CHAPTER 14
PRODUCTION HELL
Technology “does “not automatically improve. It only improves if a lot of people work very hard to make it better. And actually, it will, I think, by itself, degrade,” Elon explained in his 2017 TED Talk. “You look at great civilizations like ancient Egypt, and they were able to make the pyramids, and they forgot how to do that. And the Romans, they built these incredible aqueducts. They forgot how to do it.”177
Elon doesn’t know how long we have to save humanity. And he thinks of it like that. The window is open now, but no one knows for how long.
That urgency is what drives him to take on more and more problems and hunt down solutions. He’s working against the clock, and that pressure is ever present for him.
The Falcon Heavy’s debut may have dazzled earthlings, but meanwhile—back at the Tesla factory—a different story was brewing. Elon summed it up in two telling words: production hell.
The problem child was the Model 3. It was designed and hailed as the car for the masses. Now in production, the demand and buzz was white hot. Customers couldn’t wait to get their hands on it. The media couldn’t wait. Investors couldn’t wait. And yet there was delay after delay. Problem after problem. Tesla was not producing them quickly enough. Elon had to figure it out. And fast.
Sure, Elon was by now a billionaire, with multiple houses in Bel-Air, but for the foreseeable future, he wasn’t resting his head on a cushy pillow at home, surrounded by all the creature comforts that come with that kind of money. No, he moved into the factory to work there and sleep there. During his waking hours, Elon could be found on the factory floor, helping teams work through problems and bottlenecks. When it was time to sleep, Elon claimed a spot on a couch in a conference room. If there was a problem in the middle of the night, he wanted his team to wake him up so he could help solve it.
The media seized on the story. Was Tesla going bankrupt? Would it survive? Was the CEO out of control, out of touch, over the edge? These were the conversations on national and international television. Newspapers, blogs, and podcasts joined in. It was constant chatter about Tesla and Elon.
Then, in the middle of production hell, Elon attended the social function of the year: the Met Gala. It is the see-and-be-seen event to beat all others. Picture Hollywood’s biggest movie stars, the wealthiest tech moguls, beautiful supermodels, all coming together in elaborate evening wear chosen to fit a specific theme. For heaven’s sake, it was put on by Vogue’s iconic editor Anna Wintour, and another organizer was Amal Clooney, the famous human rights attorney who happens to be married to actor George Clooney.
As he climbed the steps of the Metropolitan Museum of Art in New York City, and walked past the hordes of media waiting to catch a glimpse of every celebrity, he was not alone. Elon had a date, his new girlfriend, synth-pop artist Grimes. Their very public debut was putting the world on notice. He’d found love again.
Elon Musk and Claire Elise Boucher, aka Grimes, at the Met Gala. (Photo by Anthony Behar/Sipa USA via AP Images.)
Their appearance sent entertainment reporters, Twitter, and a hefty percentage of Elon’s and Grimes’s fans into gossipfest overdrive! It was the talk. But after their big night out, Elon was back on the plane, and back at the factory, focused on the problem at hand: scaling Model 3 production.
When CBS’s Gayle King toured the production line in the spring of 2018, Elon told her, “I’m definitely under stress, so if I seem like I’m not under stress then I’m gonna be clear, I’m definitely under stress.”178
The goal had been to produce five thousand cars a week. By April 2018, the number was less than half that. That was a problem because manufacturing and selling a massive amount of Model 3s was and still is the fundamental point of having a mass-market car. It was also critical to Tesla’s business plan.
Elon began personally tackling every problem, including the admitted use of too many robots in assembly. While Elon was dealing with Model 3 production, Tesla issued a recall of 123,000 Model S cars. That meant more headlines.
Moody’s, a leading financial analyst and research company on Wall Street, downgraded Tesla’s credit rating, pointing to the Model 3 production shortfall. That meant even more headlines.
Then, that spring a driver was killed in a horrible car accident while driving his Tesla Model X. The media called into question the safety of Tesla’s semiautonomous autopilot. A few months later, an investigation by the National Transportation Safety Board offered a preliminary clue as to what happened, saying the driver did not have his hands on the wheel for six seconds immediately before it crashed.
May 8, 2018, brought another deadly accident, which meant another investigation. Speeding at 116 mph around a 25 mph curve, the eighteen-year-old driver lost control of his Model S and crashed. Not only was the driver killed, but one of his passengers died too. Another passenger was injured.
When emergency crews got to the scene of the crash, one aspect of the wreckage stood out: the battery fire. Investigators said it took three hundred gallons of foam and water to extinguish the flames. Adding to that, the Model S’s batteries reignited twice, once on the tow truck and again after the wrecked car was placed in a storage yard. As of this writing, that issue is still under investigation. Part of what they are looking into is how first responders worked to extinguish the flames. Could first responders be in danger at the scene of a crash involving a Tesla Model S? Meanwhile, since speed was a factor in the crash, Tesla added a speed limiter feature to its software in honor of the teen who was killed.
A chorus of critics seemed to speak in unison. Could Tesla’s failure be close at hand? Were Tesla’s automobiles dangerous? The tension spilled over into Elon’s direct interactions with the media and even on earnings conference calls with financial analysts and investors. He was angry about what he called “bone-headed, boring” questions. He was furious about the media’s lack of context in reporting on Tesla. He specifically pointed out that when Tesla was involved in an accident, it made national headlines. The same standard is not applied to every other carmaker and the thousands of car crashes that happen daily.
A prime example? Also in May 2018, a Model S hit a stopped truck at 60 mph and was left nearly unrecognizable. The accident had two competing storylines. Media headlines ran with the driver’s account that the autopilot was on at the time. Elon, in complete exasperation, pointed out that other than a broken foot, the driver was fine. For Elon, this was testament to the car’s safety.
He weighed in on Twitter: “What’s actually amazing about this accident is that a Model S hit a fire truck at 60mph and the driver only broke an ankle. An impact at that speed usually results in severe injury or death.”180
The tension between Elon and his critics and the media filled into Elon’s Twitter feed. That snowballed into more bad coverage. Headlines read: ELON MUSK’S MEDIA MELTDOWN; ELON MUSK LASHES OUT AT MEDIA, AGAIN; ELON MUSK’S SILLY WAR WITH THE MEDIA; and more.
While tweeting, Elon proposed a solution: Pravduh, an online rating of journalists’ credibility. The media seemed unprepared for such a direct and public attack on their coverage. Eventually the full display of a nasty back and forth simmered down. It’s yet to be seen if Elon will follow through with rolling out Pravduh.
Elon Musk’s tweets about Pravduh (screenshot taken October 2018).
At the same time a Consumer Reports review of the Model 3 nailed the car for poor brake performance. As a result, the car did not receive the magazine’s coveted recommendation. Tesla immediately tweaked the brakes with an over-the-air fix. Then, Consumer Reports experts retested the car and the results allowed the magazine to give the Model 3 the gold standard “buy” recommendation. Tough headlines ultimately gave way to Consumer Reports’ awed acknowledgment that Tesla fixed the problem in one week, using a software update. Tesla did not have to haul cars back to the factory or a service center. Engineers simply reprogrammed the braking system and sent the fix wirelessly to the cars. It was a stunning development.
At the factory, Elon added an additional assembly line … in the parking lot, under a tent. It flew in the face of standard auto assembly, where cars are supposed to be made in giant factory buildings, but as a solution, it was a classic start-up maneuver—nimble, innovative, new thinking that thumbed its nose at convention. And Elon was thrilled, snapping pictures and tweeting them to the world.
Tesla assembly line. (© Tesla Motors Inc.)
And it worked. By the end of the third quarter of 2018, Tesla was making five thousand Model 3s a week.
As he thanked Tesla owners and workers, the media moved the goal. Could Tesla do it the next week and the next? Was its success a fluke? Would Tesla turn a profit? Or would it still go bankrupt?
The pressure remained and intensified. And Elon erupted.
In a single tweet one August morning, Elon said, “Am considering taking Tesla private at $420. Funding secured.”181 The tweet hit in the middle of the trading day in New York and sent Tesla’s stock price soaring by 6 percent. The Securities and Exchange Commission decided to take a look because such a statement from a CEO who is also the chairman of the board could affect the company’s stock price.
Elon Musk’s August 7 tweets (screenshot taken October 30, 2018).
This was the big question: Did Elon really have funding secured? The public backlash was swift and immediate. Elon backed down from taking the company private. In September the SEC charged Elon with securities fraud in federal court, saying his tweet was false and misleading. Ultimately, Elon and Tesla settled. Tesla was fined $20 million. Elon was personally fined $20 million, and while he would remain CEO, he would no longer be chairman of the board.
Elon was not happy. Shortly after the settlement was announced, Elon mockingly renamed the SEC the Shortseller Enrichment Commission. When asked about the fine on Twitter, he replied, “Worth it.”
But then he threw the biggest punch he had and the one he loves most—success. Model 3 safety test results were in, and they were stellar. The car received the coveted five-star safety rating, and that’s not all. It also had the lowest probability of injury, which makes the Model 3 one of the safest cars ever tested by the National Highway Traffic Safety Administration.
There was another reason to crow … the company had made a profit of $312 million and was expected to be profitable going forward.
And that led to headlines like this. Forbes: GUESS WHAT? EVERYONE WAS WRONG ABOUT TESLA. CNN: MEET THE NEW, PROFITABLE TESLA. USA Today: TESLA DELIVERS PROFIT.
Controversy or not, bad press or good press—there is a huge stick by which Elon is measuring Tesla, his core mission: Is this company helping to save the planet? He took on a car industry that was turning its back on electric cars, and now he had them twisted up in knots trying to get electric vehicles on the market as soon as possible.
“The fundamental value of a company like Tesla is the degree to which it accelerates the advent of sustainable energy, faster than it would otherwise occur,” Elon explained during his TED Talk. “So when I think like, What is the fundamental good of Tesla? I would say, hopefully, if it accelerated that by a decade, or potentially more than a decade, that would be quite a good thing.”182
In the immediate future Elon sees a reality where your car drops you off at work, and while you sit at your cubicle, the car heads off to pick up your laundry. Or the car heads off to pick up other people you’ve shared it with. Then the car is back in time to pick you up when you are ready.
“There will be a shared autonomy fleet where you buy your car, and you can choose to use that car exclusively. You could choose to have it be used only by friend and family, only by other drivers who are rated five stars. You could choose to share it sometimes but not other times. That is one hundred percent what will occur. It’s just a question of when,”183 Elon said in his TED Talk, where he elaborated on some of his ideas about the future and the work involved in creating it.