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No need to worry—Elon Musk’s desk is right at the end of the Tesla production line

Reuters//Lucy Nicholson
Up from here?
  • Michael J. Coren
By Michael J. Coren

Climate and emerging industries editor

Published This article is more than 2 years old.

Tesla’s cars receive endless praise for their elegance and performance. The trick for the company will be to actually deliver thousands of cars on time with world-class manufacturing standards.

With that in mind, CEO Elon Musk used the company’s first quarter earnings call to reassure investors that he’s got everything under control.

“My desk is at the end of the production line. I have a sleeping bag in a room adjacent to the floor,” said the self-described “nano-manager” who obsesses over the tiniest details at his companies.  

In announcing earnings, the company also doubled down on its commitment to deliver 80,000 to 90,000 new vehicles in 2016. It moved up its timeframe to build 500,000 cars of all models by two years, to 2018.

“What we’re trying to do is get as many electric cars on road as possible. What’s the limiting factor? Product,” Musk said on the call. “We need to be the world’s best in manufacturing. That’s what we’re hell-bent on doing.”

In a year filled with daunting goals, Tesla is off to a solid start. During the first quarter, the electric car manufacturer brought in $1.6 billion in revenue, right at analyst expectations of $1.61 billion. The company also reported lower than expected losses, reflecting what it said was a focus on cost cutting.

The results sent Tesla’s stock up about 7% in after-hours trading before settling in at about half that.

The company said it was on schedule with the construction of its “Gigafactory” battery production plant in Nevada, with the first batteries to roll out by the end of the year.

Tesla must still clear major hurdles to meet all its goals. Earlier today, Bloomberg reported two top manufacturing executives—Greg Reichow, Tesla’s vice president of production, and Josh Ensign, vice president of manufacturing—were leaving the company. Tesla said their departures are not related to the difficulties delivering its Model X SUV, but they come as it gears up to produce its most inexpensive model to date: The first Model 3s are supposed to be delivered by the end of 2017.

The company has a history of falling behind delivery deadlines, sometimes by a year or more. Most recently, parts shortages slowed Model X assemblies because Tesla did not properly vet suppliers, added too much new technology, and lacked capacity to make parts in-house, according to the company (pdf).

Musk is now essentially betting on the company’s ability to churn out quality vehicles in large numbers. After releasing three pricey models—the Roadster, Model S sedan, and Model X SUV—the Model 3 is intended to offer luxury design and sporty performance and in a cheaper package that appeals to new class of car buyer.

He’s making that bet as competition looms. With Morgan Stanley predicting that 16% of vehicles will be electric by 2030, the big automakers are pushing more aggressively into the space. American, Chinese, German, and Japanese carmakers, all with far more resources and experience building cars at mass volumes, are now racing to take on the upstart.

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