Tesla Suffers More Manufacturing Woes

Tesla Inc. (TSLA) is facing yet more setbacks in its manufacturing process as it tries to automate production of its Model 3. The electric auto company is reportedly churning out a significant number of flawed parts from its factory in Fremont, California, numerous unidentified employees told CNBC. Repairing and reworking the flawed cars and defective parts is more work than the factory can keep up with, the sources said.

One employee estimated that about 40 percent of the parts made in the Fremont factory needed to be remade. Another said that the inability to hit production targets is dampening morale.

To date, about 400,000 people have reserved the Model 3, paying about $1,000 in a refundable fee. But the production process has been riddled with setbacks and delays. In fact, Tesla recently admitted that last month it had halted production of its Model 3 for a week, saying it needed to iron out “bottlenecks” that created delays. (See also: Tesla Suspends Model 3 Production in Feb: Report.)

Making Last Year's Goals

A year ago, Tesla CEO Elon Musk said that the company said it sought to produce about 20,000 Model 3 vehicles each month by the end of 2017. But then that target date was pushed to this year. Now, Tesla is aiming for 2,500 per week by the end of March and 5,000 vehicles per week by the end of June, closer to the 2017 goal.

Tesla has reportedly shifted engineers and technicians from its other facilities to attend to repairs in Fremont to improve the backlog of flawed parts, employees say. In addition, they say Tesla sends flawed parts to its remanufacturing facility about 50 miles away, but Tesla denied that claim. “Our remanufacturing team does not ‘rework’ cars,” a spokesperson told CNBC.

Tesla shares have gained about 28.8% in the past year, though the stock is down 1.4% in the past month. Tesla’s market cap is now about $55.8 billion, greater than either General Motors Co. (GM) or Ford Motor Co. (F). (See also: Tesla Stock Retest Support After Breakout Week.)