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Tesla is still reportedly making batteries for the Model 3 by hand as the company fights to get out of 'production hell' (TSLA)

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Tesla’s Gigafactory in Sparks, Nevada. Tesla

  • A new report from CNBC claims Tesla is struggling to make Model 3 batteries at its Gigafactory in Sparks, Nevada.
  • The report includes claims from current and former employees who raised concerns about inexperienced employees and the fact that some parts of the batteries were being made by hand as recently as mid-December.
  • A Tesla spokesperson told Business Insider that the report is “extremely misinformed and misleading” and denied that Model 3 batteries are potentially dangerous.

Tesla has struggled to produce its first mass-market electric car, the Model 3, after receiving hundreds of thousands of pre-orders for the vehicle. While CEO Elon Musk said the company would be making 20,000 Model 3 vehicles per month by December 2017, Tesla delivered only 1,550 during the entire fourth quarter.

This is not the first time Tesla has struggled early in the production process for one of its vehicles, but a new report from CNBC indicates the company may be further from mastering the manufacturing process for the Model 3 than it would like. The report includes claims from Tesla employees that, as recently as mid-December, the company was making parts of Model 3 batteries by hand in its Gigafactory in Sparks, Nevada. 

Since the batteries contain parts that must be aligned with a high level of precision, using human workers to put together some parts of the batteries could cause a defect, the report claims.

Concerns about the production process have been heightened by the report’s claim that Tesla is using inexperienced employees to produce and inspect the batteries. 

A Tesla spokesperson called the report “extremely misinformed and misleading” in an email to Business Insider. While the company said “some elements of the production process will be more manual,” the spokesperson added those elements will not affect the safety or quality of the batteries.

The spokesperson also said that “many” employees were hired without prior engineering or manufacturing experience, but said that they have received “extensive training.”

“The implication that Tesla would ever deliver a car with a hazardous battery is absolutely inaccurate, contrary to all evidence, and detached from reality,” the spokesperson said. “It is irresponsible to suggest as much based on unnamed, anonymous sources who have provided no such evidence and who obviously do not have a complete understanding of the extensive testing that all batteries in Tesla vehicles are subjected to.”

While Model 3 production delays didn’t prevent Tesla’s stock from surging in 2017, the company will have to prove it can overcome its production difficulties in 2018.

Elon Musk is a master storyteller, but Wall Street will only show so much patience to a company that can’t make the products it sells. Given that Musk may receive a new compensation plan that will pay him only if Tesla’s market capitalization increases, 2018 will be a critical year for Tesla to prove it is good at building.

Get the latest Tesla stock price here.

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