Tesla Inc. (NASDAQ:TSLA) got a shocker this week after news broke that workers at its Fremont, CA factory are warming up to the idea of forming or joining a union. Interestingly, having workers form a union is the least of Elon Musk’s worries. Tesla has never had issues with unions (until now) because it placed it’s factory in Northern California, far from the South and Midwest where the United Automobile Workers (UAW) has its strongest base.
However, Elon Musk is under immense pressure to bring the mass-market Model 3 to the market as promised this year. Musk made some big promises about the Tesla Model 3 and he is running Tesla like a boot camp in order to avoid losing brand loyalty from buyers if he under-delivers on his promises. Now, the voices calling for unionization at Tesla claim that Musk’s pressure to ramp up output is forcing workers to contend with a lot of mandatory overtime and a hazardous workplace.
Tesla Model 3 trial production begins next week
Tesla Inc. (NASDAQ:TSLA) is ready to begin trial production of its mass-market Tesla Model 3 on February 20, Reuters report. The EV maker says it will shut down its CA plant in order to retool it for the production of the Model 3. During the shutdown of the plant, the firm will expand its paint shop; upgrade the firm for increased productivity; and perform general maintenance. The trial production will begin once the firm re-opens its plant.
The trial production of the Tesla Model 3 will only be used to see how the construction models work. The firm will also use the trial run to identify and work out any kinks in the manufacturing so the assembly line can flow smoothly. The trial run is Tesla’s attempt to test the manufacturing waters and the full production of the Model 3 won’t begin until July. A statement from the firm notes that the trial run “will allow Tesla to begin Model 3 production later this year as planned and enable us to start the ramp towards 500,000 vehicles annually in 2018.”
Here are a couple of potential problem points for Tesla’s Model 3
Elon Musk is making a smart move with a plan to begin trial production of the mass-market Tesla Model 3. However, this trial run can only identify potential problems Tesla Inc (NASDAQ:TSLA) might face where the Model 3 is concerned.
To start with, Musk has revealed that he has 370,000 preorders for the Model 3. The firm made only 83,922 cars in 2016; hence, investors are worried about the chances that Tesla will produce 370,000 Model 3 in addition to its usual orders of Model S and Model X. The bigger problem however, is that most of the people that ordered for the Model 3 aren’t buying them for as a novelty. Most of them want the Model 3 as a main car or daily driver; hence, they may be less forgiving if Musk fails to meet delivery targets.
Another major problem point for the Tesla Model 3 is that it is unknown whether the firm has found a sweet price spot for the car. Musk has maintained that the Model 3 will sell for $35,000 but many people are convinced that the Model 3 you’ll actually want to buy will cost considerably more than $35,000.
Musk has said the he’ll build the orders with the full options first; hence, anybody ordering the Tesla Model 3 without options might not see the car until 2018 at earliest. Green Car Reports conducted a survey on Twitter asking people how much they think the Model 3 will cost. 32% of respondents said the car will cost less than $55,000, 22% of respondents said it will cost between $55,000 and $65,000, 31% of the people said the Model 3 will cost between $65,000 and $75,000, 15% of respondents said they think the car will cost more than $75,000.