Industry analysts were saying this for months.
Several month ago, Bloomberg did some calculations regarding Tesla and its current finances and came to a conclusion based on the data: the electric car company would soon run out of money. More precisely, it was burning through over $6,500 per minute. Predictions at the time said the company would be broke by August, but CEO and now former chairman Elon Musk figured out ways to bring in more money to keep the lights on. It also helped that Tesla finally posted a profit once it got Model 3 production under control. In a recent interview with Axios, Musk confirmed that Model 3 production problems nearly caused the death of Tesla.
“Essentially the company was bleeding money like crazy,” Musk said. “And just if we didn’t solve these problems in a very short period time, we would die. And it was extremely difficult to solve them.”
Musk didn’t go into specifics but he really didn’t have to because he stated what everyone already pretty much knew. Tesla completely underestimated the challenges of mass-scale production. Up until the Model 3, Tesla only built the Model S and Model X, neither of which are mainstream vehicles, but rather luxury cars. The Model 3, by contrast, is the affordable Tesla and it was in high demand the moment it was unveiled back in 2016.
Tesla’s goal was to build 5,000 Model 3 units weekly, but it took a while to achieve that. Based on the short clip in the included interview, it sounds like the Model 3 “production hell” nearly broke Musk. He still sounds traumatized by the whole experience. Could it explain some of his strange behaviors as of late, like announcing things on Twitter he probably should not have and smoking weed on Joe Rogan’s podcast? It’s possible. The most important takeaway from Musk’s statement here is that we can’t always believe what he originally says. Reality works differently than what goes on in Elon Musk’s brain.