Tesla shifts to 24/7 Model 3 output to hit weekly target

Tesla Inc. will begin around-the-clock production at its Fremont, Calif., assembly plant as it tries to ramp up Model 3 output to 6,000 units a week by the end of June, according to an internal company email.

“As part of the drive towards 6k, all Model 3 production at Fremont will move to 24/7 operations. This means that we will be adding another shift to general assembly, body and paint,” Tesla CEO Elon Musk wrote in the email obtained by Electrek.

The news comes a day after Tesla temporarily suspended Model 3 output in what the company said was a planned pause in production.

The suspension of output — the second since February — was meant to improve automation and systematically address bottlenecks to increase production, a regular move by car companies, Tesla said on Monday.

"We will be stopping for three to five days to do a comprehensive set of upgrades. This should set us up for Model 3 production of 3,000 to 4,000 per week next month," Tesla CEO Elon Musk said in a letter to employees, Electrek reported Tuesday.

"Another set of upgrades starting in late May should be enough to unlock production capacity of 6,000 Model 3 vehicles per week by the end of June," Musk added in the letter, according to Electrek.

Between the Fremont plant and its battery factory, Tesla will be adding about 400 people per week for several weeks, Musk wrote. The company had previously said it was targeting 5,000 a week by around the end of the second quarter.

“The reason that the burst-build target rate is 6,000 and not 5,000 per week in June is that we cannot have a number with no margin for error across thousands of internally and externally produced parts and processes,” Musk said, noting that the carmaker produced 2,250 of the mission-critical sedans last week.

“We are burning the midnight oil to burn the midnight oil,” he added.

Investors are closely watching to see if Tesla is able to meet long-delayed targets and quickly ramp up the Model 3, on which the company's future profitability rests. Tesla is facing pressure on multiple fronts after a fatality in one of its vehicles using its Autopilot system, a downgrade by Moody's, and a public spat between Musk and safety regulators.

Tesla's use of robots to assemble Model 3s has led to more complexity and delays, which Musk acknowledged last week in a tweet: "Excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated."

"Tesla's been trying to run full tilt," said Chaim Siegel, an analyst at Elazar Advisors, before Musk's letter was published. "He's sleeping overnight on the production floor. I don't think there is any way they'd purposely want to slow production. It tells me something's not quite right."

In the letter to employees cited by Electrek, Musk said Tesla had built over 2,000 Model 3s per week for three weeks, with the 2,250 produced last week.

Tesla had previously targeted 2,500 Model 3s a week by the end of the first quarter and 5,000 by the end of the second quarter.

Missed deadlines threaten the unprofitable company's credibility with the market and its ability to raise cash. Musk has said no new funds are needed this year, although many analysts dispute that.

Musk rallied employees in the letter, while warning departments or suppliers who missed the mark, saying they would need a "very good explanation" and a plan for fixing the problem presented directly to him.

Reuters contributed to this report.