Tesla is struggling to manage and fix a significant volume of flawed or damaged parts from its suppliers, sending some to local machine shops for rework, according to several current and former Tesla engineers. The company said it also makes adjustments to the design of some parts after receiving them from suppliers.
On Friday, Tesla CEO Elon Musk promised the company would be profitable and cash-flow positive in the third and fourth quarter of this year. But a high volume of rework and design tweaks could cut into Tesla's margins and contribute to delays in the delivery of its cars.
Tesla said such work is being done on a small subset of parts from suppliers and has not constrained or delayed its Model 3 build plan.
Tesla's future as a mass-market car company hinges on efficient, automated production of the Model 3. The Model 3 is currently the best-selling electric car in the U.S. So far more than 400,000 people have already reserved that vehicle, paying $1,000 refundable fees to do so.