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Tesla is not out of “production hell” yet—it is suspending Model 3 production for four to five days this week to ease bottlenecks, just days after Elon Musk said that he was more optimistic about the rate of production and after admitting that too much automation was holding back the ramp-up of its mass-market model.
This is the second such pause so far this year, and a Tesla representative said that both halts had been planned.
“These periods are used to improve automation and systematically address bottlenecks in order to increase production rates,” Fox News quoted the Tesla representative as saying.
Although such production halts are not uncommon for automakers, the news of the Model 3 production suspension is likely to be taken negatively by the market, as mass-market EV car production has so far lagged behind Tesla’s aggressive targets.
“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,” Reuters quoted analysts at Evercore ISI as saying.
At 9:52 a.m. EDT on Tuesday, Tesla’s shares were down 2.57 percent on NASDAQ.
Dave Sullivan, an analyst at AutoPacific Inc, told Bloomberg in an email: “Traditional automakers adjust bottlenecks on the fly during a launch.”
“This is totally out of the ordinary.”
“I don’t think there is any way they’d purposely want to slow production. It tells me something’s not quite right,” Elazar Advisors analyst Chaim Siegel told Reuters.
At the end of last week, Musk admitted that “excessive automation at Tesla was a mistake”, but voiced optimism about the rate of Model 3 production, after solving some “critical things” that were holding back Tesla from producing more Model 3s and from reaching its self-imposed production target.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.