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Tesla prepares to boost production and return to hiring mode

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Workers at Tesla’s Fremont, Calif., assembly plant in October 2017.
(Russ Mitchell / Los Angeles Times)
Bloomberg

Tesla Inc. is poised to increase production at its California car plant and is back in hiring mode, according to an internal email sent days after the company wrapped up a record quarter of deliveries.

The electric-car maker is “making preparations” to raise output at its factory in Fremont, Jerome Guillen, Tesla’s automotive president, wrote Tuesday. “While we can’t be too specific in this email, I know you will be delighted with the upcoming developments.”

After several rounds of job cuts announced by Chief Executive Elon Musk over the past year, Guillen also told employees that Tesla was hiring. “As we continue to ramp up production, please tell your friends and neighbors that we have lots of exciting new positions open, both in Fremont and at Giga,” he wrote, referring to the company’s battery factory near Reno.

Tesla shares climbed 3.9% on Wednesday to $238.92. A copy of the email was seen by Bloomberg, and a Tesla spokeswoman didn’t immediately respond to a voicemail or email seeking comment.

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The plan to boost production is a show of confidence by Tesla in the sustainability of demand for the Model 3, which paced the company’s record 95,200 deliveries in the second quarter. The sedan is helping Musk overcome flagging sales of the Model S, which went into production in 2012, and the Model X, which started output in 2015.

Musk this week tamped down speculation that “refreshed” versions of the Model S and X were coming soon, saying the vehicles will get “only a series of minor ongoing changes.” Tesla delivered a total of just 17,650 Model S sedans and Model X crossovers in the second quarter, down 21% from the same quarter last year.

Tesla’s shares had plunged 31% this year through Tuesday’s close. The rout has been fueled by disappointing first-quarter deliveries and concern that the cheaper Model 3 is cannibalizing sales from the higher-margin S and X models, preventing the company from earning profits.

But just as Musk has been adamant that demand isn’t a problem for Tesla, Guillen’s email to employees was upbeat. He wrote that the company “hit new records in all production lines for output and efficiency” in the most recent quarter — at both the California and Nevada plants — and that “quality is also reaching record highs.”

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Tesla has said it plans to produce “significantly” more than the 360,000 to 400,000 vehicles the company expects to deliver in 2019. Musk had promised the company would be building 500,000 cars a year by the end of last year.

Output may reach 500,000 vehicles worldwide this year if its factory now under construction near Shanghai can reach “volume production” early in the fourth quarter, the company told shareholders in April.

“The stamping, body, paint, and general assembly lines in China are well underway and hitting records in both line design and fabrication,” Guillen said.

In a Wednesday note to investors, Morgan Stanley stock analyst Adam Jonas wrote that “we do not expect Tesla production to surpass an annual run-rate of 500k until late 2020.”

Guillen’s note urging employees to put the word out that Tesla was hiring may have come as a bit of a surprise. Musk announced plans to reduce headcount by about 7% in January and 9% in June 2018. As of Wednesday morning, Tesla’s job-listings website hadn’t posted a Fremont position since June 27 and showed only a handful of jobs posted in all of June.

While Guillen’s email doesn’t mention it, Tesla does have a new model in the works that may bring about need for more workers. Musk said last month that the company was likely to produce the Model Y — a crossover smaller than the Model X — in Fremont.

Guillen ended his email with a reminder to employees that they should refrain from leaking internal communications to the public.

“Do not share company information through email, Instagram, Facebook or Twitter. Leave that to Elon!” he wrote. “Once that information is public, feel free [to] retweet your heart out, share on IG or FB.”

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Times staff writer Russ Mitchell contributed to this report.


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