that ambition.

Elon Musk at Model 3 Launch: And then in terms of price, well of course it will be $35,000. And I want to emphasise that even if you buy no options at all. This will still be an amazing car - you will not be able to buy a better car for $35,000 or even close, even if you get no options.

KRIS: People wanting to buy a Model 3 were able to line up at Tesla stores ahead of the announcement and place a $1000 US dollar deposit to reserve their place in queue. And online reservations opened an hour before the launch, leading to a huge number of people putting their name on the list for an order before they’d even seen the vehicle.

Elon Musk at Model 3 Launch: And this is kind of crazy but I just learnt, was just told. The total number of orders for the model 3 in the past 24 hours has now passed 115,000. [Crowd Cheers]

Voice in Crowd: Sight unseen…. You Did it!

Elon Musk at Model 3 Launch: So… Thank you, that’s a lot yeah. Thank you to everyone that ordered the car - we love you.

KRIS: Just two days later - on the 2nd of April 2016 - Musk tweeted that there had been 180,000 reservations for the Model 3 and that the future of electric vehicles looked bright. he then updated that count to 198,000 - and recommended people place their orders as the wait time was growing rapidly. He then followed up with another tweet that said quote “Definitely going to need to rethink production planning…”

KRIS: By mid-April of 2016, the company already had close to 400,000 reservations,  cementing Model 3 as a definite success for the company IF they could get them delivered.

KRIS: From Lawson Media, This is Supercharged - a show about power, conflict, and the people who are driving change. I’m Kristofor Lawson, and this season we’re exploring electric vehicles, and how Tesla is forcing the entire automotive industry to move towards an electric future.

KRIS: This is episode three. Production Hell.

[Episode Montage]

KRIS: The huge interest in the Model 3 placed significant pressure on Tesla and CEO Elon Musk to find a way to scale their production. It also highlighted to other manufacturers that the mass market was ready for an EV.

KRIS: Less than a month after the Model 3 announcement. A Bloomberg news story said that Ford had paid a $55,000 premium to get their hands on a Founders Edition Model X - so they could examine the vehicle.

KRIS: Tesla was already in a race to produce a mass market EV - with the Model 3 being a clear competitor to the Nissan Leaf which was first released in 2010, and the Chevy Bolt which was due to release in late 2016. And the Model 3 launch firmly cemented Tesla as a serious contender.

KRIS: In Q2 of 2016 - Tesla delivered just 14,402 vehicles… 9,764 Model S and 4,638 Model X. During the same time they produced 18,345 vehicles, about 2000 a week, well short of the production capacity needed - especially if they were going to add the Model 3 to the lineup.

KRIS: Tesla’s quarterly update letter said “The Model 3 capacity expansion will reflect our initial efforts to apply our ‘machine that makes the machine’ philosophy to vehicle manufacturing, and demonstrates our intense focus on volumetric and capital efficiency.”

Elon Musk Q2 2016 call: “Basically we were in production hell for the first 6 months of this year, man it was hell.”

KRIS: This is CEO Elon Musk speaking on Tesla’s Q2 Earnings Call in August of 2016.

Elon Musk Q2 2016 call: “And then we just sort of managed to just sort of climb out of hell. Basically part way through June. And now where… the production line is coming, and our suppliers mostly have their shit together, there’s a few that don’t. One I’m going to be visiting on Saturday personally to figure out what the hell’s going on there. But we’ll solve it.”

KRIS: A large portion of this 2016 call covers how Tesla is trying to scale their production. Although if Elon thought that the first six months of 2016 were hard he had perhaps underestimated the huge challenge ahead.

Elon Musk Q2 2016 call:“The thing that’s crazy hard about cars is there’s thousands of unique items and you move as fast as the slowest item in the car. Um so, but yeah but that said production is… it feels like we’re… I’m not losing sleep at night literally because of production issues right now.”

KRIS: This Q2 2016 call is very clear evidence that Tesla’s production problems didn’t begin with the Model 3. In fact Tesla has struggled with production going back to the original roadster.

Revenge of the Electric Car: “I’m just headed to the Menlo store because I wanted to do a car by car walkthrough.”

KRIS: This is a clip from the Documentary ‘ Revenge of the Electric Car’. The film follows the early development of several electric vehicles - and the filmmaker Chris Paine was able to record Elon inspecting some of the original roadsters which Tesla was struggling to get out the door.

Revenge of the Electric Car: Well this is one of the cars we rejected…. Elon: “Holy Mackerel, Jesus. Yeah like we have like an army of cars here, Jesus.”... I’m looking like we’re going to be able to deliver four cars to the sales team, Elon: “This is frightening.”... “Right now we’re facing an issue which is that it’s sort of a crisis of confidence amongst the customers where you can only tell them to delay so many times and then they start to think, man is this company ever going to get me a car. “

Chris Paine: This is my car.

Elon: This is your car? This is actually your car?

Chris Paine: Number 23, right, number 23?

Voice: Yes.

Elon:  Ok, well you’ve heard the explanation now. So I guess hopefully it will have a powertrain tomorrow. I was just thinking actually it’s a nice choice of colours.

KRIS: Moving forward to the Model S. In 2015 Consumer Reports issued a statement based on 1400 survey response - many which complained of reliability issues with the Model S. Consumer Reports updated their rating on the vehicle and issued a statement saying “From that data we forecast that owning that Tesla is likely to involve a worse-than-average overall problem rate.”

KRIS: The Model X also suffered from problems which Elon said was due to integrating too much advanced technology into the vehicle too early. Leading Consumer Reports to issue a recommendation that said the Model X was quote “more showy than practical.”

KRIS: But the Model 3 - was designed to solve the problems of the past. It was meant to be easy to produce at scale. But given the huge volume of reservations Tesla now had to meet, and an over-reliance on trying to build the machine that builds the machines… it didn’t take long before things started going wrong.

Dana Hull: Well I think that the Model 3 was a really unique case. They designed the Model 3 to be simple to manufacture, but then Elon got really excited about designing the factory of the future, and they over-automated a lot of the production processes,

KRIS: This is Dana Hull from Bloomberg News.

Dana Hull: Late in the game realised that it wasn't working and went back to relying on manual labour. If you'll recall, Musk tweeted that he made a mistake, that the over-reliance on robots and automation was his, and they ended up building another general assembly line in a tent outside of the factory. I think that they've sorted out their production issues. They are manufacturing the Model 3 in higher volumes now, but they're nowhere near the volumes that they initially promised.

Dana Hull: Tesla is still learning how to do things like worldwide logistics. Right now, they're delivering cars not just in California but all across the United States, into Europe and into China as well. Just managing the logistics of getting these cars on ships and on transport trucks and getting them to the locations. I mean there's all kinds of stuff on social media from customers about, "I was supposed to take delivery on this date, and then my date was changed." I think the company is just going through growing pains in terms of having a robust internal network that can handle delivery and logistics and service and sales. And they're kind of growing so rapidly that they're building the plane while they're flying it in a lot of cases.

KRIS: On July 28, 2017, sixteen months after it was first announced, Tesla held an event at their Fremont Factory to celebrate the delivery of the first 30 Model 3s.

Elon Musk at Model 3 Handover: “There are many elements of the design… it’s difficult to say exactly what makes it good. But except to say that we agonise over every curve, over every detail, every corner, every element of the interior, the exterior. Including things that people probably won’t even notice. We care about every part of it.”

KRIS: The event was a significant milestone for the company… but it was also just the beginning of the problems Tesla was set to face around Model 3 as it began to scale up production.

Elon Musk at Model 3 Handover: “In terms of production, the thing that’s going to be the major challenge for us over the next six to nine months is how do we build a huge number of cars. Frankly we’re going to be in production hell. Welcome, Welcome, Welcome to Production Hell. That’s going to be where we are, for at least six months - maybe longer. But you guys know that, you’re veterans. You’ve been through this. So I look forward to working alongside you, journey through hell. As the saying goes, if you’re going through hell. Keep going.”

KRIS: The challenges facing the team would be significant - and Elon spoke about the Model 3 production problems in more detail a couple of days later in August on the 2017 Q2 Earnings Call.

Elon Musk Q2 2017 Call: “What we have ahead of us of course is an incredibly difficult production ramp. Nonetheless, I think we’ve got a great team. And I’m very confident that we’ll be able to reach a production rate of 10,000 vehicles per week towards the end of next year. And we remain, we believe, on track to achieve a 5000 unit week by the end of this year.”

KRIS: These numbers sounded ambitious at the time - but Elon assured investors not to pay too much attention to the interim figures, and that Tesla would certainly hit their 10,000 a week target by the end of 2018.

Elon Musk Q2 2017 Call: “When you have an exponentially growing production ramp, slight changes of a few weeks here or there can appear to have dramatic changes, but that is simply because of the arbitrary nature of when a quarter ends. But what people should absolutely have zero concern about, zero, is that Tesla will achieve a 10,000 unit production week by the end of next year.”

KRIS: During Q3 of 2017 Tesla delivered their 250,000th vehicle, and at the same time were struggling to ramp up production on their Model 3. Their 2017 Q3 update, released in November highlights that quote “the Model 3 production process will be vastly more automated than the production process of Model S, Model X or almost any other car on the market today, and bringing this level of automation online is simply challenging in the early stages of the ramp.” The company also predicted that they’d hit the magic 5000 per week production capacity for Model 3 towards the end of Q1, 2018.

Lora Kolodny: Tesla thinks of itself as a tech company, if, if not as much as than even more than a car company.

KRIS: This is Lora Kolodny. Lora covers Tesla, new vehicle tech and robotics for CNBC.com, and has written extensively on Tesla’s production problems.

Lora Kolodny: When I have interviewed employees through the last few years covering Tesla on a daily beat here, they, they say that you know, Elon Musk is an optimist and kind of a sucker for a beautiful 3d rendering. And he wants to embrace their ideas and vendors ideas about, again, sophisticated automation. Didn't always work out as planned, I think in part because leadership at the company isn't necessarily full of car, car, guys and car women, not people from the auto industry. But people from all walks all throughout tech, there are some from the auto industry, but they don't necessarily bring some of the hardwon lessons from other factory experiences into play there at the Fremont factory and at the Gigafactory and it showed up you know, he admitted later right, Humans are underrated, but they're still striving for automation. There are other reasons production hit snags as well.

KRIS: As Tesla tried to scale their Model 3 production problems due to the over reliance on robots became more evident. By February of 2018, Tesla estimated that Model 3 production rates would reach 2,500 by the end of Q1 2018 and 5,000 by the end of Q2… significantly behind schedule. One of the major issues Tesla faced was around their battery assembly line at the Gigafactory, and by the Q1 2018 Earnings Call in May - Tesla was only producing 2,270 vehicles a week - well short of their estimates. So something had to change.

[CBS - Gayle King]: Everybody get ready to meet the demand, we’re going to be in production hell. But you didn’t expect this kind of production hell or did you?

[CBS - Elon Musk]: No it’s worse than I thought.

KRIS: This is from an interview CBS Presenter Gayle King conducted with Elon Musk in April 2018. In it Elon blames the complexity of new technology in the Model 3, along with robots, as being key hurdles the company had to deal with to scale production.

KRIS: Elon detailed some of the issues further in Tesla’s Q1 Earnings call on May 2nd.

Elon Musk Q1 2018 Earnings Call: “One of the things that we’ve also found is that there’s some things that are very well suited to manual operation, and some things that are very well suited to automated operation. And the two should not be confused. So I should be clear that the vast majority of the Tesla production system is automated, however as I mentioned in a tweet a few months ago, we did go too far on the automation front and automated some pretty silly things.”

KRIS: Elon then details one of these silly problems that the Tesla team had tried to fix with a robot, the placement of a soft, fibreglass lining on their battery packs.

Elon Musk Q1 2018 Earnings Call: “So we had Flufferbot, Which was really an incredibly difficult machine to make work. Machines are not good at picking up pieces of fluff. Hands are way better at doing that. So we had a super complicated machine, using a vision system to try to put a piece of fluff on the battery pack. Then one of the questions I asked was do we actually need that? So we tested a car with and without, and found that there was no change in the noise volume in the cabin. So we had a part that was unnecessary, that forced line kept breaking down, because Flufferbot would consistently fail to pick up the fluff, or put it in a random location. That was one of the silliest things I found.”

KRIS: As pressure mounted for Tesla to scale their production demands around Model 3… the team realised that they couldn’t hit their target without creating a new production line. And that production line had to be assembled quickly. So in true startup style Tesla built a whole new line called GA4 in a kind of giant tent. Here’s CNBC’s Lora Kolodny again.

Lora Kolodny: When we talk about GA4 that stands for General Assembly Four. It became colloquially known as the tent. Right. One of these short seller citizen journalists spies, you know, what was photographing scenes around the factory from the street level and just looking in on what the public could see. And sort of surface the story that Tesla was building a tent because they had to expand capacity. You know, that, that caused, like a huge amount of interest, how could you do precision manufacturing in the open air like that? There's been fascination around that for a while.

KRIS: Tesla’s tent structure was built in a matter of weeks, and quickly became a vital part of the Model 3 manufacturing line. In Tesla’s Q2 Update on August 1st of 2018, the company announced they’d hit their 5000 a week production capacity for Model 3 vehicles in July. Many people thought the membrane structure would be a temporary solution, however, it became clear that it would be a more permanent fixture, so Lora started looking deeper into how Tesla was producing vehicles in this open air facility.

Lora Kolodny: I got really interested in after this, you know, several months after that, as a tent remained and it was it was clear that this wasn't just a thing that went up for one season that was actually you know, contributing to the volume of Model 3s they could produce. What are the advantages? What are the disadvantages? What is it like working in there?

KRIS: Lora was able to speak with a number of employees who worked at the factory… and who had roles in these open air facility. And I do want to be clear - while it is referred to as a tent, it is actually membrane structure… and there are a number of them which house different elements of the production line, such as quality assurance.

Lora Kolodny: I learned that the amount of time they have to complete a single task working in this long assembly line was always shrinking right over time. So many of them felt they didn't have time to properly complete a task and check that their work was done correctly. There was a lot of non automated systems to evaluate, you know, whether this this was torqued incorrectly that was, you know, put in place just so the threading was, you know, aligned. And, you know, that was a universal complaint, right, like they keep taking seconds off the time there's so much pressure to produce more cars and less time that we don't, we don't have enough time to do this right. And also, we're, we're doing complex physical tasks over and over again, walking with this heavy equipment down the line. It's not like what I expected. What I expected is someone's like practically sitting in as in a chair or on a stool or something and just kind of like doing light assembly or fixing things into place and most of the jobs don't sound like that within GA4 there's a good amount of walking up and down the line fixing things in motion as they roll past slowly but still, you know. So the time pressure figures, it sounded like an atmosphere of real camaraderie. You know, some people were allowed to listen to music on the job and things you couldn't experience inside the brick, which is, you know, the indoor part of the factory, the much more automated part of the factory.

KRIS: Tesla has a number of different Factories around the world, including Gigafactory 1 in Nevada where battery packs are made, Gigafactory 2 in Buffalo New York - where Tesla’s solar cells are made, Gigafactory 3 which is being built in Shanghai, and Fremont where the majority of vehicles are assembled. Lora published her investigation in July 2019, and detailed a number of issues with the GA4 assembly line at Fremont… and two of the people willing to go on the record were Carlos and Maggie Aranda.

Lora Kolodny: Carlos had been injured on the job in just at the end of the year in 2018. And he wasn't sure when he was going to get back on the job. And he had he had tweeted something about that, you know, like, I you know, it's injured on the job. I'm having trouble sussing out my benefits, whatever it was. Huge Tesla fanatic, this guy had been, you know, an employee of the month, and other things like that. And you know, he was really enthusiastic about the electric vehicle mission and excited about Tesla, but he was just frustrated in dealing with this injury.

Carlos Aranda: My name is Carlos Aranda, I'm 42. I'm pretty much a family man. I just worked hard all my life and a little bit to my story of Tesla.

KRIS: Carlos grew up in the bay area in a small town called Antioch… he’s been married for 20 years and has two kids. And in 2017 was working at Walmart earning around $14 an hour. The pay wasn’t great so he was looking around for other work to opportunities, and at the time he saw an ad that seemed too good to be true.

Carlos Aranda: Starting $18 an hour auto assembly line. Uh, no experience needed really. So I applied for it and kind of forgot about it. Uh, six months later they got back to me and asked me to come in for an interview.

KRIS: Carlos had to pass a number of tests to make sure he could physically do the work, and he eventually got the job.

Carlos Aranda: Well, my position I picked up originally was a parts person to deliver parts. Um, then they told me that that was unavailable. So I was going to be picking up garbage and trash around the factory, which I said okay. I really didn't to do, but I would do it just to get my foot in the door. And then eventually they said they were going to just put me on the assembly line.

KRIS: Carlos says he started work at Tesla in September of 2017. Right as the company was trying to scale production of the Model 3, and well before there was ever any talk of a tent. But as someone who had never worked on a vehicle assembly line. Carlos says the first day was a lot to take in.

Carlos Aranda: Oh my God. It was overwhelming seeing all these big machinery and people moving fast and uh, not really realising that I had to be a conscious every where in the factory because everything is electric. So you can hear the forklifts, you can hear the trams, you can't hear any of the moving vehicles through the plant. So it was kind of like, you know, the noisy as was in there, you can't hear those things and they whizz right by you. Um, this factory was huge and that he's never been into a plant before like that at all. And so just being able to look around and kind of like, what did I get myself into kind of thing.

KRIS: When Carlos started on the assembly line, he says he was working on a fairly easy task that involved putting the chrome mouldings over the door.

Carlos Aranda: It was a simple operation where you came in, the car came to your station and you just put the moulding piece, you put the first, uh, 11 gromits in, you put the moulding piece, use screwed the 11 shots that need to be, uh, into the moulding. And then that was it. And the car would go onto the next station. But when I first started, when, when the Model 3 first took off, um, we were doing probably maybe like four cars a day.

KRIS: Carlos says the initial days he worked an eight hour shift - however as those four cars quickly became 50 and then eventually 120, he suddenly found himself working twelve hour shifts, although he didn’t mind it because the pay was really good. He says he loved working at Tesla and the team that was around him were really friendly.

Carlos Aranda: Management was really great at the time. Supervisors were great. The man, the main managers of the running the factory shifts were, were great. The people I worked with, um, I loved, but as time went on in the more cars were pushed, it just seemed like everybody kind of lost that friendliness. Everybody kind of lost that coma commodity and it just like, we just went backwards and that kinda hurt everybody.

KRIS: As Tesla started to prepare for the new GA4 production Line in 2018, Carlos says there were a lot of people hoping to use that as an opportunity to move up in the ranks. He applied and was hoping to become a lead - it meant more responsibility and an increase in pay.

Carlos Aranda: Uh, my boss came up and told me cause I wanted to go and I was just, I kind of gave up too and and lost heart 'cause I seen everybody going out there and they were getting promoted and um,

Carlos Aranda: That's all I kind of got upset and I just kinda was just like, I guess this is in a bad mood for a couple of days on boss was like, what's wrong? And I said, well, I would love to go up here, you know, GA4, you know, he said, Oh yeah, well you're, wherever your transfers are already waiting for you. We just gotta wait for the end of the week. Then he told me, uh, at the beginning or the end of, uh, of may that I was going to be heading out there into a, probably around the middle of June. So, uh, when I went out there, I was kind of surprised. It only took me about two and a half weeks and they made me a lead, which finally got me the promotion that I wanted. Um, so, and that's how I started out there.

KRIS: Carlos says the transition to the open air tent meant there was a lot of figuring out how to do tasks that in the main factory had been done by a robot.

Carlos Aranda: ...because there was a lot of, parts of there were heavy and we had to figure out how to put the, the dashboard and how to, how to put a few other components into the car without hurting people. ‘Cause a robot would just pick it up and push the right in and we would just be able to shoot the shots and, or bolt anything down. And now we're just trying to figure out how we were gonna, um, kinda manually manhandle these things in there.

KRIS: As the Model 3 production ramped up, Carlos found himself doing night shifts. And Elon Musk had even tweeted that he was sleeping on the factory floor at Fremont. And Carlos says that staff were scared of Elon when he would turn up to inspect their work.

Carlos Aranda: Amongst my peers and the people that worked for me, it was kind of crazy for them cause they didn't believe that he was there. It was always like a myth or rumour. Um, I have kind of worked with him off and on a little bit just on plans and things that he wanted done. Not really person to person kind of thing. But, um, just some plans that he had handed down to he wanted me to work on. And so I, with the at one point we had a thermal bar issue, which keeps the battery hole and the robot stopped working. And so we had to figure out a way how to do that. And so, and we eventually we came up with the, with the process of putting the amount of thermal bars in manually, which was kind of a risky cause it's uh, it's, uh, it's a lot to do. It's a heavy thing. It's 40, 50 pounds and lifting 40, 50 pounds about 90 times a night. It puts you in a lot and a lot of risk of being hurt or pulling muscles and just getting hurt in general. And so that's one of the things we did about when they would, uh, see him come. Everybody would kind of be afraid and everybody would get to work. The managers would come and tell us, Hey look, Elon's coming down. He's checking our work. Uh, make sure that, you know, everything's clean, everything. You guys are doing your work and no one's on the phone. And it was kind of a thing that everybody was just really afraid when he would come into the tent.

KRIS: The open air structure also meant workers were exposed to the elements… whether that be cold weather, or even smoke from wildfires nearby.

Carlos Aranda: When there was fires and things like that, you would smell the smoke. Uh, when it gets cold outside, you definitely would freeze. During the summertime they would have to bring out swamp coolers to keep us cooled down. Um, it was a lot different than the factory, the factory where we didn't have any of that stuff cause the factory had a filter [which] would filter out smoke. Uh, we wasn't really cold. It wasn't really hot. Uh, except for the few couple of days that we were really hot in Fremont. When I started first off on the job, I believe it was around 105 and maybe about 110 in the factory.

Lora Kolodny: The things workers told me besides working through the smoke, that poor air quality without good air filtration masks, at least on the first day and even after that, if these kind of paper masks you see at the hardware store, you know, like, if those didn't fit you you just worked without. You know, you couldn't bring in your own more sophisticated equipment because it had to be given to you by Tesla eventually. Yeah. And it wasn't available immediately. It was after a bunch of people complained. And, you know, it wasn't if those particular face masks didn't fit you so some people who are more petite like that, that wouldn't stay on their face or some people who are larger than these like kind of one size fits all didn't feel good to keep it on and so they just worked without...

KRIS: Lora’s story also detailed a number of issues with the quality of work being sent through the production line. There are photos of electrical tape being used to fix problems, and vehicles being let down the assembly line with bolts not torqued down correctly.

Lora Kolodny: I had photographs from multiple sources, there were more photos than you saw published that we shared with Tesla to get their responses. There were, you know, we we spent ample time at Tesla waiting for their responses to that story. And you know, what, what we were able to verify, we published, what we couldn’t verify we didn't publish.

KRIS: Some of the photos are included in Lora’s CNBC story which we’ll link to in the show notes of this episode. I should add, that in coming forward workers were certainly placing their careers at risk if Tesla were to ever find out. The company does have a history of going after whistleblowers who share information with the media. An employee who worked on vehicle testing at Tesla, told me that that should confirm some of the reports of culture at the company, and that their only regret was quote “staying longer than the one month it took to revamp my resume.”

KRIS: Another former staffer at Tesla’s european plant in the Netherlands - told me that the workload was significant and that they would be getting to work early, and coming in on weekends to keep up with the pace. I should add that it seems the experience at the Netherlands office is somewhat more positive than at Fremont. This staffer told me that despite the workload created by Tesla’s rapid expansion through Europe, workers were genuinely excited whenever Elon would turn up.

KRIS: For Carlos Aranda though - his positive experience at Tesla changed when he was injured on the job. Carlos says he was working in alignment and got plantar fasciitis in his feet after having to jump in and out of vehicles all day. He dealt with this for a few months - however in December of 2018 his hands became injured from some of the repetitive work he was doing.

Carlos Aranda: We had special torque wrenches to, uh, untorque the wheel so that we could get the proper reading, uh, of the wheels. We set them straight, uh, put the little electric boots on to, uh, metre them. And sometimes my guys would, uh, actually torque them too tight with the torque wrench. And so we didn't have enough time. I would have to go in there with a little Crescent wrench and, untorque them. And you're talking about something that, you know, a robot would have done a kind of strength. Um, they're done in Newton metres, which in in our regular basis, you know, you're talking about a lot of torque. Uh, some are probably around 12 to, you know, 1200, uh, uh, in torque to, uh, torque these bolts on.

Carlos Aranda: And so I would have to go in with a wrench and kind of loosen them and do that over and over and over again when I finally felt, uh, a sharp pinch in my left wrist and kind of hurt for awhile. So, you know, I took some time out. I told my guys, go ahead and take my place, you know, and then I went back in and told my manager, I said, Hey, look, my wrist hurts. Uh, I need to see the nurse. And that's part of Tesla's policies. When you get hurt, they send you to the clinic, there on site and you get seen.

KRIS: Carlos says Tesla provided him some initial support by way of a therapist, however he had to take a leave of absence from his job, and in January 2019 he was able to see a doctor.

Carlos Aranda: Went on leave, seen my doctor and my doctor said I had a carpal tunnel and they're both wrists and cubital, uh, in my elbows, which is a par... is a really painful thing to, you know, where you can't sleep at night, you, it's hard to do anything basic again. And that's kind of ah, the beginning of the entry status from when I got injured.

KRIS: Over the next several months Carlos worked on his recovery and was hoping that he would eventually go back to work. However the recovery was taking longer than expected. His wife Maggie also worked on the production line, so the family still had one stream of income. However with his mounting medical expenses, Carlos says at one point they were $5,000 behind in rent. And in June had to give up their home. Around the same time - Maggie was fired from her position at Tesla due to cellphone usage which Carlos says was because she was helping to organise appointments for his care. The pair even started a Go Fund Me to help cover their expenses. But it was maggie’s firing that was the last straw for Carlos. On June 18 he posted a tweet that said quote “ am so sick of Tesla giving me the run around. I am about to quit and burn them to the ground. With what I know I can put a big monkey wrench in the works.”... and on June 24 he emailed through his resignation to the Tesla HR team.

Lora Kolodny: Tesla told us, they fired him, but we had all the evidence to the contrary. He showed me the email that he had resigned. It was dated. He showed me that Tesla emailed him within a day or a few days saying, we expect you back at work on Wednesday, you know, so they clearly hadn't processed the resignation up to whatever management HR etc. And then only after he reminded them he had resigned. Did they send him some kind of correspondence in saying, oh, you're, you're dismissed. Right? Right. We looked at all that. And so we reported that he said he resigned and we saw that email. And that's what it looked like...

KRIS: I have also seen copies of these emails and they do support Carlos’s version of events.

Lora Kolodny: Why did Tesla say that they fired him? They said that he posted something on social media that violated their workplace, one of their policies or another. And it was some hot headed tweet or social media post.They didn't, you know, provide any evidence they had actually fired him though, and they may have very well been limited to what they could disclose because of you know, HR and confidentiality stuff, but, but again, I had his resignation email, an email from his management saying, we expect you back at the factory, you know, to do this. I had more emails showing that he said, Hey, by the way, I already resigned so I don't know why you're sending me this. And you know, I was sitting there looking over all this stuff with him in person, you know, doing an interview, which again, I had reached out many, many months before, at the start of the year, and it took almost a half a year before he was ready to talk.

KRIS: When I spoke with Carlos, he and his wife Maggie were living in their car - a 2015 Nissan Altima. He said they would park outside the Great America theme park where they both had annual passes, so that way they had somewhere they could go to get food and have a shower. After resigning Carlos also had what appeared to be an issue with his heart. So had to go to the hospital for two days. This hospital trip significantly increased his medical expenses, which at the time of recording they had no way to pay. I’ve seen evidence of these hospital bills, and the most recent medical bill they sent me was for $24,000. However, I've just learned that both Carlos and Maggie have been able to find new jobs and are slowly beginning the process of working their way out of debt.

KRIS: I do want to be clear that I’m not saying that the same experience Carlos had is the norm at Tesla… but there are many reports from different news outlets that document the experience of employees who have been injured on the production lines. I’ll link a few of them in the show notes. Tesla has tens of thousands of staff - however when you’re growing quickly it can be easy to overlook the basics, and a company of that size should certainly do whatever they can to look after all their staff.

KRIS: The Model 3 may have caused production hell for Tesla, but it also inspired many across the automotive sector to take EVs seriously. So how does the competition stack up? That’s coming up right after this break.

[AD BREAK]

Anthony Agius: It’s pretty much like any other Hyundai in that it’s just a normal Hyundai style sedan car really, but when it takes off you notice that there’s no engine smell.

KRIS: It still has that nice new car smell.

Anthony Agius: Yeah, it does. It’s a nice new car which is always good.

KRIS: This is Anthony Agius. Anthony writes about tech for a living. He runs a newsletter called The Sizzle, and writes for websites like DriveZero. And we’ve just jumped in to his EV - but unlike the other people we’ve spoken with in this series. Anthony doesn’t drive a Tesla - he drives a Hyundai Ioniq.

Anthony Agius: Driving it, it’s not like you’re in a spaceship like a Tesla kind of thing. Fancy, luxury car. But it’s a lot smoother to drive than a petrol car. It’s when I go from an electric car to a petrol car, it’s like driving a tractor. It just feels so rough and vibrations, and which I never noticed until I owned an electric car. But yeah, you really notice the difference when you’ve driven one for a while and gotten used to it.

KRIS: I mean, I guess it kind of like changes your relationship with vehicles?

Anthony Agius: Yeah, I mean. All I know is I actually tend to drive more because it costs so little to drive. And it’s like why not drive there? Over the petrol car, it’s like well alright I’ve got to pay for petrol, I know that the carbon emissions are not good, whereas with an electric car there's no carbon emissions if I charge from my solar panels. And the power costs like 19c a kwh compared to 1.50 a litre for fuel. Alright I’ll go and drive there.

KRIS: Tesla’s ambition in the EV space has certainly inspired the whole industry to take notice. Every car manufacturer is working on some kind of electric vehicle with popular competitors to the Model 3 being the Nissan Leaf, the Chevy Bolt, and the Hyundai Ioniq. However Tesla still holds the lead when it comes to range, and charging infrastructure.

KRIS: So what kind of range can you get on this?

Anthony Agius: This one you get about 200km. On the freeway you get a bit less. If I drive it to Ballarat from here, I get about 180 or so. Whereas if I'm driving to Melbourne I get about 220, 230. So I kind of estimate for most of the time about 200km.

KRIS: Which is not a whole lot, but it’s also a significantly cheaper vehicle than buying a Tesla?

Anthony Agius: That’s right, I mean I would prefer 300km or 350. There’s not enough charging stations around Australia to actually go on those long trips. I kind of have to plan. I can’t go more than really 100km from home, unless there’s a charger somewhere along the way. And there’s a few slow chargers, like the one I have at home, that take about two, three hours to put more power into the battery. But not those rapid chargers that can do about a full battery in 20 minutes. There’s about 60 in Australia at the moment and that’s obviously not enough for a country the size of Australia and the population of Australia.

KRIS: As we mentioned in episode one - Tesla’s supercharger network is one of the huge draw cards to owning a Tesla, with more than 1600 supercharger locations around the world. Each of those locations might have multiple superchargers - meaning there are more than 14,500 in total. And Tesla have been very strategic as to where those superchargers are placed. In Australia for instance, the rollout initially focused on popular driving routes, such as Sydney to Melbourne - to make sure that Tesla owners could get between Australia’s most populous cities.

KRIS: When people talk about EVs often the topic of range anxiety comes up. I’ve spoken with a lot of Tesla owners and for many of them range anxiety is not really a problem. The combination of longer battery range, and the vast amount of charging points means that owning a Tesla doesn’t result in the same kind of anxiety that exists with other manufacturers.

Anthony Agius: I get home with about 20 kilometers of range left. So, you’re kind of cutting it close when you should have a lot more battery than that. Because a 200km, or 120km round trip, should leave me home with about 80 left, but I get home in real world with about 20 or 30. Which is, unless you plan for that, you could be left stranded.

KRIS: Ford is one company that has realised the importance of having places to charge and has been rolling out their Fordpass network. They’re basically rolling out some of their own charging stations along with forming partnerships with other providers like Electrify America - to deliver more than 12,000 charging locations across North America.

KRIS: In Australia Chargefox have been rolling out their charging network - mainly on the East Coast. And in New South Wales, the NRMA are installing 40 fast charging locations around the state…. But a lot of the problems with range anxiety can certainly be solved with improved competition and performance from Tesla’s competitors.

KRIS: In recent months we’ve seen other players enter the market including Porsche with their Taycan - an electric that will have around 250miles or 400km of range, and do 0-60 in just 2.8 seconds. The Porche Taycan is clearly designed to be a competitor to the new Tesla Roadster which is due to be released in 2020.

KRIS: Then there’s the Ford Mustang Mach E. Which will have a 300mile or 480km range, and do 0-60 in a bit over 3 seconds.

Mustang Promo Video: “An All-Electric zero emission game changer. Delivering guilt free performance for the next generation of thrill seekers. The newest member of the Mustang family - The Mustang Mach E”

KRIS: The Mach E seems a competitor to Tesla’s Model Y SUV which is due to hit the US market in 2020. Although the Model Y can be configured with a long range version that can reach a slightly higher 335miles or 540km range.

KRIS: Volkswagen are also looking at EVs as a path away from their diesel emissions disaster. In 2020 they’re planning to release the ID, a small almost beetle like car that can do 600km on a single charge, and the ID Crozz SUV which can do 500km. And in 2022 they’ll also have the ID Buzz, which is clearly modeled off the old Kombis.

KRIS: Jaguar have the iPace which can do 470km, and Hyundai also now have the Kona Electric which can do more than 400km.

KRIS: And then of course… we have the trucks. With Ford talking about bringing an electric version of their popular F150 to market within a few years, and EV startup Rivian are also entering the truck market.

Rivian Promo Video: “It’s a pickup truck that performs like a sportscar, does well off road, and has the range of a gas vehicle.”

KRIS: Rivians R1T is designed to be a clear competitor to Ford’s F150, with 400 miles of range and all the features you expect in an adventure vehicle.

KRIS: And then… we have Tesla’s Cybertruck.

Elon Musk at Cybertruck Launch: Welcome to the Cybertruck Unveil… trucks have been the same for a very long time.

KRIS: Elon proceeds to show a bunch of photos of the existing trucks on the market before telling audiences about the importance of Tesla having a pickup.

Elon Musk at Cybertruck Launch: To solve sustainable energy. We have to have a pickup truck. So I present to you the Cybertruck.

Lora Kolodny: I was sort of reporting from the live stream. Right. And my instinct usually when there's breaking news is published quick.

KRIS: Here’s Lora Kolodny.

Lora Kolodny: But initially, I was in certain if like the sides of that thing, we're going to fall off and reveal like some more traditional looking, at least by Tesla standards vehicle. And then you know, I kind of, I kind of smiled and and saw it is what it is, which is, hey, it's if you can't, you know it's Elon will never say if you can't beat them join them he's going to try and beat him every time, right? And not like I know the guy personally but just from my observations of the way he does business. And so with f150 an electric version of the f150 pending and other EV pickups come into the market like Rivian has got the backing of Amazon and there are some others in the works hybrid and pure battery electric. I think Tesla said, let's just do  Tesla, let's go completely distinct. Gamer culture resonates, you know, let's, let's go for the design that our people love. And we'll do the features that we think we can do best and I mean it's just a prototype, there's no way that's production vehicle and it was a lot of fun for people I I almost understand why they did it that way there's part of me that thinks they're they're giving up a chance to make and sell a more popular vehicle. This is more like a Hummer, right it's like a truck, bro, truck like it's, it's for flashy, flashy kind of marks of distinction. It's not really it doesn't sound all that utilitarian necessarily. We'll see. I mean, I don't want to I don't want to prejudge to this extent, but it's, it's, um, it was, it was a fun reveal.

KRIS: Almost as soon as Cybertruck hit the stage the memes began. Cybertruck has been compared to a low bit-rate version of a regular truck… with it’s clean lines and flat edges. Along with its stainless steel body that can supposedly stop a bullet. And they demonstrated this by having lead designer Franz von Holzhausen hit it with a sledgehammer.

Elon Musk at Cybertruck Launch: Now don’t hold back… [Bang as sledgehammer hits truck]

KRIS: The windows were also meant to be armoured glass, and Tesla made a point of dropping a ball on various panes of glass to see how the Tesla’s glass would stack up. All was going to plan, until Franz, threw a metal ball into the window of the Cybertruck on stage, and the windows suddenly cracked.

[Franz throws ball at window and it cracks]

Elon Musk at Cybertruck Launch: “Oh my Fucking god. Well maybe that was a little too hard”

KRIS: He then threw it at the rear window, and that also cracked.

Elon Musk at Cybertruck Launch: “It didn’t go through.”

KRIS: Now I don’t believe that the smashed windows were a PR stunt, however it certainly worked. Even the Australian Broadcasting Corporation covered the announcement, and usually they would have ignored it for reasons of bias.

KRIS: It now seems Tesla has a huge task on their hands to build another production line to suit this especially unique vehicle. With Elon claiming there have been more than 250,000 reservations, although as Lora points out - these are very different from the reservations of the past where people had to put down a significant deposit.

Lora Kolodny: The lay person, you know, maybe someone who's really in like sharp on business, but not following Tesla's kind of saga of pre orders, reservations, you know, all these things which have changed over time, so you have no apples to apples comparisons virtually vehicle to vehicle for Tesla. And they wouldn't necessarily parse a preorder is just like a little refundable fee put down that's just 100 bucks and it doesn't commit you to anything. It doesn't commit Tesla anything. They don't have to deliver you this vehicle. They don't have to ever even make the vehicle your hundred bucks is refundable.

KRIS: From everything we’ve learned about Tesla it’s clear that they are unlike any other car manufacturer so is tesla actually a car company? Are they a tech company? Or are they a battery company?

Lora Kolodny: They better be a car company. I mean, that's, you know, 4000 pounds plus of, you know, vehicle vaulting down the street. And if they're not a car company, that's if they don't have a car company mentality. In addition to the tech company mentality, it's just doesn't bode well. So I think they have come to realise they are as much car company but like I said, the, you know, I think Elon was a software guy. He's also an aerospace guy, but his early success was in software. And so I think that that and the just the start of the company here in Silicon Valley. It was tech, you know, hardware, hardware and software both but still tech. They act like a tech company business model wise I, I hope they've come to realise they need to also embrace the best of automotive practices for manufacturing safety, safety testing, you name it.

KRIS: Coming up in the next episode of Supercharged…. Tesla’s vehicles are full of technology, and one component of that is causing a lot of controversy.

[Episode 4 Montage & Credits]

[ENDS]

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