Harder Than Rocket Science

Can Elon Musk make Tesla into a real car company?

- Tom Randall, Josh Eidelson, Dana Hull, And John Lippert

On July 1, Elon Musk went home to sleep. The chief executive of Tesla Inc. had been camping out at his electric car factory in Fremont, Calif., for much of the past week. He’d been sleeping on a couch, or under a desk, as part of a company-wide push to get out of what he calls “production hell” by manufacturing at least 5,000 of Tesla’s new Model 3 sedans in a week. “I was wearing the same clothes for five days,” Musk says in an interview with Bloomberg Businessweek. “My credibility, the credibility of the whole team,” was at stake. 

Musk initially promised as many as 200,000 Model 3s by the end of 2017. To get there he planned an unprecedented investment in factory robots, calling the production line “the machine that builds the machine.” He’d said it would look like “alien dreadnought”—a manufacturing process so futuristic, unstoppable, and cost-effective that it would seem extraterrestrial.

It hasn’t worked out that way. Tesla ended 2017 having made not quite 2,700 Model 3s. As of the end of June it had turned out about 41,000, and some analysts express doubts about whether it will ever be able to show a profit on the car, and Tesla hasn’t even started selling the $35,000 base model.

Making matters worse, Tesla has $10 billion in debt and suffered a credit downgrade in March. It’s spent about a billion dollars more per quarter, on average, than it has taken in over the past year, and the cost of a recently announced factory in China is still unknown. Tesla is running out of cash at a time when competition is heating up—Volkswagen, BMW, Daimler, and others plan to release dozens of electric car models.