Californian car maker Tesla is shutting down production lines for its older Model S and Model X electric cars for 18 days, starting December 24, 2020, and it appears to be more than just a Christmas break. As to the reasons why, that is the subject of much speculation.
The news of the shutdown, first revealed via an email to staff that was transcribed by CNBC on Saturday, comes as Tesla looks to finish 2020 by reaching its target of 500,000 electric car sales for the calendar year.
Staff affected by the closures will receive a week of full pay, but will also be required to take either forced paid leave or have the option to work in other production departments or “volunteer” for delivery.
In the email shared by CNBC, Tesla boss Elon Musk said: “We are fortunate to have the high class problem of demand being quite a bit higher than production this quarter.”
The Model X and Model S, which account for around 11% of Tesla sales, are presumably not part of this “high class” problem.
But the move to close the production lines for Tesla’s premium electric vehicles has set off speculation about possible other reasons behind the S and X line closure.
Tesla typically ramps up deliveries towards the ends of quarters as it aims to report as many sales (which are only recorded after a vehicle is delivered) as possible.
As the end of fourth quarters also marks the cut off point for subsidies as well as the last chance to aim for whole year sales targets, the ramp up in December is typically the most intense.
But the EV maker has never shut down the Model S and Model X lines before to do this.
Another theory on why Tesla may be closing the S and X lines down temporarily focus on possible upgrades of the S and X lines.
As Tesla investor and advisor Ross Gerber noted on Sunday (US time), “Elon doesn’t shut production lines for no reason.”
Elon doesn’t shut production lines for no reason. #tesla $tsla
— Ross Gerber (@GerberKawasaki) December 13, 2020
The answer may lie in a 15-month-old tweet from Musk regarding the production timeline for the tri-motor drivetrain planned for the Model S and Model X.
“Plaid powertrain is about a year away from production & applies to S,X & Roadster, but not 3 or Y,” tweeted Musk in September 2020.
Yes. To be clear, Plaid powertrain is about a year away from production & applies to S,X & Roadster, but not 3 or Y. Will cost more than our current offerings, but less than competitors.
— Elon Musk (@elonmusk) September 12, 2019
Other theories are that there may be a smaller refresh design in the works for the Model S and Model X, such as has just been applied to the Model 3 – although why this would need a factory shutdown is not clear.
Another is that the “structural” battery design planned for the Model 3 and Model Y are also being planned for the premium vehicles – although as we understand it, if this were going to happen, it would be introduced in line with single-piece castings as per the upcoming Berlin Model Y plans.
The full email sent by Musk to staff according to CNBC is as follows:
Subject: S/X Holiday Shutdown
Hi Team,
The SX lines will be shut down for the holidays starting Dec. 24th and returning Jan. 11th.
We would like you to take the opportunity to refresh or spend time with your family, so Tesla will be giving you a full week pay for the week of Jan. 4th. There will also be limited paid opportunities for you to support other shops or volunteer for deliveries during some of this time.
Dec. 23rd – last day of work before shutdown
Dec. 24th-25th – Paid holidays*
Dec. 28th-30th – Unpaid time off (may use PTO**), support deliveries or other shops.
Dec. 31st-Jan. 1st – Paid Holiday*
Jan. 4th – 8th – Paid time off (40 hours)
Jan. 11th – return to work
If you would like to volunteer for deliveries for Dec. 26th — Dec. 31st, or support other shops from Dec. 28th – Dec. 30th, please use the survey below to let us know your preference. We will do our best to accommodate your requests, but preferences are not guaranteed and will be granted on a first come first serve basis.
Here’s the separate email from Musk to all employees (as transcribed by CNBC):
Subject: Vehicle Production
We are fortunate to have the high class problem of demand being quite a bit higher than production this quarter.
To ensure that we have the best possible customer outcome and earn the trust of the customers and investors who have placed their faith and hard-earned money with us, we need to increase production for the remainder of the quarter as much as possible.
I would only send this note if it really mattered.
Super appreciated,
Elon
Btw, please send me a note directly if you see ways to improve output, but feel that your voice is not being heard.
Bridie Schmidt is associate editor for The Driven, sister site of Renew Economy. She has been writing about electric vehicles since 2018, and has a keen interest in the role that zero-emissions transport has to play in sustainability. She has participated in podcasts such as Download This Show with Marc Fennell and Shirtloads of Science with Karl Kruszelnicki and is co-organiser of the Northern Rivers Electric Vehicle Forum. Bridie also owns a Tesla Model Y and has it available for hire on evee.com.au.