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Tesla looks to tackle production woes with lesser paint options

Tesla (TSLA) regained some lost ground this week, ending yet another phase of value erosion, after investors responded positively to CEO Elon Musk’s fresh claims the company will turn profitable in the third quarter. Adding to the bullish sentiment, Tesla also got a rating upgrade.

Musk is once again busy devising new strategies to improve operational efficiency, especially the production of Model 3. Hardly a week after stirring a fresh controversy for smoking marijuana and drinking whiskey during a media interview, Musk Tuesday announced plans to slash the color options, ‘obsidian black’ and ‘metallic silver’, for its luxury electric cars in an effort to simplify manufacturing.

The two paint options will be removed from the company’s menu with immediate effect, limiting the number of available options to five. However, customers willing to pay a premium can still make a special request for ‘obsidian black’ and ‘metallic silver’.

The two paint options will be removed from the company’s menu with immediate effect, limiting the number of available options to five

For Tesla, meeting the weekly production target of 5,000 units for Model 3 is very crucial. While ditching the color options is a convenient step towards minimizing delays, an earlier decision to do away with a brake test in the final stage of production did not go well with the stakeholders, and many raised safety concerns.

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Experts believe the current quarter will be an important period in Tesla’s history, considering the mixed response it is receiving from the market. There is a great deal of optimism among investors over the repeated assurances on profitability, though they come at a time Musk’s leadership is under severe criticism. There is also skepticism over his ability to steer through the current challenges and achieve the production targets.

The latest of the series of bizarre actions from Musk cost Tesla two senior executives – Chief People Officer Gaby Toledano and Chief Account Officer Dave Morton stepped down earlier this month. The company lost more than 40 executives so far this year, including the recent exit of communications VP Sarah O’Brien.

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Tesla shares have been in a free fall since the first week of August and lost sharply last week following Musk’s controversial media interview. Though trading started on a positive note this week, marked by some strong gains, the stock dropped about 2% in premarket trading Tuesday.

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