Tesla Disputes Report of Numerous Defects on Production Line

Investor’s Business Daily

November 30, 2017

Brian Deagon

More than 90% of Tesla Model S and X autos rolling off the assembly line have defects that need repair, a report from Reuters says, citing unnamed employees of the automaker.

The alleged defects include doors not closing, water leaks, missing parts, loose objects and more, the report said, attributing nine current and former Tesla workers.

Tesla disputed the workers’ portrayal of the automaker as struggling to produce defect-free vehicles. The report on production defects comes as Tesla is in the midst of ramping production of its Model 3 sedan, which is aimed at the mass market.

According to Tesla workers interviewed by Reuters, while production snags are normal with any new launch, chronic defects with Tesla’s established Models S and X show a company still struggling to master basic manufacturing. Tesla began manufacturing its first car, the Model S, in 2012 but has been notorious for missing production deadlines.

Tesla responded to Reuters, saying the majority of its post-assembly defects are minor and are resolved in a matter of minutes. A spokesperson said Tesla has a rigorous process that requires all cars to pass more than 500 inspections and tests. Rework on cars after assembly reflects the company’s commitment to quality, the spokesperson said.

“Our goal is to produce perfect cars for every customer,” Tesla said in a prepared statement. “Therefore, we review every vehicle for even the smallest refinement.”

Tesla in October said it delivered 26,150 vehicles in the third quarter, up 4.5% from the year-ago period, but added that “production bottlenecks” were crimping its planned ramp-up for the Model 3. Tesla said it made just 260 Model 3 cars, short of an expected 1,500 units for the quarter.

Tesla posted third-quarter results on Nov. 2 that missed earnings expectations by a wide margin and revealed that production woes with its new Model 3 continue, as it pushed out production targets. Tesla had intended to build 5,000 Model 3 sedans per week, starting in the fourth quarter. It now expects to hit that target by late in the first quarter of next year.

Tesla shares closed down 3.2%, to 307.54 in the stock market today. Tesla shares are up 43% this year.

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