Elon Musk Email

In an email to employees last week, Tesla CEO Elon Musk explained that the reason for the Model 3 production shutdown in Fremont and Gigafactory 1 is to prepare to increase production. Substantially

 
Musk explained that Tesla is now shooting to more than double production of 6,000 units per week across all production processes and suppliers in order to achieve 5,000 units per week in June.

The move seems to be in response to the recent miss in Model 3 production targets and is very bold in a Musk sort of way.

It’s a great email and I love how he evens gets low-level enough to tell people to walk out of meetings or phone calls if they aren’t well structured.  So good.

 

Here’s the email:

Progress, Precision and Profit

Elon Musk

Everybody

Progress

First, congratulations are in order! We have now completed our third full week of producing over 2000 Model 3 vehicles. The first week was 2020, the second was 2070 and we just completed 2250 last week, along with 2000 Model S/X vehicles.

This is more than double Tesla’s weekly production rate last year and an amazing feat in the face of many challenges! It is extremely rare for an automotive company to grow the production rate by over 100% from one year to the next. Moreover, there has simultaneously been a significant improvement in quality and build accuracy, which is reflected in positive owner feedback.

Starting today at Giga and tomorrow at Fremont, 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 3000 to 4000 per week next month.

Another set of upgrades starting in late May should be enough to unlock production capacity of 6000 Model 3 vehicles per week by the end of June. Please note that all areas of Tesla and our suppliers will be required to demonstrate a Model 3 capacity of ~6000/week by building 850 sets of car parts in 24 hours no later than June 30th.

Any Tesla department or supplier that is unable to do this will need to have a very good explanation why not, along with a plan for fixing the problem and present that to me directly. If anyone needs help achieving this, please let me know as soon as possible. We are going to find a way or make a way to get there.

The reason that the burst-build target rate is 6000 and not 5000 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, amplified by a complex global logistics chain. Actual production will move as fast as the least lucky and least well-executed part of the entire Tesla production/supply chain system.

By having a Model 3 subsystem burst-build requirement of 6k by the end of June, we will lay the groundwork for achieving a steady 6k/week across the whole Model 3 system a few months later.

As part of the drive towards 6k, all Model 3 production at Fremont will move to 24/7operations. This means that we will be adding another shift to general assembly, body and paint. Please refer anyone you know who you think meets the Tesla bar for talent, drive and trust. Between Fremont and Giga, Tesla will be adding about 400 people per week for several weeks.

Precision

Most of the design tolerances of the Model 3 are already better than any other car in the world. Soon, they will all be better. This is not enough. We will keep going until the Model 3 build precision is a factor of ten better than any other car in the world. I am not kidding.

Our car needs to be designed and built with such accuracy and precision that, if an owner measures dimensions, panel gaps and flushness, and their measurements don’t match the Model 3 specs, it just means that their measuring tape is wrong.

Some parts suppliers will be unwilling or unable to achieve this level of precision. I understand that this will be considered an unreasonable request by some. That’s ok, there are lots of other car companies with much lower standards. They just can’t work with Tesla.

Profit

A fair criticism leveled at Tesla by outside critics is that you’re not a real company unless you generate a profit, meaning simply that revenue exceeds costs. It didn’t make sense to do that until reaching economies of scale, but now we are there.

Going forward, we will be far more rigorous about expenditures. I have asked the Tesla finance team to comb through every expense worldwide, no matter how small, and cut everything that doesn’t have a strong value justification.

All capital or other expenditures above a million dollars, or where a set of related expenses may accumulate to a million dollars over the next 12 months, should be considered on hold until explicitly approved by me. If you are the manager responsible, please make sure you have a detailed, first principles understanding of the supplier quote, including every line item of parts & labor, before we meet.

I have been disappointed to discover how many contractor companies are interwoven throughout Tesla. Often, it is like a Russian nesting doll of contractor, subcontractor, sub-subcontractor, etc. before you finally find someone doing actual work. This means a lot of middle-managers adding cost but not doing anything obviously useful. Also, many contracts are essentially open time & materials, not fixed price and duration, which creates an incentive to turn molehills into mountains, as they never want to end the money train.

There is a very wide range of contractor performance, from excellent to worse than a drunken sloth. All contracting companies should consider the coming week to be a final opportunity to demonstrate excellence. Any that fail to meet the Tesla standard of excellence will have their contracts ended on Monday.

Btw, here are a few productivity recommendations:

– Excessive meetings are the blight of big companies and almost always get worse over time. Please get of all large meetings, unless you’re certain they are providing value to the whole audience, in which case keep them very short.

– Also get rid of frequent meetings, unless you are dealing with an extremely urgent matter. Meeting frequency should drop rapidly once the urgent matter is resolved.

– Walk out of a meeting or drop off a call as soon as it is obvious you aren’t adding value. It is not rude to leave, it is rude to make someone stay and waste their time.

– Don’t use acronyms or nonsense words for objects, software or processes at Tesla. In general, anything that requires an explanation inhibits communication. We don’t want people to have to memorize a glossary just to function at Tesla.

– Communication should travel via the shortest path necessary to get the job done, not through the “chain of command”. Any manager who attempts to enforce chain of command communication will soon find themselves working elsewhere.

– A major source of issues is poor communication between depts. The way to solve this is allow free flow of information between all levels. If, in order to get something done between depts, an individual contributor has to talk to their manager, who talks to a director, who talks to a VP, who talks to another VP, who talks to a director, who talks to a manager, who talks to someone doing the actual work, then super dumb things will happen. It must be ok for people to talk directly and just make the right thing happen.

– In general, always pick common sense as your guide. If following a “company rule” is obviously ridiculous in a particular situation, such that it would make for a great Dilbert cartoon, then the rule should change.

If there is something you think should be done to make Tesla execute better or allow you to look forward to coming to work more (same thing in the long term), please send a note to [redacted]

Thanks for being such a kickass team and accomplishing miracles every day. It matters. We are burning the midnight oil to burn the midnight oil.

Elon

The Future of Cars

I’ve been reading and listening a lot about cars and their evolution lately. It’s pretty fascinating.

It seems that three trends are converging to shape our future:

  1. Electric cars are becoming a real option.  This changes the game by making the hard part of building a car shift from making an engine to making a battery. This is a much different, and much easier, problem.  Opens the market to many more and different companies. 
  2. Self-Driving cars.  This has been happening at Google for over a decade. Now Tesla has one, so does Audi and BMW, and Uber has said this is the future and is pouring resources into it. Apparently the only hard parts remaining for self-driving cars to figure out is how to drive in bad weather and how to see through fog and haze.  I’d say that lots of humans struggle in these areas too. 
  3. On-demand cars.  You can call a car at the push of a button.  Uber and Lyft’s come to me  in under 3 minutes now.  They are everywhere and growing.

The mix of all three of these make for some interesting scenarios.  Some quick ones that i’ve been pondering about:

  1. In the future, you own a self driving car.  You go to dinner in the city and it drops you off at the restaurant. It then can drive around the city and pick up people (like an Uber) and make some quick cash.  Will we allow just any self-driving car to do this?
  2. What do the interior of these new self-driving cars look like?  You don’t have to face forward and you don’t have to have a dashboard. You don’t even have to sit up — you could be lying down and sleeping while they drive.  The extra sleep or productive time I would gain from a self-driving car is hours a day week and days a month.  The found time would be incredible. 
  3. In the future, do people even own cars or are there just a lot of on-demand vehicles of them out there that are available on demand?
  4. Self-driving cars have better collision detection that humans.  They can communicate with cars around them and decide on where they are going ahead of time. In that case, do we even have lanes on the road anymore? Do we have stop signs and stoplights?  Are there a lot more bicyclists because you know it’s 100% safe to ride your bike on the road?
  5. Who makes all of these cars? The car industry is $1 trillion. To put that into perspective: the global advertising industry is $500 billion.  The 3 luxury car manufacturers of BMW, Lexus an Audi make up a market about the same size of the iPhone market.  There are very few things in this world that are as big as the car industry. So, you can see why it’d be enticing for Apple to get into this game.

It’s interesting that Uber thinks of the driver as a major cost issue in their platform and getting rid of the driver gets rid of 70% of the costs of a trip.  This is why they are aggressively exploring “smart routes” and Uber Pools as 1.0 version of driverless cars. 

I’ve noticed that some of the people I talk to about this are hesitant or resistant to this future. People love their cars. I know that i do.  But i have to imagine that people use to love their horses too.  In fact, i’m guessing that people liked horses back in the day more than we like cars now.

 

I Love Luxe

Parking in San Francisco is a pain and I always dreaded visiting some of my friends as i knew i’d be circling for a long long time.

The Luxe team

That is, until i met Luxe.  They are an on-demand valet service.  About 10 minutes before you arrive somewhere, you open the app and drop a pin at where you’re going.  They will then have someone meet you there who will then take your car and park it for you in one of their lots.  The valets cruise around on little foot scooters which they put into your trunk when they take your car.

Also, you can have them bring your car to a different spot than where you dropped it off.  So, on a friday night if I meet my friend at his house and then we walk to dinner and then take a Lyft/Uber to a movie/show somewhere, i can then have my car delivered to me once we’re all done so I can drive home.

The price is what makes it doable.  It’s $5 an hour or $15 daily max. It’s less than most garages in the city but with more convenience.

They also have a $300 monthly unlimited use rate which is also cool if you want to use it for work or if you don’t have a parking spot at home.  I somehow doubt that it’s that profitable, or profitable at all as a business, but if VC’s want to fund my convenience, i’ll take them up on that offer.

Note: they just switched all of the employees to be W2 workers.  Interesting.

Driving in San Francisco

I was out in SF these past two days.  A few observations: 

First, i was stuck in traffic for about 2 hours trying to get from Oakland airport to SF city.  The Bay Bridge was backed up and we just sat for hours.  Finally, when the traffic parted, i looked to my left and saw a rainbow and knew that everything going forward would be alright:

 

After hitting the city, i cruised down to Palo Alto area and saw an interesting sight.  It was my first sighting of the new BMW i3.  The i3 is the Bavarian automaker’s first fully electric vehicle available to buy. I thought it was fitting that i saw the electric car surrounded by the biggest polluting trucks i’ve ever seen.  Check it: 

I also had a great time jamming out to new favorite tune.  It’s Bruno Mars’s new song which just jams.  I saw it on SNL this weekend and was blown away.  Check it out: 

Anyway, it was a successful trip to the bay area although I’m happy to be headed back to Colorado.  Given the Jan. 3 due date of baby #2, i expect i’ll be taking a little hiatus from traveling for a while. 

 

Tesla and Continuous Deployment

I’m thinking about getting a new car. Mostly because i never drive my car, it frequently needs maintenance, and it just sits in my garage depreciating. So, i’d like to have a less expensive, more reliable car depreciating. 

Of course, the car i want is the Tesla.  It has everything a guy could want.  But it’s too expensive and the Tesla SUV (the Tesla X) isn’t available yet.  So, back to the drawing board.  I’ll keep you posted as to what i get around to. 

In the meantime, i thought i’d write a little about why I think Tesla is so great.  One key characteristic is how they release their cars. Most car manufacturers do a waterfall-style release schedule, meaning they do one step of the manufacturing process after another in a linear way:

  1. First, design the car and call it a model name (usually after a year)
  2. Second, produce the car in a factory
  3. Finally, release the car to the public
  4. Then, start the process over again with a different model. 

Most software companies (Kapost included) do it a different way, called “continuous deployment” where you release your product and then continuously update it every day, week and month.  This way you can take customer feedback and immediately make change and improvements for all customers. 

Telsa is doing this too. Their Model S sedan downloads firmware updates on a regular basis.  These software changes go much further than simply changing user interface elements in the dashboard (which is a monster 11 inch touch screen).  Instead, Tesla will modify major elements of the car from the suspension to its acceleration and handling characteristics.  When they found out that people were lowering the height of the car too much on highways resulting in fires from drivers running into debris, they made a quick firmware update not allowing the car to be lowered as much.  

What’s even cooler about doing this continuous release cycle is that Tesla has broken automobiles traditional release schedule.  Rather than waiting a year to roll out a new Model S, they have been continuously improving the product every quarter on the assembly line.  There are no model years to differentiate a Model S in 2012 from one in 2014.  

That’s just one of the reasons they’ll disrupting the industry.  I love it. 

 

A Bet For Self-Driving Cars

I’m a huge fan of self-driving cars.  Google’s effort to make a car that drives itself is pretty awesome. If you have read about them, read the Wired article here.  Just think of all the time and productivity you would earn if you could have a car drive you everywhere.  For all the minutes you’re in a car, you could now be doing something else.  It’ll be found time.  It’s glorious.

Because of my enthusiasm, I made a bet a few weeks ago here at work.  I’m betting that a self-driving car will be available for me to purchase before 3/1/2023.

Some details:

  • The car has to be on the road and legal to drive somewhere in USA
  • It must cost under $150k

I’m taking the under for $200 against Keith.


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Local Motors

Screen shot 2009-11-05 at 4.23.23 PM

This is a company, Local Motors, i just found out about (from Toni) that crowd-sources the designs of cars and then builds them in a micro-production environment.  This is the next car their are building (below).  It looks totally sweet.  They build each car one by one and costs roughly $50k per car.  But they are (1) totally unique; (2) quite fast; (3) environmentally sound – 30 mpg on clean desiel; (4) and kick ass!

I’d love to have one of these.  To me, cars are getting more and more similar.  As a kid, i used to be able to identify the make of a car by their headlights in the dark.  Now i can’t even identify them in the daylight. A Nissan looks like a Toyota which looks like a Ford.

I love the thought of crowdsourcing and micro-producing for cars.  We’re already doing with t-shirts (threadless), shoes (nikeID), and airplanes (Epic planes)

rally-fighter

The Grindhouse is a Double Dose of Awesome

Tarantino and Rodriguez are teaming up to do a double feature called The Grindhouse.  It’s a movie that shows 2 separate films back-to-back. The first (Rodriguez’s) is a horror movie called Planet Terror which includes has a chick with 1 normal let and 1 leg as an assault rifle.  The second (Tarantino’s) is an action adventure flick with a scarred (physically and emotionally) Kurt Russell who drives a tricked out car and kicks some ass.  It’s as if you took all the great parts of Knight Rider, Roadhouse, Tango & Cash into a room with a gallon of whiskey and then made it all ironic.  At least that’s what i’m expecting.  See for yourself….

[youtube=http://www.youtube.com/watch?v=A5L4vvNpvYw&eurl=http%3A%2F%2Fwww%2Egoogle%2Ecom%2Freader%2Fview%2F]

Knight Rider is Coming Back

They’re finishing up the script and getting ready to remake the original pilot episode “Knight of the Phoenix” into a feature film.  One thing that has been confirmed: Hasslehoff will not be in the film.  Below is one of the proposed cars for K.I.T.T. (which is a Koenigsegg CCS) although the rumors are that it’ll be more like a 2006 Camero.  All details are fleshed out in this article.  Whatever the car is, i loved the show and am pretty excited to see it come to the big screen. KITT