Tesla Inc (TSLA)

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Tesla shares tumble on report of costly flaws, rework at Fremont factory
By: Silicon Valley Business Journal | March 14, 2018

Tesla shares dropped 4.45 percent on Wednesday after a CNBC report said the company is churning out large numbers of flawed parts and vehicles on the Model 3 production line at its Fremont electric car factory.

"One current Tesla engineer estimated that 40 percent of the parts made or received at its Fremont factory require rework. The need for reviews of parts coming off the line, and rework, has contributed to Model 3 delays, the engineer said," CNBC reported. Another current Tesla employee told CNBC that employee morale is suffering from the production delays.

A Tesla spokesperson denied the report. "Our remanufacturing team does not 'rework' cars," the spokesperson said in a statement to CNBC.

Tesla employees say automaker is churning out a high volume of flawed parts from CNBC.

The modestly priced Model 3 sedan, Tesla's cheapest vehicle to date, is key to the company's future as an automaker for the masses.

Tesla acknowledged earlier this week that it briefly paused Model 3 production at the Fremont factory last month to give it time to make improvements to its manufacturing process.

“Our Model 3 production plan includes periods of planned downtime in both Fremont and Gigafactory 1,” Tesla said in a statement to reporters earlier this week. “These periods are used to improve automation and systematically address bottlenecks in order to increase production rates. This is not unusual and is in fact common in production ramps like this.”

Tesla has said it wants to produce 2,500 Model 3s per week by the end of this month and ramp up to 5,000 Model 3s per week by late June. The Model 3 is Tesla’s most affordable car, with the base model starting at around $35,000. More than 400,000 people are on the Model 3’s waiting list, which means it’ll likely be nearly two years before the company is able to work its way through the car’s existing demand.

Tesla has about 10,000 employees at its Fremont factory, making it the Bay Area and California's largest manufacturer.

https://www.bizjournals.com/sanjose/news/2018/03/14/tesla-model-3-production-rework-report-tsla.html?ana=yahoo&yptr=yahoo

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