Production had been halted for much of last week in Tesla's car factory in Fremont, California, and its battery factory near Clark, Nevada. In a Tuesday note to employees, CEO Elon Musk said that the pause was necessary to lay the groundwork for higher production levels in the coming weeks. Musk said he wants all parts of the company ready to prepare 6,000 Model 3 cars per week by the end of June, triple the rate Tesla has achieved in the recent weeks.

The announcement caps a nine-month period of turmoil that Musk has described as "production hell" as Tesla has struggled to ramp up production of the Model 3.

Tesla had high hopes for its Model 3 production efforts. In 2016, Musk hired Audi executive Peter Hochholdinger to plan the manufacturing process, and Business Insider described his plans in late 2016: "Hochholdinger's view is that robots could be a much bigger factor in auto production than they are currently, largely because many components are designed to be assembled by humans, not machines."

A year later, Musk himself was touting Tesla's advanced robotics expertise. "We are pushing robots to the limit in terms of the speed that they can operate at, and asking our suppliers to make robots go way faster, and they are shocked because nobody has ever asked them that question," Musk said on a conference call last November. "It’s like if you can see the robot move, it’s too slow.”

Musk now admits he was wrong about this. "Excessive automation at Tesla was a mistake," Musk tweeted recently. "To be precise, my mistake. Humans are underrated."

"We had this crazy, complex network of conveyor belts," Musk told CBS News. "And it was not working, so we got rid of that whole thing."

Musk is discovering that large-scale car manufacturing is really hard, and it's not easy to improve on the methods of conventional automakers. And while automation obviously plays an important role in car manufacturing, it's not the magic bullet Musk imagined a couple of years ago. Far from leapfrogging the techniques of conventional automakers, Tesla is now struggling just to match the efficiency of its more established rivals.

And most of the auto industry experts we talked to thought Musk still had a lot to learn.

"A lot of the mistakes we're hearing about are mistakes that were made in the rest of the industry in the 1980s and the 1990s," says Sam Abuelsamid, an industry analyst at Navigant Research. He points to the experience of General Motors, which wasted billions of dollars in a largely fruitless effort to automate car production in the 1980s.

At the same time, it's rarely a good idea to underestimate Musk. Musk has a long history of setting optimistic deadlines for his companies and then failing to meet them. But Musk is persistent and a quick learner. He has made a lot of mistakes so far, but he may still have time to learn from those mistakes and turn Tesla into a competitive carmaker.

The same mistake

In reporting this story, we talked to two different experts who drew the same parallel to GM's automation efforts in the 1980s. At the time, GM was being led by chairman and CEO Roger Smith and faced rising competition from Toyota and other foreign carmakers. Smith had a vision for a "lights out" car factory where robots would do the bulk of the work, allowing GM to produce cars more efficiently than anyone else.

In their 1994 book Comeback, Paul Ingrassia and Joseph White (Author) described the results of Smith's automation project at GM's plant in Hamtramck, Michigan:

As Hamtramck's assembly line tried to gain speed, the computer-guided dolly wandered off course. The spray-painting robots began spraying each other instead of the cars, causing GM to truck the cars across town to a fifty-seven-year-old Cadillac plant for repainting. When a massive computer-controlled 'robogate' welding machine smashed a car body, or a welding machine stopped dead, the entire Hamtramck line would stop. Workers could do nothing but stand around and wait while managers called in the robot contractor's technicians.

Over the course of the 1980s, GM spent billions of dollars on advanced robotics, but it never saw a return on that investment.

"Instead of easing robots onto the line a few at a time, providing for inevitable debugging problems with redundant equipment, GM bet the entire Hamtramck production system on the proposition that leading-edge automation would work instantaneously."

Three decades later, robots are more sophisticated. But the same basic insight applies: automation works best when it's added incrementally to a production process that's already working smoothly. And Musk seems to have made the same mistake Smith did: bringing in way too many robots, way too quickly, leaving little time for testing and refining the process.

Robots are supposed to allow production of more cars with fewer workers, but one ironic consequence of over-automation is that it can actually require more workers. Ingrassia and White report that GM's Hamtram

Elon Musk has said that “excessive automation” is partly to blame for the serious backlog in production of Tesla cars, noting that human beings can in some situations do a better job.

Mr Musk has come under fierce criticism for the delays facing his Model 3 sedan.

“Yes, excessive automation at Tesla was a mistake,” he said. “To be precise, my mistake. Humans are underrated.”

Caught in what Mr Musk has called “manufacturing hell”, the electric car firm has failed to hit its weekly production target of 2,500 Model 3 vehicles in the first quarter of 2018, fostering doubt within the industry that Tesla will be able to hit its 5,000-a-week target in three months time.

“We had this crazy, complex network of conveyor belts. And it was not working, so we got rid of that whole thing," he said.

"We got complacent about some of the things that we felt were our core technology.

“We put too much new technology into the Model 3 all at once. This should have been staged."

Tesla's problems with battery production at the company's Gigafactory in Sparks, Nevada, are worse than the company has acknowledged and could cause further delays and quality issues for the new Model 3, according to a number of current and former Tesla employees. These problems include Tesla needing to make some of the batteries by hand and borrowing scores of employees from one of its suppliers to help with this manual assembly, said these people.

Tesla's future as a mass-market carmaker hinges on automated production of the Model 3, which more than 400,000 people have already reserved, paying $1,000 refundable fees to do so.

The company has already delayed production, citing problems at the Gigafactory. On Nov. 1, 2017, CEO Elon Musk assured investors in an earnings call that Tesla was making strides to correct its manufacturing issues and get the Model 3 out.

But more than a month later, in mid-December, Tesla was still making its Model 3 batteries partly by hand, according to current engineers and ex-Tesla employees who worked at the Gigafactory in recent months. They say Tesla had to "borrow" scores of employees from Panasonic, which is a partner in the Gigafactory and supplies lithium-ion battery cells, to help with this manual assembly.

Can we please replace the link with this article?

It answers why the analyst think Tesla's way of doing things is an issue:

the Japanese, try to limit automation because it "is expensive and is statistically inversely correlated to quality." Their approach is to get the process right first, then bring in the robots — the opposite of Musk's.

And, a hypothetical but expansive example on why Tesla's automation strategy might not achieve the desired cost savings.

Tesla’s Factory Woes Reveals Why You Shouldn’t Automate Everything

Carlos E. Perez Blocked Unblock Follow Following Mar 29, 2018

Photo by Ines Álvarez Fdez on Unsplash

There are new reports that Tesla’s AI strategy to automate their entire manufacturing process is failing to deliver the productivity they had hoped for. Business Insider reports that “Wall Street analysts have laid down a compelling argument that over-automation is to blame.” The report details the arguments as to why not everything needs to be automated:

But while all that exotic capital might allow Tesla to remove 5 workers, it will then need to hire a skilled engineer to manage, programme and maintain robots for $100 an hour.

A balance must be maintained between the manageability of advanced AI technology and the tasks that can be performed by a reasonably skilled employee. There will always be tasks in the process where the costs for automation is not worth it. A majority of costs in AI is upfront, this upfront cost can spiral out of control if the problem is beyond what present-day AI is capable of doing. This is the problem with many AI endeavors, too many are lured into the science fiction thinking that AI already exists today. One should never convert a task to improve productivity into a task to do academic research. Understanding what AI can and cannot do well is critically important to control costs and avoid failure. Do yourself a favor and hire a Deep Learning expert for an hour to tell you what not to do.

The Japanese who historically have a much more advanced experience working with automation know the problem better. The Japanese approach is to first get the process right and then bring in the robots. In fact, this approach translates well not only in manufacturing automation but also in knowledge-based work.

It is important to remember that today’s lean methodology we find in software development can be traced back to lean manufacturing methods of the Japanese. Lean’s core value is simple: maximize customer value while minimizing waste. These ideas work in manufacturing as well as in knowledge-driven industries.

In the book “The Deep Learning AI Playbook”, I introduced the Deep Learning Canvas and the framework at its core is the Jobs To Be Done (JTBD) approach applied to ‘Cognitive Load’. What we attempt to do is to map out the existing business process and identify specifically the JTBD of a customer (i.e. this could be an employee). JTBD identifies many tasks that a customer performs to do their job and we identify the cognitive load (constraint/impediment) that can be augmented with AI technology. The cognitive loads include lack of memory, information overload, lack of meaning and acting fast. Each kind is augmented with different kinds of Deep Learning (DL) driven technology. Specifically search, summarization, translation, and visualization. However, we should be pragmatic. We cannot expect DL to do everything.

Deep Learning Canvas

Rather, as DL technology incrementally improves over time, each JTBD that has been augmented by AI continues to improve. This in effect reduces the cognitive load of the user for each task and as a consequence allows the user to become more productive in their work. Productivity may translate in higher throughput, but ideally towards a better customer experience (See: DL for CX and XLA). The higher level objective should always be CX, after all, that is what motivates customers to invest in a relationship.

The value of AI is that it incorporates technology that is able to identify a users context and then deliver the appropriate goods or services at the right time. This is how value is created. This is how AI and processes are linked. In Lean Thinking, this is the assessment of the value stream to see if each step is “ valuable, capable, available, adequate and flexible”. The right way to employ AI automation into a business is to start with a strategy that incorporates an understanding of purpose, process and most importantly — people.

Analysts at Bernstein argue that Elon Musk has over-automated Tesla.

The very robots that Musk says will revolutionise the car industry are baking in Tesla’s mistakes and costing far more money than they’re worth, they say.

The robots are killing Tesla.

In a rare win for humans over robots in the battle for labour efficiency, Wall Street analysts have laid down a compelling argument that over-automation is to blame for problems at the billionaire Elon Musk’s electric-car company.

That is to say, the very innovation and competitive advantage that Musk says he’s bringing to the car industry – his nearly fully automated plant in Fremont, California – is the reason Tesla is unable to scale quickly.

According to the Bernstein analysts Max Warburton and Toni Sacconaghi, it’s the robots that can’t pump out Tesla’s highly anticipated Model 3s fast enough. The whole process is too ambitious, risky, and complicated.

From Bernstein (emphasis ours):

“Tesla has tried to hyper-automate final assembly. We believe Tesla has been too ambitious with automation on the Model 3 line. Few have seen it (the plant is off-limits at present), but we know this: Tesla has spent c.2x what a traditional OEM spends per unit on capacity. “It has ordered huge numbers of Kuka robots. It has not only automated stamping, paint and welding (as most other OEMs do) – it has also tried to automate final assembly (putting parts into the car). It talks of two-level final lines with robots automating parts sequencing. This is where Tesla seems to be facing problems (as well as in welding & battery pack assembly).”

Warburton, who spent his career before Wall Street at the International Motor Vehicle Program – a partly academic, partly commercial organisation based at MIT – wrote that “automation in final assembly doesn’t work.”

Bernstein adds that the world’s best carmakers, the Japanese, try to limit automation because it “is expensive and is statistically inversely correlated to quality.” Their approach is to get the process right first, then bring in the robots – the opposite of Musk’s.

It’s not a problem that Tesla, a highly indebted company, can afford forever.

The company’s stock has cratered more than 25% in the past month on worries that it will yet again underdeliver on its Model 3 promises. Over the past few days, investors have been selling Tesla’s debt in droves. On Tuesday, Moody’s downgraded Tesla by one notch, to B3, citing a “significant shortfall” in Model 3 production.

During Tesla’s fourth-quarter earnings call, Musk told investors that factory model assembly was the biggest constraint on Model 3 production. There are tens of thousands of components in each car, he said, and the company can only move as fast as it can correct each problem area.

One thing that makes it hard to solve problems in every area, according to Bernstein’s analysts, is that they’re all automated. Other car companies that have tried this – Fiat and Volkswagen – have also failed.

Bernstein

What’s more, Bernstein says, this is barely saving Musk money. From the note:

“Let’s say there are 10 hours of labour in final assembly (the part of the production line where parts, interiors and the powertrain are installed in a painted bodyshell). In a regular plant, final assembly typically has less than 5% of tasks automated. If Tesla attempts to automate 50% of these tasks, it could cut out 5 or so hours of labour. This might save $US150 per car (assuming wage rates, all in, of $US30 per worker, per hour). “But while all that exotic capital might allow Tesla to remove 5 workers, it will then need to hire a skilled engineer to manage, programme and maintain robots for $US100 an hour (our estimate of a robotic engineers’ hourly rate). “So the net labour saving may be only $US50 per unit. Yet putting the automation into the plant seems to involve an apparent capital cost that’s $US4,000 higher per unit of capacity than for a normal plant. If the product is built for 7 years, that’s over US$550 of additional depreciation per unit built. It’s hard to see an economic case even if somehow the Fremont Model 3 line can be made to work. So why exactly has Tesla taken this route? It’s unclear.”

Oh.

So in Musk’s attempt to bring on the robot uprising that will revolutionise how we make cars, he’s burned cash and baked in his own mistakes. If you think about it that way, we are just beginning to understand how much this will cost him.

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In a rare win for humans over robots in the battle for labour efficiency, Wall Street analysts have laid down a compelling argument that over-automation is to blame for problems at the billionaire Elon Musk's electric-car company.

That is to say, the very innovation and competitive advantage that Musk says he's bringing to the car industry – his nearly fully automated plant in Fremont, California – is the reason Tesla is unable to scale quickly.

According to the Bernstein analysts Max Warburton and Toni Sacconaghi, it's the robots that can't pump out Tesla's highly anticipated Model 3s fast enough.

The whole process is too ambitious, risky, and complicated.

READ MORE:

• Model 3 hell is burning other Tesla products

• Tesla fires hundreds of people after company-wide performance reviews

• Tesla's Model 3 leaves little 'wiggle room' on cash

From Bernstein: "Tesla has tried to hyper-automate final assembly. We believe Tesla has been too ambitious with automation on the Model 3 line. Few have seen it (the plant is off-limits at present), but we know this: Tesla has spent c.2x what a traditional OEM spends per unit on capacity.

JOHN RAOUX/AP Elon Musk told investors that factory model assembly was the biggest constraint on Model 3 production.

"It has ordered huge numbers of Kuka robots. It has not only automated stamping, paint and welding (as most other OEMs do) – it has also tried to automate final assembly (putting parts into the car). It talks of two-level final lines with robots automating parts sequencing. This is where Tesla seems to be facing problems (as well as in welding & battery pack assembly)."

Warburton, who spent his career before Wall Street at the International Motor Vehicle Program – a partly academic, partly commercial organisation based at MIT – wrote that "automation in final assembly doesn't work".

Bernstein adds that the world's best carmakers, the Japanese, try to limit automation because it "is expensive and is statistically inversely correlated to quality". Their approach is to get the process right first, then bring in the robots – the opposite of Musk's.

It's not a problem that Tesla, a highly indebted company, can afford forever.

The company's stock has cratered more than 25 per cent in the past month on worries that it will yet again underdeliver on its Model 3 promises. Over the past few days, investors have been selling Tesla's debt in droves.

JEFF CHIU/AP So in Musk's attempt to bring on the robot uprising that will revolutionise how we make cars, he's burned cash and baked in his own mistakes.

On Tuesday, Moody's downgraded Tesla by one notch, to B3, citing a "significant shortfall" in Model 3 production.

During Tesla's fourth-quarter earnings call, Musk told investors that factory model assembly was the biggest constraint on Model 3 production. There are tens of thousands of components in each car, he said, and the company can only move as fast as it can correct each problem area.

One thing that makes it hard to solve problems in every area, according to Bernstein's analysts, is that they're all automated. Other car companies that have tried this – Fiat and Volkswagen – have also failed.

PAUL OWEN/STUFF The very innovation and competitive advantage that Musk says he's bringing to the car industry is the reason Tesla is unable to scale quickly.

What's more, Bernstein says, this is barely saving Musk money. From the note:

"Let's say there are 10 hours of labour in final assembly (the part of the production line where parts, interiors and the powertrain are installed in a painted bodyshell). In a regular plant, final assembly typically has less than 5% of tasks automated. If Tesla attempts to automate 50% of these tasks, it could cut out 5 or so hours of labour. This might save $US150 per car (assuming wage rates, all in, of $US30 per worker, per hour).

"But while all that exotic capital might allow Tesla to remove 5 workers, it will then need to hire a skilled engineer to manage, programme and maintain robots for $US100 an hour (our estimate of a robotic engineers' hourly rate).

"So the net labour saving may be only $US50 per unit. Yet putting the automation into the plant seems to involve an apparent capital cost that's $US4,000 higher per unit of capacity than for a normal plant. If the product is built for 7 years, that's over US$550 of additional depreciation per unit built. It's hard to see an economic case even if somehow the Fremont Model 3 line can be made to work. So why exactly has Tesla taken this route? It's unclear."

Oh.

So in Musk's attempt to bring on the robot uprising that will revolutionise how we make cars, he's burned cash and baked in his own mistakes. If you think about it that way, we are just beginning to understand how much this will cost him.

• This story was first published by BusinessInsider.com.au

CLOSE It’s in “production hell,” according to Elon Musk Time

Elon Musk, CEO of Tesla Motors, poses with a Tesla car in front of Nasdaq following the electric automakerís initial public offering on June, 29, 2010, in New York. (Photo: Mark Lennihan, AP)

Corrections & Clarifications: A previous version of this story misstated the rate of Tesla vehicle sales in comparison to DeLorean Motor Co. sales.

The annals of the automotive industry are filled with bold upstarts who failed to reinvent the business after they gravely underestimated how hard it really is to make cars.

Look no further than John DeLorean, for example. DeLorean's car company flamed out in the 1980s after turning heads with gull-wing doors that bear a striking resemblance to the falcon-wing doors on Tesla's Model X.

Will Tesla CEO Elon Musk join the Back to the Future carmaker on the list of swashbuckling executives who made a big splash but ultimately failed to reimagine the auto business?

To be sure, Musk has already accomplished much more than DeLorean, whose DeLorean Motor Co. built only 9,080 cars before collapsing. That's about as many as Tesla sold monthly last year.

But with production of the new mass-market Tesla Model 3 electric car struggling to speed up, some investors are losing faith in the billionaire innovator, who is also CEO of rocketmaker SpaceX.

Tesla stock plunged 23% from March 12 through March 29, the last day of active trading. At $266.13, shares are 32% below their all-time high of $389.61.

Last week, Moody's downgraded Tesla's bond rating and lowered its outlook from stable to negative.

"Tesla's ratings reflect the significant shortfall in the production rate of the company's Model 3 electric vehicle," Moody's said.

Musk has acknowledged navigating "production hell" with the Model 3, which has been plagued by delays as he tries to adopt advanced factory automation. But Musk remains confident he can revolutionize vehicle making.

"The car industry thinks they're really good at manufacturing. And actually they are quite good at manufacturing, but they just don't realize just how much potential there is for improvement," he said in February. "It's way more than they think."

Musk bragged that Tesla's futuristic approach to vehicle manufacturing, which relies heavily on high-tech robotics, will be its "long-term, sustained competitive advantage." That includes automating not just the processes of stamping, painting and welding, which most automakers already do, but also eventually automating final assembly.

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Since launching production in July, the company has reportedly encountered a litany of challenges, such as parts shortages and basic miscues that have forced technicians to scramble to fix assembly-line production errors after the cars were supposed to be finished.

Consequently, industry experts are beginning to question Musk’s manufacturing strategy.

More: Elon Musk's bad spell continues amid a spat with the National Transportation Safety Board

More: We rented a Tesla Model 3 from a new owner: Call it spartan, high-tech and compelling

More: Tesla CEO Elon Musk: We got 'complacent' but Model 3 output is accelerating

More: Tesla stock dives as feds investigate deadly Calif. crash

"Tesla has not only tried to reinvent the car, but has also tried to reinvent the production line, with hyper-automation," Sanford Bernstein auto analyst Max Warburton said Wednesday in a note to investors. "This is creating serious issues."

Part of the problem is that Tesla rushed into manufacturing too quickly, said AutoPacific analyst Dave Sullivan, who formerly worked in an assembly plant.

John DeLorean answers reporters' questions at a news conference in New York on Feb. 19, 1982. DeLorean developed the short-lived gull-winged sports cars featured as a souped-up time travel machine in the "Back to the Future" movies. (Photo: AP)

The company appears to be "more concerned with getting butts in seats and fixing the quality issues after the fact," Sullivan said. "Early adopters will look the other way for now, but that goodwill won't last for long."

Tesla did not agree to comment for this story.

But engineering chief Doug Field told employees in a March 23 email obtained by Bloomberg that workers should find it "personally insulting" that critics are questioning Musk's strategy. He exhorted workers to help boost Model 3 production.

“Let’s make them regret ever betting against us," Field reportedly wrote. "You will prove a bunch of haters wrong.”

Investors want to see accelerated production of the Model 3 when the compan

Elon Musk: "Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated."

Elon Musk says Tesla relied on too many robots to build the Model 3, which is partly to blame for the delays in manufacturing the crucial mass-market electric car. In an interview with CBS Good Morning, Musk agreed with Tesla’s critics that there was over-reliance on automation and too few human assembly line workers building the Model 3.

Earlier this month, Tesla announced that it had officially missed its goal of making 2,500 Model 3 vehicles a week by the end of the first financial quarter of this year. It will start the second quarter making just 2,000 Model 3s per week, but the company says it still believes it can get to a rate of 5,000 Model 3s per week at the midway point of 2018.

“crazy, complex network of conveyor belts”

Previously, Tesla has blamed bottlenecks in the production of the Model 3’s batteries at the company’s Gigafactory for the delays. But in a wide-ranging (and largely positive) interview with CBS’s Gayle King, Musk also admits it was Tesla’s over-reliance on robots in the production.

Musk then said the company needs more people working in the factory and that automation slowed the Model 3 production process. He alluded to a “crazy, complex network of conveyor belts” the company had previously used and said the company eliminated it after it became clear it wasn’t working.

It’s a fairly stunning admission from the man who previously likened his company’s massive factory to an “alien dreadnought” thanks to the complex assemblage of advanced robotic arms building its line of electric cars. In an earnings call with investors last year, Musk spoke about the production speeds facilitated by Tesla’s robots. “It’s remarkable how much can be done by just beating up robots ... adding additional robots at choke points and just making lines go really, really fast,” he said. “Speed is the ultimate weapon.”

“Speed is the ultimate weapon”

Last year, Tesla acquired Perbix, a private machining firm that makes automated equipment for factories, allowing the carmaker to bring the production of more parts in-house. Tesla described the deal as a step further in its long-stated ambition to “build the machine that makes the machine.”

In fact, Musk was so confident that Tesla had gotten right the mix of robots and humans that its giant Gigafactory would become the company’s ultimate product. “The competitive strength of Tesla long-term is not going to be the car, it’s going to be the factory,” he said last February. “We’re going to productize the factory.”

Musk is also one of the foremost voices urging caution in the development of robotics and artificial intelligence. He has called for governments to regulate AI to prevent the technology from threatening human existence, and has warned for a coming “AI apocalypse.”

“We got complacent about some of the things we felt were our core technology”

Also in the interview, Musk said the Model 3’s technical complexities were additionally to blame for the company’s ongoing “production hell.” “We got complacent about some of the things we felt were our core technology, we put too much new technology into the Model 3 all at once,” Musk said.

A spokesperson for Tesla declined to clarify Musk’s comments. While aesthetically more minimal than the Model S or X, the Model 3 uses 2170 lithium-ion battery cells, which are more complex than the industry-standard 18650 battery cells used in the Model S and X. Musk previously confirmed that Tesla’s Gigafactory 1 in Nevada was the source for the production bottlenecks slowing Model 3 deliveries. Panasonic, Tesla’s battery cell manufacturing partner at the factory, has also confirmed this.

To be sure, Musk has used the “too much technology” excuse before. In 2016, he owned up to the problems with production of the Model X, telling an audience of Tesla shareholders, “This [Model X] program has been challenging. I particularly need to fault myself for a fair bit of hubris for putting too much technology all at once into a product.” The Model 3, he said, would not have as much technology as the Model S and X.

Now Musk said he has taken over production of the Model 3, sleeping at Tesla’s Fremont factory in an effort to keep tabs on the vehicle’s rollout. In the interview, he shows King the conference room where he sleeps. A pillow and sleeping bag can be seen in the shot. King calls the couch “not even [...] comfortable.”

Tesla Inc.’s Elon Musk, who’s built up an aura around how automated his car assembly plant will be, has good news for humans: We still need your help.

“Excessive automation at Tesla was a mistake. To be precise, my mistake,” the CEO wrote in a tweet Friday, hours after CBS aired an interview in which he acknowledged putting too many robots in Tesla’s lone auto factory. “Humans are underrated.”

Musk didn't get to elaborate on the complexities of his factory setup, but he did point out one particular failure: the facility at one point used a "crazy, complex network of conveyor belts, and it was not working so [Tesla] got rid of the whole thing."

That Musk would've chosen to rely on a highly automated facility is little surprise. During a shareholder meeting in 2016, he excitedly noted that he thinks of the factory itself as a product with the potential for tremendous breakthroughs. "We realized that the true problem, the true difficulty, and where the greatest potential is – is building the machine that makes the machine," Musk said. "In other words, it's building the factory."

Musk's plan to craft the machine that builds machines only picked up steam when Tesla acquired Perbix, an automated manufacturing company that Tesla had long-running business ties with. While the move allowed Tesla to being more component production in-house, it might have caused still more problems -- Tesla temporarily suspended Model 3 production for a week in February in part to "improve automation." It seems clear that Musk hasn't yet struck the right balance between machines and the roughly 10,000 human workers at the Fremont factory.

Just to be clear though, a surfeit of robots isn't the only reason Tesla has consistently fallen short of its production goals. On the company's most recent earnings call, Musk candidly pointed out that issues with battery module production at the company's Gigafactory in Nevada was the "limiting factor" in Model 3 output.

"We were probably a little overconfident, a little complacent, in thinking this is something we understand," he said at the time. "We put a lot of attention on other things and just got too comfortable with our ability to do battery modules, because we've been doing that since the start of the company."

After Tesla failed to hit its goal of producing 2,500 Model 3 electric cars a week, CEO Elon Musk says he's figured out what went wrong: robots.

Yes, robots, which are designed to help build lots and lots of Tesla's electric vehicle at an insane speed, are to blame for why customers who pre-ordered the Model 3 still haven't gotten them yet.

In an interview with CBS Good Morning, Musk said the Model 3 is in "production hell" because Tesla used too many robots.

"It's worse than I thought," Musk said. "We have this crazy complex network of conveyor belts and it was not working so we got rid of that whole thing."

When asked if using more humans instead of robots would help speed up production, Musk told CBS that it would and that they need more humans working on the assembly lines.

Earlier this month, Musk made the bold decision to personally fix the Model 3 bottlenecks by getting his hands dirty on the factory floor.

He tweeted about how he had gone "back to sleeping at the factory" and CBS confirmed his surprisingly ordinary sleeping situation as nothing more than a narrow and uncomfortable couch and a sleeping bag in a conference room. Yep, Musk the billionaire, is spending his nights in a sleeping bag at the office.

"We got complacent about some of the things that we thought were our core technology. We put too much new technology into the Model 3 all at once."

"Excessive automation at Tesla was a mistake," Musk reiterated on Twitter. "To be precise, my mistake. Humans are underrated."

Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated. — Elon Musk (@elonmusk) April 13, 2018

You're damn right humans are underrated. Humans > robots. Of course, this shouldn't surprise anyone who follows Musk.

Despite using more technology to further his endless ambitions, including electricity-powered vehicles, landing reusable rockets, sending Teslas into deep space, helping solve traffic jams with the Hyperloop, selling Boring baseball caps, and flamethrowers, Musk has cautioned against over-relying on technology before.

Musk has said AI, if abused or developed incorrectly, could be the downfall of humanity. He's even gone as far as saying AI could trigger World War III.

It's ironic then that over-using technology – robots and automation in this case – is what screwed up the Model 3's production. If Musk has learned anything after this, it's that he should start applying his life philosophy to his work sooner rather than later.

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In a recent interview with CBS, Elon Musk discussed the future of Tesla and the problems the manfucturer was having producing enough Model 3 vehicles to meet growing demand. One of the issues that Musk touched on was the company’s over-reliance on robotics, saying that they had slowed the company down.

“Yes, they did … ” Musk said in response to questions regarding whether or not the company’s use of robots delayed production. “We had this crazy, complex network of conveyor belts … And it was not working, so we got rid of that whole thing.”

Musk followed up these statements on Twitter by admitting that “humans are underrated.”

Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated. — Elon Musk (@elonmusk) April 13, 2018

Tesla has been under an increasing amount of pressure due to its failure to produce enough units of the Model 3 to meet demand. While Musk did admit that the company’s over-reliance on robots had led to delays, he said that customers should not be worried about getting their cars. He said it might take up to nine extra months, but customers would get them.

“There shouldn’t be a question mark as to whether somebody’s gonna get their car, it’s just, yes, you’ll definitely get your car,” Musk told King. “It’s gonna be six to nine months longer than expected.”

Musk also pointed out that three of those months have already passed, so customers don’t have too much longer to wait. That being said, he did admit that some customers had canceled their orders. He believes that most of them did so simply because they needed a car right then and there, and Tesla didn’t have it.

The low production levels have taken a toll on Tesla’s stock. Last month, share prices fell from $340 t0 $252, but things are improving according to Musk, who noted this in a tweet to the Economist.

In a delicious turn of fate Elon Musk has put robots the world over on notice. He recently replaced the highly-touted automation system at Tesla with a better, more intelligent paradigm: humans.

Tesla’s Model 3 production facility is regarded as one of the most advanced car manufacturing plants in the world. It’s also been a complete failure. Elon Musk this month personally took over operations. And in true Musk form he’s burning the candle at both ends, rarely leaving the building.

When your billionaire boss is sleeping on the factory floor, it’s safe to say there are going to be some company changes.

Thanks to a series of unfortunate events, Tesla’s 2018 has been one of those no good, awful, very bad years. A second Autopilot-related fatality put a damper on public opinion, while missing every production goal the company set made shareholders nervous. And to top things off, Tesla had to recall over 100,000 Model S cars due to some bolts in the steering column using ill-suited materials.

We mentioned before that most (if not all) of the company’s problems are due to human error. The only consistent thing about its Model 3 production has been the company’s failure to meet its fulfillment goals. And that’s because Musk chose to make the ‘last mile’ of production entirely automated, and it blew up in his face.

Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated. — Elon Musk (@elonmusk) April 13, 2018

In an interview last week with Gayle King on CBS This Morning, when asked if the automation systems caused some of the delay, Musk said:

Yes, they did….We had this crazy, complex network of conveyor belts….And it was not working, so we got rid of that whole thing

After changing things at the factory recently, and replacing the expensive automation with good old fashioned human workers, things are looking up. Musk told King he expected to push 2000 units a week and increase those numbers through the second quarter and beyond.

So, it turns out the world’s most advanced automobile factory, helmed by one of the most tech-savvy people in the world, can’t finish its job using automation.

And, if even Tesla can’t keep robots employed, it looks like humans are going to have to put off our eventual retirement from the global workforce even longer.

The Next Web’s 2018 conference is just a few weeks away, and it’ll be 💥💥. Find out all about our tracks here.

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After missing its target of producing 2,500 Model 3 cars per week at the end of Q1 2018, Tesla CEO Elon Musk has revealed what went wrong: battery production problems – plus too many robots on the production line.

While the production of the batteries used in the Model 3 at Tesla’s Gigafactory was largely responsible for the company’s failure to meet its own production targets, its over-dependence on robotics shares some of the blame, he said.

Musk invited CBS Good Morning to tour Tesla’s factory and discuss the latest news about the Model 3’s troubled production. Asked by CBS whether there were too many robots and not enough human workers on the production line, he agreed:

We had this crazy, complex network of conveyor belts and it was not working, so we got rid of that whole thing.

The CBS video offers a glimpse of the heavily automated nature of Tesla’s manufacturing processes. Musk has boasted in the past of how Tesla is bringing as much of the manufacturing process in house as possible, even going so far as to purchase Perbix, a producer of automated factory equipment.

But it seems that Musk’s ongoing quest for manufacturing precision and efficiency has gone beyond the point of diminishing returns.

Price of innovation – or poor judgement?

In a Tesla shareholders’ meeting in 2016, Musk spoke of his focus on the importance of building “the machine that builds the machine.” However, the tech visionary admits that his company got ahead of itself when it came to its latest electric vehicle:

We got complacent about some of the things we felt were our core technology, we put too much new technology into the Model 3 all at once.

Despite its advanced internals, the Model 3 is set to be the first affordable (starting at $35,000), mass-produced Tesla. But over half a million pre-orders have left the carmaker struggling to meet the demand.

Given the manufacturing challenges, Musk has taken over management of the Model 3 production line himself, often sleeping in the factory.

Despite the obvious pressure he’s under, with weekly production figures now over 2,000 and an expected three or four-fold increase in output over the next quarter, Tesla will be hoping it is now over the worst of its production problems.

Hope for battery lifespans

Despite the battery-related delays for the Model 3, there is good news about existing batteries’ lifespans. Tesla owners on the Dutch-Belgium Tesla Forum have shared the battery performance data of their vehicles, revealing some interesting insights.

As reported by electrek, the collated data (on a publicly available Google Sheet) reveals that Tesla battery degradation occurs at a rate of less than 10 percent over 160,000 miles.

The data reveals that while Tesla battery packs lose about five percent of their capacity over a vehicle’s first 50,000 miles, the degradation levels off after that. The trend line on a graph of battery capacity against mileage suggests that the next five percent capacity loss occurs over far greater distances.

Internet of Business says

These are tough times for Tesla – despite Musk’s successes elsewhere in 2018, such as with SpaceX and satellite-based broadband. In the past month Tesla has been slammed by the US road safety board, after a fatal crash involving one of its ‘driver-assisted’ vehicles. Tesla has put out a voluntary recall of 123,000 of its Model S vehicles in response.

The company has also had its credit status lowered on Wall Street due to the fallout. Meanwhile, Tesla is haemorrhaging money and investors are growing impatient with the vaunting ambition that attracted them to Musk in the first place.

In striving to innovate at every step of the Model 3’s production, Tesla has put obstacles in its own way and missed production targets. Yet with output finally increasing and over-automation issues being ironed out, the road ahead now looks a little less bumpy.

Meanwhile, the revelations about Tesla’s battery performance are, while informal, certainly encouraging. Given the small sample size and limited mileage, it remains to be seen whether the trend is correct. Anyone with a lithium-battery-powered laptop, or mobile device that’s more than a couple of years old, knows the degradation that this technology usually sees after numerous charge cycles.

Nevertheless, this is reassuring news in the face of the widespread doubts surrounding the lifespan of lithium battery powered electric vehicles. Hopefully, the battery modules taking so long to emerge from Tesla’s Gigafactory will be worth the wait.

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‘Humans are underrated,’ says CEO after company failed to hit weekly production target in first quarter of 2018

This article is more than 11 months old

This article is more than 11 months old

Elon Musk has admitted that automation has been holding back Tesla’s Model 3 production and that humans, rather than machines, were the answer.

The electric car maker’s chief executive said that one of the reasons Tesla has struggled to reach promised production volumes was because of the company’s “excessive automation”.

Asked whether robots had slowed down production, rather than speeding it up, during a tour around Tesla’s factory by CBS, Musk replied: “Yes, they did … We had this crazy, complex network of conveyor belts … And it was not working, so we got rid of that whole thing.”

“Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated,” Musk added later.

Profile Elon Musk Show Hide The South African-born computer programmer and businessman is worth about $21bn (£15bn) today. He was catapulted into the ranks of the super-rich with the sale of PayPal to eBay, which netted him $165m

In 2002, he used $100m to found SpaceX, which aims to cut the cost of space travel through technology such as reusable rockets. One of Musk's ultimate goals is to pioneer efforts to colonise Mars.

Musk became a major investor in electric car company Tesla in 2004 and took over the reins in 2008. Tesla has focused on building a vehicle with mass market appeal. Despite low sales, its stock market value overtook Ford last year.

Another ambitious Musk project is the Hyperloop, his vision of a super-fast underground transport system to whisk passengers between major US cities, such as LA and San Francisco, at hypersonic speed. He has called the idea a "cross between a Concorde and a railgun and an air hockey table". Critics say it is too impractical and expensive.

More recent ideas include OpenAI, a not-for-profit firm researching artificial intelligence, and Neuralink, a company exploring ways to connect the human brain with AI.

Photograph: Peter Parks/AFP

Caught in what Musk has called “manufacturing hell”, the electric car firm has failed to hit its weekly production target of 2,500 Model 3 vehicles in the first quarter of 2018, fostering doubt within the industry that Tesla will be able to hit its 5,000-a-week target in three months time.

The significant production shortfall has delayed crucial customer deliveries. Musk said he was forced to take direct control of the production line at the beginning of April, resorting to pulling all-nighters and sleeping at the factory.

“We were able to unlock some of the critical things that were holding us back from reaching 2,000 cars a week. But since then, we’ve continued to do 2,000 cars a week,” he said.

At the same time Tesla is facing negative publicity over a fatal crash of one of its Model X SUVs that was driving using the firm’s Autopilot mode, openly feuding with the US National Transportation Safety Board and attempting to suppress issues before media attention.

NON-ALIEN Elon Musk has agreed with critics who say that Tesla is overly-reliant on automation and has too few human assembly line workers building the Model 3.

During an interview with CBS, Musk said that using too many robots in the production process of the Model 3 has led to a "crazy, complex network of conveyor belts," which might actually have slowed things down.

"It was not working, so we got rid of that whole thing," he told CBS This Morning co-host Gayle King.

Tesla announced earlier this month that it had missed its production target of 2,500 cars every week for the Model 3, and is now aiming at 2,000 a week - a climbdown from its initial target of 5,000.

Musk now says that he wants to start using more humans in the factory, to speed up production. He has referred to the recent period as "production hell".

More humans could well help with areas of quality control that the Model 3 has faced. Early customers have complained about a multitude of issues, including broken rear lights, charging problems and other technical defects.

Related: Space X and Tesla employees launch Elon Musk mask range because you're worth it

Musk, who personally took control of the Model 3 production line this month and has been sleeping at the factory, says that production is now back on track. He told CBS: "We'll probably have...a three- or four-fold increase in the second quarter," adding, "I...have a clear understanding of the path out of hell."

Sources recently told Reuters that Tesla will begin to produce its upcoming Model Y at its plant in Fremont, California in November next year. It will ramp production by also producing the cars in China, from 2021. µ

Tesla’s new Model 3 car is seen Jan. 26 at the Tesla store in Washington. (Salwan Georges/The Washington Post)

For the second time since February, Tesla said Monday it has temporarily suspended production of its Model 3 sedan, a move that analysts say underscores the immense challenges for the company to deliver its first mass-market electric vehicle.

The pause comes just days after chief executive Elon Musk downplayed worries about manufacturing delays with the Model 3, and after the company disclosed it had failed to meet its goal of producing 2,500 cars per week by the end of the first quarter. Analysts say that a successful rollout of the Model 3 is crucial to the company’s long-term success. And for Musk himself, the car represents the culmination of a plan to supply affordable, widely available vehicles powered solely by electricity.

[Tesla’s ‘transformative year’ is hitting a brick wall]

The company said in a statement that the pause in Model 3 production was planned and “not unusual.” The downtime will be used to “improve automation and systematically address bottlenecks in order to increase production rates,” Tesla said. The statement used the same language during the halt in production earlier this year. Tesla did not say how long the suspension, which was first reported by BuzzFeed, would last.

While production hitches are not unheard of, planned delays are not common, said Akshay Anand, an executive analyst with Kelley Blue Book. Nonetheless, he was not surprised by the suspension. “This is Tesla’s first go-around of really mass-producing something. This is not the Model S or the Model X that’s only accessible to the elite. And when you have something that’s mass-marketed, it’s a different ballgame.”

Analysts say that smooth Model 3 production can help the company stem its money-losing operations. Tesla reported net losses of more than $770 million in the last three months of last year, up from $219 million during the same time in 2016. “While further delays would not necessarily ‘make or break’ Tesla, they will invariably exacerbate cash burn,” Toni Sacconaghi, an analyst at Bernstein, said in a research note Tuesday. He added that if Tesla does deliver on the Model 3, however, the company could still thrive because of the rapid growth of the electric vehicle market and the lack of competition at the Model 3’s price.

Tesla has said it expects Model 3 production to escalate quickly, despite prior delays. Earlier this month the company said it aims to produce 5,000 vehicles per week. That would require the company to more than double its current rate.

Musk has blamed production delays, in part, on an overreliance on automation. He said customers of the Model 3 will receive their vehicles, but not as early as they had planned. “There shouldn’t be a question mark as to whether somebody’s going to get their car,” Musk told “CBS This Morning” in an interview last week. “It’s a six-to-nine-month time shift — that’s literally it — and three of those months have already passed.”

Tesla has received more than 400,000 reservations from customers for the Model 3, according to reports, which requires a $1,000 deposit. The cheapest version of the car will cost $35,000 and will begin to ship in late 2018, the company said.

(Reuters) - Tesla Inc (TSLA.O) shares fell as much as 2 percent in premarket trading on Tuesday, a temporary halt in production of its Model 3 sedan adding to nerves about the electric car maker’s consistent failure to keep its promises on vehicle output.

Model 3, the most affordable sedan from Tesla, is seen as crucial to the company’s future profitability, but has so far missed several production goals.

The car maker said the halt - the second since February - was to improve automation and systematically address bottlenecks to increase production, a regular move by car companies.

“While temporary suspensions to production, in order to improve manufacturing engineering/line rates, are not uncommon in the auto industry, particularly during a ramp-up, we believe that the news will once more be taken negatively by the market; providing more honey to the bears,” Evercore ISI analysts said.

Tesla’s use of robots to assemble Model 3s had led to more complexity and delays, which billionaire Chief Executive Elon Musk acknowledged on Friday in a tweet: “Excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.”

According to Bernstein analysts, Tesla has not only automated stamping, painting and welding like most other manufacturers, but also tried to automate final assembly. This is where the U.S. electric car maker seems to be facing problems.

“Tesla’s been trying to run full tilt,” said Chaim Siegel, an analyst at Elazar Advisors. “He’s (Musk is) sleeping overnight on the production floor. I don’t think there is any way they’d purposely want to slow production. It tells me something’s not quite right,”

FILE PHOTO: First production model of Tesla Model 3 out the assembly line in Fremont, California , U.S. is seen in this undated handout photo from Tesla Motors obtained by Reuters July 10, 2017. Tesla Motors/Handout via REUTERS

Model 3 production fell short of the weekly target of 2,500 at the end of the first quarter and a number of Wall Street analysts say they do not believe it will succeed in producing 5,000 Model 3s per week in the second quarter, as Musk has promised.

“I can’ t imagine that Tesla can reach an output of 5,000 cars per week until the end of June,” said Frank Schwope, an analyst with NORD/LB. “I expect that Tesla is going to fail (in) their aims for this year, as they did so often.”

Shares of Palo Alto, California-based Tesla was last down nearly 1 percent.

Tesla

Elon Musk looks tired. There are bags under his eyes and an embattled admittance of disappointment has replaced the billionaire entrepreneur’s typical exuberance. A big, yellow strapline reads "PRODUCTION HELL" and CBS This Morning co-host Gayle King appears surprised as Musk agrees with every one of her questions that suggests Tesla hasn't been performing as well as it should.

During the eight-minute exclusive tour of his enormous Giga Factory in Silicon Valley, Musk is asked why it's producing just 2,000 Model 3s a week, as opposed to the 5,000 a week he promised at launch. He simply nods and admits: "I need to work out how we can be better and get better at meeting goals.”

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Fair enough. But he then goes on to point out the conference room he sleeps in overnight while he sorts out the myriad issues facing the company. A billionaire business owner sleeping on a sofa above a factory floor: admirable behaviour or a sign of desperation?

It looks like investors haven't been too impressed by Tesla's recent performance, either. In late March, the company's share prince plunged after it announced a voluntary recall of 123,000 Model S vehicles. On Tuesday April 17, the company's share price continued to wobble after it said it would temporarily halt production of its mid-priced, mass produced Model 3 to "address bottlenecks" in its production line.

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"Our Model 3 production plan includes periods of planned downtime in both Fremont and Gigafactory 1," a Tesla spokesperson said at the time. "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.”

However, the latest closure makes it the second temporary shut down since February, and although, as previously stated, this is nothing completely new in the automotive industry, it is yet another black mark on a company that has been under fire for production, quality and autonomous driving issues since its very first car.

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"It was always a huge task to scale up from being a low-volume producer of luxury cars to a big player in the mass-market electric vehicle sector,” explains David Bailey, an expert on economic restructuring and industrial policy at Aston Business School in Birmingham.

“Tesla has been a pioneer in technology and a trailblazer in the electric vehicle market, but it has limited knowledge in the manufacturing process, and to go it alone could spell trouble for the company. The Model 3 is potentially a make or break scenario for Tesla, and if it can't prove to its investors that it can scale up and make significant profit, it could spell bad news,” he adds.

Elon Musk will make driverless cars a reality sooner than you think Tesla Elon Musk will make driverless cars a reality sooner than you think

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Aside from production mishaps, the list of fires Tesla is currently putting out continues to grow, with the company defending its position after a recent fatality involving its Autopilot semi-autonomous driving features – the second death surrounding this technology in recent years following a crash in May 2016 involving a Model S.

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On top of this, Musk is addressing build quality issues that have been raised by customers and critics, with the likes of JD Power, one of the most influential consumer guides in the world, complaining of faulty door handles and excessive body panel gaps.

Plus, recent allegations raised by Reveal and The Center for Investigative Reporting claim that Musk's company concealed the true number of workplace injuries at its Fremont, California assembly plant in an attempt to put a positive spin on safety numbers and divert some of the negative press surrounding the company.

But as the fire continues to spread, the entrepreneur is seemingly employing the tactic of giving as good as he gets, branding Reveal an “extremist organisation” that “harassed” his workers by “phone or social media or even in the parking lot of the factory” in a statement on the company's blog.

Musk also reportedly yelled "shame" at a group of journalists on a conference call that dared to allege recent performance-related firings of hundreds of employees was to "disrupt possible unionisation efforts".

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His blustering, almost Trump-like reactions on social media speak volumes of the gulf that separates Tesla and the more established automakers of this world.

Instead of engaging in online social disputes or writing ranting blogs on the company

CBS This Morning

In a push to deliver cars to waiting customers, Tesla is moving to 24-hour operations at its Fremont, California, assembly facility and plans to hire "400 people per week for several weeks" between Fremont and its battery Gigafactory in Sparks, Nevada.

Chief Executive Elon Musk would have us believe the hiring spree is a sign of confidence in Tesla's ability to boost production by the end of June to meet demand for Model 3, its entry-level electric car. But make no mistake: it's a sign of desperation. The Model 3 launch has been a disaster, and hiring a bunch of people in a hurry is only going to make things worse for Tesla, not better.

Financially, it could get ugly fast. Already, Wall Street is bracing for disappointing first-quarter results on Wednesday due to lower-than-expected Model 3 production. Now, after Musk admitted the company bet too heavily on automation, Tesla's second-quarter results will be under pressure, too. Not only will the company face higher labor costs, it will probably also have to write down millions of dollars' worth of automated machinery that is being ripped out of the factory on Musk's orders.

Humans are underrated, the billionaire boss now says, but throwing more people at the job won't necessarily make Tesla more efficient. The company tripled its headcount between 2014 and 2017, but since it's still not producing many cars, revenue per employee is stagnant, far below that of General Motors and Ford Motor, as noted in a Bloomberg story examining the risk that Tesla might soon run out of cash.

On Twitter, Musk confidently predicted that Tesla will be profitable and cash flow positive in the second half of this year and won't have to raise additional money from investors. But his marching orders to employees suggest money is tight: beginning immediately, any expenditures over $1 million must get Musk's prior approval. (That reminds me of the austerity measures that governed GM during its 2009 bankruptcy.)

Meanwhile, state and federal labor officials are scrutinizing Tesla's factory operations after reports of unsafe conditions. What could possibly go wrong by flooding the assembly line with 1,000 or more newbies in a matter of weeks?

"This is a recipe for disaster," said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor, Michigan. "You don’t have a smooth running ship and then you add a bunch of new untrained people? That doesn’t right the ship."

It's reasonable to ask whether Tesla will even be able to hire 1,200 or more qualified workers in time to meet Musk's aggressive objectives. In a recent email, Musk told employees the goal is to achieve a "burst-build rate" of 6,000 vehicles per week, triple the current rate, by the end of June. (Notably, that includes a 20 percent margin for error to make sure it nets 5,000 cars per week, a failure rate no established automaker would tolerate. Tesla says Model 3 quality has improved dramatically in recent months. An independent benchmarking study of a model built in late 2017 found examples of both engineering brilliance and manufacturing incompetence.)

To meet that target, Tesla is adding another shift of workers in Fremont, which will now operate 24 hours a day, 7 days a week. But where will it find all those workers in a tight labor market? The unemployment rate in the East Bay counties of Alameda and Contra Costa is 3 percent, lower than the state and national rates. And the cost of living in the region is prohibitive for many manufacturing workers. Union organizers say many Tesla employees live an hour or two away from the factory or share housing with fellow workers to make ends meet on their $19-an-hour paycheck. Tesla recruits at job fairs as far away as Fresno or Modesto, which are farming communities.

Then there's the question of training. I asked other automakers how long it takes to get new hires ready for the job when they're preparing to add an extra shift at a factory. (Tesla declined to provide details on its hiring process.)

In the old days (1984 to 2009), GM, Ford and Chrysler had thousands of laid-off union workers getting paid for doing nothing. The Jobs Bank, as it was called at GM, was where automakers found able, trained workers during periods of expansion.

Now, it's harder to identify, screen and train new workers for assembly work, even in the industrial heartland. "The fastest we would hire 400 people would be 12-13 weeks," a Ford spokeswoman told me. (Tesla plans to hire 400 people per week.)

Why so long at Ford? The company said it takes about two weeks to collect enough résumés from state employment agencies, minority and veterans groups and employee referrals. Then each job candidate must pass a basic reading comprehension and problem-solving test. That preliminary screening takes at least a week, likely longer, Ford said. Those who pass the written test must then be cleared by a doctor for physical activity and pass a dru

Investors and fans of Tesla are anxious to hear what the company has to say about the production ramp of the Model 3, the main driver of future profits and cash-flow, when it releases its first-quarter results on May 2.

Analysts at Bernstein and UBS recently released reports that focus specifically on the problems with “over-automation” of the Model 3 line, production of which is now approximately 2,000 vehicles per week—nowhere near the company’s target of 5,000 vehicles per week.

Founder and CEO Elon Musk, for years one of strongest proponents of a future where there are no people in the production process and his factory looks like an alien spaceship, is now acknowledging that the optimal level of automation remains a complex balancing act of design, productivity, quality, and human and machine skills.

He recently blamed an overly automated production process as the reason for missing Tesla’s output targets. “Humans are underrated,” he tweeted. And Musk added to CBS, “We had this crazy, complex network of conveyor belts… and it was not working, so we got rid of that whole thing.”

In the Bernstein analysis, Toni Sacconaghi and Max Warburton offer some explanation as to why it’s proving so difficult to ramp up production on an overly automated line. Warburton’s background includes time spent benchmarking vehicle-assembly plants and he states that, in attempting to hyper-automate Model 3 production at its Fremont plant in California, Tesla “may have shot itself in the foot.”

“Automation simply can’t deal with the complexity, inconsistencies, variation and ‘things gone wrong’ that humans can,” and “can create quality problems further down the line,” they say. The Bernstein analysts deduce that Tesla’s troubles are because of the complexity of automating final assembly, where the car is put together. This is something that’s been tried before by other manufacturers—such as Fiat, Volkswagen, and GM—and they have all failed. Sacconaghi and Warburton say:

In final assembly, robots can apply torque consistently—but they don’t detect and account for threads that aren’t straight, bolts that don’t quite fit, fasteners that don’t align or seals that have a defect. Humans are really good at this. Have you wondered why Teslas have wind-noise problems, squeaks and rattles, and bits of trim that fall off? Now you have your answer.

The Bernstein analysts point out that final assembly is fundamentally an exercise in flexibility because the process is constrained by the ability to feed the right part at the right time. Humans are able to spot things that aren’t right, stop the process, and try to get them fixed. One of the important ways that simple design contributes to simpler final assembly is in how many parts and how much space is required alongside the assembly line. Robots aren’t as flexible as humans; they aren’t as good as humans at adapting to product variants nor can they handle as many complex movements as humans.

This means that, beyond a certain point, automation can raise costs, and contrary to what you’d expect, not help quality or productivity. Importantly, automation needs to be overlaid on a stable process to ensure that it’s not the errors that are being automated. This will be especially important once machines are learning on their own, because there’s not necessarily a human to notice if an error is being propagated.

As we enter an age of machines that can learn directly from data rather than being programmed by humans, Tesla’s experience with a hyper-automated production process is important to understand. In a more automated future, it’s still vital to appreciate what humans can do better.

Tesla was hoping to produce 5,000 new Model 3 electric cars each week in 2018. So far, it has failed to manufacture even half that number. Questioned on the matter, the company’s CEO, Elon Musk, claimed that “excessive automation was a mistake” and that “humans are underrated”.

He’s not wrong – the recent drive for full automation has overlooked the importance of adaptability. Humans are still far more able to adapt to change than artificial intelligence (AI). In the long-term, AI has the potential to replace human workers, but for now leaders need to determine the right speed of change.

The Tesla factory in Silicon Valley is highly automated. Early on, Musk understood that any process following a sequence of predefined steps and taking place on a fairly controlled environment, such as a factory floor, could be automated by artificial intelligence and robots. And this is something he should be credited for.

But while autonomous systems are developing rapidly, humans remain far better at adapting to unforeseen changes. When it comes to complex factory work, this is something that should not be underestimated. Looking back on Tesla’s productivity issues, Musk undoubtedly missed the importance of adaptability in manufacturing. The probability of small errors and unforeseen situations is proportional to the complexity of the process, especially when the process takes place in the physical world.

Adaptive intelligence

Humans and other forms of intelligent life evolved to survive in a constantly changing world. For this reason, they can cope remarkably well with unforeseen situations and discrepancies between expected and actual events. As cognitive scientist Gary Marcus emphasises, there are a lot of things “that go into human intelligence, like our ability to attend to the right things at the same time, to reason about them to build models of what’s going on in order to anticipate what might happen next and so forth.”

Humans and animals can also adapt their bodies to radically different situations in order to achieve their goals. For example, we can move forward by walking, swimming, jumping, climbing and crawling – and we can do so even if we lose the use of a limb. These dynamic aspects of biological systems help them cope with radical change under highly complex situations.

Machine learning, on the other hand, is not yet at the level of human intelligence and adaptability. Sure, we have made great progress. Today, advanced AI algorithms, inspired by nervous systems, can learn to recognise similar situations like a traffic light turning red or a ball falling on the street even better than humans. Developments in robotics also mean that new robots made of soft materials can physically adapt to unforeseen objects in the physical environment. But in both cases, adaptability is limited to variations within a restricted category of objects or events.

The truth is that we have not yet mastered the design of robots and AI that are resilient enough to respond to unpredictable environments. Take the example of robots used in the packaging industry. Automated guided vehicles with limited on-board intelligence can only follow simple programming instructions taking them along fixed routes in a defined environment. These robots might be able to pick up a product and place it into a carton, without the ability to do anything more complex. When the job changes, the robot will have to be replaced.

More complex mobile robots are also in use. They have built-in sensors and scanners, as well as software that allows them to detect their surroundings and choose the most efficient route so that a product is not necessarily placed in the same location every time. These more complex robots are more flexible and adaptable, but they are still quite far away from what biological systems can do.

This could be a problem for overly automated factories where small physical discrepancies (a broken wheel, wear and tear on the ground, imprecisely positioned parts) can rapidly accumulate and result in unpredictable situations (a component is not where it should be, a robot is missing). When a process changes or the factory starts making a new product, then there is a need to reconfigure the equipment and find a different solution. This is not yet entirely within reach of AI and robotics.

Full automation

Musk has publicly noted his desire to create a fully autonomous factory. His underlying goal is to overcome the limits of human speed. With greater speed, higher outputs can be achieved. But in complex environments, such as a highly automated factory, there is a need for highly adaptable robots that can respond to unforeseen situations and to each other like biological systems do. Introducing that sort of biological resilience in robotics and AI requires further research.

The first involves testing robotic automation within a defined set of processes, such as picking raw material and placing it on the assembly line. The second involves expandin

Flufferbot! Alberto E. Rodriguez/Getty Images

Falling behind production deadlines for its Model 3 sedan and rapidly burning cash, Tesla has been struggling mightily to speed up its assembly line. On a call with investors Wednesday, CEO Elon Musk said the company had identified an unlikely culprit in those delays: a “flufferbot.”

As Tesla scrambles to deliver on some 450,000 orders for the Model 3, its first mass-market vehicle, Musk has described the company’s predicament as “production hell.” Part of the problem has been an over-reliance on automation, which Musk recently acknowledged, adding in an April 13 tweet: “Humans are underrated.”

Musk gave the public an amusing peek into that hell on the company’s quarterly earnings call Wednesday. “We did go too far on the automation front and automated some pretty silly things,” he said. Musk proceeded to offer the following example, about a fiberglass mat that was designed to insulate noise from the battery pack:

We had these fiberglass mats on the top of the battery pack. They’re basically fluff. So we tried to automate the placement and bonding of fluff to the top of the battery pack. Which is ridiculous. So we had this weird flufferbot. Which was really an incredibly difficult machine to make work. Machines are not good at picking up pieces of fluff. Human hands are way better at doing that. So we had a super-complicated machine. Using a vision system to try to put a piece of fluff on a battery pack. … … The line kept breaking down because Flufferbot would frequently just fail to pick up the fluff. Or put it in a random location.

Musk said he asked his team whether the fluff was really necessary. The company tested a car both with and without the fiberglass battery insulation and found “no change in the noise in the cabin.” They concluded that the part was unnecessary and did away with the flufferbot.

Elon on "silliest" examples of over-automation at Tesla: "Fluffer bot would frequently fail to pick up the fluff." Rip Flufferbot — Caroline O'Donovan (@ceodonovan) May 2, 2018

Musk also gave an example of what he called “overgeneralizing the design” of the Model 3. Tesla has plans for a dual-motor, all-wheel-drive version of the vehicle. But right now, it’s only producing the single-motor, rear-wheel-drive version. Nevertheless, the company was building battery packs with both front and rear ports, and adding a sealed plate to the front port on each one. “It added cost, added manufacturing staff, and added a failure mode,” Musk said. “For something that is unnecessary.” He implied that Tesla has stopped including the front-drive port on the batteries for rear-drive vehicles.

Partly as a result of such changes, Musk said, “We’ve had a radical improvement in battery pack production” in just the past few weeks. Whereas assembling a pack used to take as long as seven hours, Tesla can now assemble them in “under 17 minutes,” he said.

While it looks like Tesla will come nowhere close to Musk’s initial goal of building 500,000 cars this year, the company said Wednesday that it still hopes to meet a significantly revised goal of building 5,000 Model 3s per week within the next two months. However, 2,270 vehicles is the most it has built in a week so far, the company reported. You can read its full quarterly earnings report here.

Tesla’s stock had plunged 4.8 percent in after-hours trading by the end of Wednesday’s earnings call.

Elon Musk has six days to make good on his pledge that Tesla will be pumping out 5,000 Model 3 sedans a week by the end of the month. If he succeeds, it may be thanks to the curious structure outside the company’s factory. It’s a tent the size of two football fields that Musk calls “pretty sweet” and that manufacturing experts deride as, basically, nuts.

“Words fail me. It’s insanity,” said Sanford C. Bernstein & Co.’s Max Warburton, who benchmarked auto-assembly plants around the world before becoming a financial analyst.

Inside the tent in Fremont, Calif., is an assembly line Musk hastily pulled together for the Model 3. That’s the electric car that is supposed to vault Tesla from niche player for the wealthy to high-volume automaker, bringing a more affordable electric vehicle to the masses.

Tesla has had a heck of a time making the leap. Musk’s expectation two years ago was that 100,000 to 200,000 Model 3s would be produced in the second half of 2017. Just 9,766 rolled out in the first quarter—a weekly output rate of roughly 750.

Hence, apparently, the tent. Musk announced it on Twitter on June 16, saying the company had put together an “entire new general assembly line” in three weeks with spare parts; the building permit was issued on June 13, though the company could have started working on aspects of the project before that.

Amazing work by Tesla team. Built entire new general assembly line in 3 weeks w minimal resources. Love u guys so much! Pic of 1st Model 3 dual motor performance coming off the line … pic.twitter.com/Xr55P3fmGd — Elon Musk (@elonmusk) June 16, 2018

Whether this new line is fully operational is unclear. Company officials declined to comment. The Tesla-obsessed users of Twitter and other internet forums have posted photos and videos and comments either praising or ridiculing the parking-lot big top. Apparently in response to the intense interest, the tent has recently been surrounded by very large trucks, which obstruct the view.

When Tesla releases second-quarter production and delivery figures in early July, the hundreds of thousands of customers who’ve been waiting since March 2016 for their Model 3s, having put down $1,000 deposits, will get a better sense of how much longer they’ll be in the queue. “The question is, how much rope Musk will get from customers who have had to wait years for delivery?” said Jeff Liker, a University of Michigan engineering professor who’s written books on Toyota Motor Corp.’s vaunted production system.

What gives manufacturing experts pause about Tesla’s tent is that it was pitched to shelter an assembly line cobbled together with scraps lying around the brick-and-mortar plant. It smacks of a Hail Mary move after months of stopping and starting production to make on-the-fly fixes to automated equipment, which Musk himself has said was a mistake.

“The existing line isn’t functional, it can’t build cars as planned and there isn’t room to get people into work stations to replace the non-functioning robots,” Warburton said in an email. “So here we have it—build cars manually in the parking lot.”

An admission in April that he erred by putting too many robots in Tesla’s plants was a humbling moment for Musk. The chief executive officer had boasted in the past that his company would build an “alien dreadnought,” sci-fi bro code for a factory so advanced and robotic, it would be incomprehensible to primitive earthlings.

During a February earnings call, Musk told analysts that Tesla had an automated-parts conveyance system that was “probably the most sophisticated in the world.” But by the spring, it had been ripped out of the factory.

“We had this crazy, complex network of conveyor belts,” Musk told CBS This Morning in April. “And it was not working, so we got rid of that whole thing.”

James Womack, the founder of the Lean Enterprise Institute in Cambridge, Massachusetts, called Tesla’s haphazard approach worrisome. “The chaos of how Musk is going about this makes it difficult for him to provide the standardized, repeatable work routines that allow people to function,” said Womack, author of The Machine That Changed the World, which sprang from an influential study of Toyota’s production techniques. “He’s going to need a second tent for repair and rework.”

The word “temporary” may be in Tesla’s tent permits with Fremont, but Musk has suggested it could stick around a while. He told one Twitter follower last week that he’s not sure the company actually needs a building anyway. He described the new assembly line as “way better” than the one in the plant that cost the company hundreds of millions.

That tweet spoke volumes to Dave Sullivan, an analyst at research firm AutoPacific who used to supervise Ford Motor factories. “To say that it’s more efficient to build this with scrap pieces laying around means that either somebody made really bad decisions with the parts in the plant inside, or there are a lot of other problems yet to be discovered with Tesla’s

Tesla's future as a mass-market car company hinges on efficient, automated production of the Model 3. Tesla will lose $6,000 for every $35,000 Model 3 it sells, says UBS analyst Colin Langan. It only breaks even if the car sells for over $41,000. Tesla has yet to produce the $35,000 base model of the Model 3.

Tesla did meet the goal of producing more than 5,000 Model 3 vehicles in a week during the third quarter. It made 80,142 vehicles (including 53,239 Model 3's), beating Wall Street analysts' expectations. But the company is nowhere near the 500,000 mark Musk promised in 2016. As of the end of Q3, Tesla has produced 167,975 cars this year. To put that in context, Ford makes that many cars approximately every 10 days.

Tesla promised investors that it will achieve positive cash flow and profitability in the second half of 2018. But some investors and analysts are deeply skeptical this will happen. Tesla's debts are quickly coming due: The company has to pay around $230 million in November, part of a larger $1.3 billion debt bill coming due in March 2019, according to AP.

Faith in the Tesla CEO is being tested like never before. Investors are wary of his social media and legal battles, attitude toward regulators and recreational drug use.

Many employees think Musk is essential to the company's success. They praise his creativity, sense of humor and inspiring speeches. Some credit his hands-on management style with building a great company. A former Tesla and SpaceX employee, Spencer Gore, who is now the CEO of Impossible Aerospace, explained:

"Elon Musk is in a position most will never experience — trying to deliver an industry-defining product on a limited budget. He can't afford to make decisions slowly, or even always compassionately. When he involves himself in low-level details it's to enhance execution speed. For some engineers, this can be frustrating, at times heartbreaking — but Elon's unconventional style is what built the Tesla we all chose to join."

But other employees describe how Musk's management style has increased costs and complexity in the factories.

The young Tesla engineer was excited. Ecstatic, in fact. It was a Saturday in October 2017, and he was working at the Gigafactory, Tesla’s enormous battery manufacturing plant in Nevada. Over the previous year, he had been living out of a suitcase, putting in 13-hour days, seven days a week. This was his first real job. And now a colleague had tracked him down to say that Elon Musk—Elon Musk!—needed his personal help. The previous year, Musk had made an audacious announcement: His company, which was known—fetishized, actually—for its luxurious electric vehicles, would soon begin manufacturing a new sedan that it planned to sell for just $35,000, putting it within reach of the middle class. The Model 3, Tesla hoped, would transform the auto industry by proving that a mass-produced, emissions-free vehicle was not only feasible but profitable. If successful, the vehicle would help end humanity’s addiction to fossil fuels, slow climate change, and show that ingenuity and ambition could accomplish nearly anything. Within a year of that announcement, however, work on the car was behind schedule. There were problems in battery manufacturing, parts construction, development of assembly lines. Tesla’s goal was to build 5,000 vehicles a week; recently the company had been producing roughly three cars a day. Many inside the Gigafactory—not to mention at the Tesla headquarters in Palo Alto and the assembly factory in Fremont, California—had been working hard for months, trying to get things on track. Musk was spending the weekend in the Gigafactory, attempting to discover why machines weren’t functioning, why parts kept misaligning, why the software was crashing. Musk had demanded that his factories be automated as much as possible. But among the consequences of this extreme roboticization were delays and malfunctions. Tesla had spent more than $1 billion building the Gigafactory, and almost nothing was going as planned. At about 10 o’clock on Saturday evening, an angry Musk was examining one of the production line’s mechanized modules, trying to figure out what was wrong, when the young, excited engineer was brought over to assist him. “Hey, buddy, this doesn’t work!” Musk shouted at the engineer, according to someone who heard the conversation. “Did you do this?” The engineer was taken aback. He had never met Musk before. Musk didn’t even know the engineer’s name. The young man wasn’t certain what, exactly, Musk was asking him, or why he sounded so angry. “You mean, program the robot?” the engineer said. “Or design that tool?” “Did you fucking do this?” Musk asked him. “I’m not sure what you’re referring to?” the engineer replied apologetically. “You’re a fucking idiot!” Musk shouted back. “Get the fuck out and don’t come back!” The young engineer climbed over a low safety barrier and walked away. He was bewildered by what had just happened. The entire conversation had lasted less than a minute. A few moments later, his manager came over to say that he had been fired on Musk’s orders, according to two people with knowledge of the situation. The engineer was shocked. He’d been working so hard. He was set to get a review from his manager the next week, and had been hearing only positive things. Instead, two days later, he signed his separation papers. Related Stories Model 3 Crash Testing Hammers Home Tesla's Safety Excellence

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The Young and the Reckless On a Wednesday morning a few weeks later, Musk returned to the Gigafactory on his private plane. Tesla had started firing hundreds of other employees for performance reasons—more than 700 would eventually be let go. Musk was scheduled to talk to the plant’s workers, to inspire them to push through what Musk had forecast would be a “manufacturing hell.” The Gigafactory needed widespread fixes; there was no way the plant would produce 5,000 batteries a week anytime soon. When he arrived, Musk began marching through the factory. He walked along the assembly line, red-faced and urgent, interrogating workers he encountered, telling them that at Tesla excellence was a passing grade, and they were failing; that they weren’t smart enough to be working on these problems; that they were endangering the company, according to someone who observed him. Employees knew about such rampages. Sometimes Musk would terminate people; other times he would simply intimidate them. One manager had a name for these outbursts—Elon’s rage firings—and had forbidden subordinates from walking too close to Musk’s desk at the Gigafactory out of concern that a chance encounter, an unexpected question answered incorrectly, might endanger a career. After Musk had patrolled the factory floor for a while, executives pulled him into a conference room. “I think we can fix this,” one of his top lieutenants, Jon McNeill, told him, according to someone who heard the conversation. McNeill tried to calm Musk down, and repeated a proverb he had once heard: No man comes up