Tesla's Stock Tumbles after CNBC Report Claims Model 3 Has 40% Faulty Parts

Tesla Model 3 on production line 1 photo
Photo: Vimeo screenshot
Nobody who wants to be taken seriously will ever use the expression "fake news" again, but we're pretty sure that's what Tesla Inc. would have liked to scream out loud the moment the CNBC piece came out.
The article is titled "Tesla employees say automaker is churning out a high volume of flawed parts requiring costly rework" and is based on the alleged statements of two unnamed former employees of the car manufacturer. In it, it says that "40 percent of the parts made or received at its Fremont factory require rework."

Given the dodgy start to life the Model 3 has had, this kind of news isn't going to help matters, particularly since we're nearing the next deadline set by Elon Musk regarding the sedan's production rate. The Fremont plant - with help from the Gigafactory 1, where the battery cells and modules are made - should have an output of 2,500 Model 3s a week by the end of this month. Is it just Musk, or can you hear "tic-tac" as well?

The obvious consequence was a severe drop in the value of Tesla's stock, which now sits at $326.63 after reaching $347.11 on Monday, the highest point in the last five days. With Tesla Inc., you just know you're not buying into the most stable company on the market, but on the other hand, it's still nerve-wracking for stock-owners to see the value drop so much, and all due to an unchecked story in the media.

However, it did provide a good chance for those looking to buy, which is why you'll hear plenty of theories saying these things are all orchestrated. But we're not here to judge, only to report, so we'll let that discussion to others.

Tesla couldn't just take the punch and go on with things as if nothing happened, so it issued a lengthy response to the allegations. You can read it in full below in the "Press release" section, but here's the jest of it: “Remanufacturing is a process that literally every automaker on earth performs. CNBC is extracting a few lines from two job descriptions posted online and making gross assumptions about the roles that are inaccurate. Our remanufacturing team is very small, comprising only 0.1% (40 people) of our nearly 40,000 employees. Any “expert” claiming there is something unusual about our remanufacturing or that it has something to do with the quality of cars that come off a production line is either very confused or just completely wrong. In reality, like other automakers, Tesla remanufactures parts because doing so uses fewer materials and less energy than building a new part from scratch. It is undeniably a good thing that is ultimately better for the environment and if well done is equally good for the customer.”

Tesla is due to give us an update on where the Model 3 production stands during the first week of April, which means we'll soon find out if the 2,500 weekly units target was met. Depending on that report, expect to see more fluctuation on the stock market.
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About the author: Vlad Mitrache
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"Boy meets car, boy loves car, boy gets journalism degree and starts job writing and editing at a car magazine" - 5/5. (Vlad Mitrache if he was a movie)
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