Is the quality of Tesla’s Model 3 suffering due to the company’s push to pump out more units? That’s one takeaway from a new report from CNBC which alleged shoddy workmanship at Tesla’s open air production tent in Fremont, California, including fast fixes with electrical tape and skipping vehicle tests in order to hit the company’s production targets.
Ahead of next week’s second quarter results from Tesla (Tesla News, Stock Quote, Chart NASDAQ:TSLA), investors are hoping for better news than what came with its Q1 in April when Tesla missed analysts’ forecasts on both earnings and revenue, with indications that demand for the company’s electric vehicles was slowing.
But earlier this month Tesla came out with better news, showing a record number of cars delivered during its Q2 2019. The company posted deliveries of about 95,200 cars, the majority of which were Model 3s, in comparison to industry analysts’ expectation of closer to 91,000.
But the unrelenting focus on output may be impacting quality, at least according to CNBC’s report on Monday which claimed that Tesla workers spoke of being pressured to take shortcuts to hit production targets, such as working through harsh conditions and skipping previously required vehicle tests.
“They detailed and provided some pictures of shoddy workmanship, to say the least, including electrical tape being applied to some brackets, some nuts not being applied in certain areas but also outlining how the conditions there were not always the best,” said CNBC’s Phil LeBeau on Monday.
“All of this was in effort to increase Model 3 production — and remember, this has been the focus for Tesla for more than a year, the Model 3, the mass-market vehicle,” he says.
Tesla responded to CNBC’s claims by saying, “Dedicated inspection teams track every car throughout every shop in the assembly line and every vehicle is then subjected to an additional quality control process towards the end of the line, and all of this happens before a vehicle leaves the factory and is delivered to a customer.”
But LeBeau claimed the rush to up production numbers has already impacted the quality of Tesla’s product, pointing to Consumer Reports, which earlier this year pulled its recommendation of the Model 3 after receiving thousands of owner reviews which spoke to poor build quality.
“If you look at Consumer Reports, if you look at other independent third-party sources that track the reliability of vehicles, the reviews on the Model 3 are not good,” said LeBeau. “In fact, Consumer Reports’ latest reliability study guys had them in the bottom half of auto brands, and the editors say it best: ‘Look, there’s a lot of issues with the Model 3.’”
“And that’s what this story gets to the heart of in terms of reliability and increased production,” he said.