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Here is why Tesla suspended Model 3 production

The temporary shutdown of Tesla’s Model 3 sedan production at Fremont raised some questions on the company’s plan of action. However, CEO Elon Musk sent an email to its employees explaining his intentions and outlining the updated goals for production work at Tesla (TSLA) over the coming weeks.

Musk stated that Tesla was increasing its production target to 6,000 Model 3 units per week with an aim to achieve 5,000 units per week by the end of the second quarter after taking into account a margin of error. Last quarter, Tesla’s aim was to produce 2,500 units per week by quarter-end, which it missed by less than 500 units.

Musk explained that the 3 to 5-day stoppage at Fremont and Gigafactory 1 was to do a set of upgrades that would increase production capacity to 3,000 to 4,000 units per week next month. This would be followed by another set of upgrades in late May, which would set the company up to produce 6,000 units by June-end.

Tesla is increasing its production target to 6,000 Model 3 units per week by the end of June

The target for 6,000 units per week by the end of June was set for all production departments and suppliers of Tesla. As part of this target, Model 3 production operations at Fremont will now run for 24 hours with additional shifts added to certain processes. Tesla will add new employees over the coming weeks as part of its production ramp-up.

Alongside his bold target, Musk also hinted that the company was getting closer to achieving profitability. He also said there would be an increased focus on reducing expenses going forward and asked for all heavy expenditures to be put on hold and unnecessary costs to be cut.

Musk alluded to the web of contractor companies within Tesla, which led to high costs and less meaningful work. He described their performance as ranging from excellent to ‘’worse than a drunken sloth.” Musk gave the contractors one week to prove their worth or risk contract cancellation.

Musk also called for doing away with frequent and unnecessary meetings, complicated chains of command that hinder better communication and unnecessary jargon.

Some heavy winds of change have begun to blow at Tesla. It remains to be seen how the company will fare at the end of it all.

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