Is Tesla in Crisis?

Is Tesla in Crisis?

Tesla CEO Elon Musk is facing a series of headache-inducing calamities as he pushes to transform the electric carmaker from niche player to mass-market manufacturer with the Tesla Model 3.

Calamities include battling the United Auto Workers union at its Fremont, CA factory, factory, seeing high-level executives leave, and having its parts supply stifled. As Musk said last year, the company is going through “production hell.”

Labor relations are getting worse between Tesla and its factory workers in Fremont, which the UAW is using to file a string of unfair labor practice charges with the National Labor Relations Board. The union conflict had been publicized in February 2017 when Tesla employee Jose Moran posted a blog article detailing harsh working conditions. Moran said that some of these workers had contacted the union because of it. In October, Tesla fired about 700 workers, which CEO Elon Musk said was part of routine performance reviews, but which union supporters described differently.

Volkswagen has faced similar efforts from the UAW to organize its plant in Chattanooga. The union lost a vote in 2014 to unionize factory employees but has successfully organized a group within the plant to stay with it. Workers in the greater Bay Area, where Fremont is based, have been known to be more supportive of unions than in other parts of the country. However, unions such as the UAW have been losing support and membership for several decades. Convincing a majority of the workforce to bring in the union is a difficult task — but the prospect of unionization is enough to rile up Musk.

Tesla workers and management are facing a steep uphill climb. In July of last year, Musk predicted the company would be building 5,000 cars a week by the end of December 2017. A Bloomberg tracker estimates that's more like 832 cars a week this month. To reach Tesla’s revised goal of hitting 5,000 a month by the end of June, conditions will need to improve significantly.

Questions are being raised out how effective Musk has been managing the company through this difficult conversion to a mass-market manufacturer. The electric automaker has been seeing other problems come up, including three of its top financial executives leaving recently. Tesla has been losing other executives, which can be typical for Silicon Valley tech-savvy companies having its talent poached away. But the latest round with the three executives leaving coincides with mounting pressure for profitable Model 3 deliveries.

 

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