Today’s news of a fire at the Fremont CA headquarters of Tesla Motors should be a wake-up call to any bulls left in the building about the situation there.
A pile of cardboard to be recycled caught fire, likely through negligence and is a perfect metaphor for what’s coming next for the company.
And it’s a shame. It didn’t have to be this way. So many good people put years of their lives into this project only to see it crumbling under the weight of Elon Musk’s enormous ego.
Musk should have stepped aside as CEO ages ago. A proper production manager should have been put in charge while Musk remained chairman of the board.
I’ve worked for plenty of small companies that couldn’t scale their production to meet their opportunities or, worse, their commitments. Tesla is a classic example of what happens when the hype outpaces the reality.
Earlier this week Zerohedge ran a story that 4300 out of 5000 Model 3’s produced in Q2 needed some amount of re-work done.
The same report also gives those closely following the Tesla saga additional color what the term “factory gated” could mean. One would guess that Musk can’t put most of these 5,000 vehicles – about 20% of which were built in Tesla’s GA4 assembly tent – on the road, when more than 86% of them need to be reworked. Internal documents revealed that these reworks came during the week of June 23 and that each one took about 37 minutes to complete.
As we noted previously when we discussed Tesla’s 5,000 Model 3 accomplishment, today’s report would confirm that the company sacrificed quality in order to boost quantity. As a result, instead of 5,000 new vehicles out on the streets, most were likely “factory gated”. In other words, they needed to be fixed.
I don’t blame the workers here. They are working their literal asses off. This is the fault of management. Management has not put into place the right controls and processes to scale up production to the levels needed to fill outstanding orders of Model 3s.
And Musk making the claim that the company could do this while knowing he couldn’t, is not just tantamount to fraud it IS FRAUD.
And anyone who still thinks Tesla is on the verge of taking over the car industry needs to have their head examined. The Model S is a 15 year old design. The Model 3 is already a 4 year old design and they can’t even build those.
Car industry sales are dominated by fickle consumers who have such a wealth of choice that they can demand incremental improvements every year while the companies scramble to retain their loyalty.
No matter how much you want to virtue-signal about your commitment to fighting global warming at the end of the day Tesla isn’t immune to this very real market dynamic.
Today’s fire is emblematic not only of Tesla’s future but of its past, it has burned through so much capital and wasted so much time just so we can genuflect at the altar of global freaking warming and a couple of grams of carbon dioxide.
Fire is supposed to destroy the old to allow the new to flourish. And Tesla has plenty of IP and patents it can sell to get shareholders back some small portion of the invested capital.
So, while Elon today is praising the fire department for their quick response to the situation, I honestly was saying, “Don’t do that…. let it burn.”
Anything to put this nightmare holdover of the insanity of the Obama years behind us.
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