It was clear that Tesla’s difficulties ramping up Model 3 production were extremely hard on the company, but now CEO Elon Musk has revealed that the automaker was at one point within weeks of dying.
During an interview with Axios On HBO, Musk said:
“Tesla faced a severe threat of death due to the Model 3 production ramp. Essentially, the company was bleeding money like crazy and if we didn’t solve these problems over a short period of time we would die. It was extremely difficult.”
He added that they were “within single digit weeks” from going under.
Here’s the clip from the interview:
— Axios (@axios) November 26, 2018
Musk said that it was back when he would be in the factory day and night, which would mean around March and April.
That’s when he said that he was back to sleeping on Tesla’s factory floor to oversee Model 3 production and working over 100 hours per week.
In the interview, Musk reiterated that he wouldn’t recommend it and that it “hurt his brain and heart.”
A few months later, Tesla achieved a production rate of 5,000 Model 3s in a week, which is around the level required for the vehicle program to be sustainable.
To be honest, I’m not sure I understand this “death” thing.
Tesla would have definitely run out of money if it wouldn’t have been able to increase Model 3 production, but does that mean that the only option would have been “dying”? Like going bankrupt?
I feel like Tesla would have still been able to raise some money around that time in order to buy them some more time to fix Model 3 production.
I remember back in 2008-2009 when Tesla was running out of money, but the risk to the company’s survival was that they were having a lot of difficulties raising money at that point.
They didn’t have the option to increase production and become sustainable so they relied on raising more capital.
Somehow, I think Tesla would have been able to convince investors of a secondary offering earlier this year in order to help with the Model 3 ramp up.
It would have diluted Tesla’s stock even more, but it would have been better than “dying”.
A threat of death or not, what they did with Model 3 production needed to be done. Thanks to Elon and the thousands of Tesla employees who also almost worked themselves to death to make it happen.