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KEY POINTS Tesla produced a record 72,531 Model 3 electric sedans in the second quarter of 2019.

Employees in the open-air GA4 "tent," which is not fully automated, tell CNBC they were pressured to take shortcuts to hit goals — reducing vehicle testing for water leaks and using electrical tape on plastic housings to make quick fixes during Model 3 assembly.

Employees in the tent say they have also had to work through harsh weather and unhealthy air quality.

Current and former Tesla employees working in the company's open-air "tent" factory say they were pressured to take shortcuts to hit aggressive Model 3 production goals, including making fast fixes to plastic housings with electrical tape, working through harsh conditions and skipping previously required vehicle tests. For instance, four people who worked on the assembly line say they were told by supervisors to use electrical tape to patch cracks on plastic brackets and housings, and provided photographs showing where tape was applied. They and four additional people familiar with conditions there describe working through high heat, cold temperatures at night and smoky air during last year's wildfires in Northern California. Their disclosures highlight the difficult balance Tesla must strike as it ramps up production while trying to stem costs. Tesla recently told shareholders that in the three months that ended June 30, it made 87,048 vehicles, including 72,531 Model 3s, the company's lowest-priced sedan. Both were quarterly records. Tesla told shareholders to expect full-year deliveries this year to reach at least 360,000, and more than 250,000 of those are expected to be Model 3s. Last year, Tesla conquered some "production hell" issues, as CEO Elon Musk called them. That included removing or repurposing conveyors and robots that didn't work as planned, and figuring out how to build cars and battery packs with more manual labor. This year, Tesla has been grappling with what could be described as "logistics hell." It has had to deliver cars to customers in more points around the world than ever before. Tesla executives have said the company should be profitable in the second half of 2019. A Tesla spokesperson said the anecdotes employees shared about work in the tent are "misleading and do not reflect our manufacturing practices or what it's like to work at Tesla." The spokesperson said many of the shortcuts described by employees, such as using electrical tape during assembly, are not approved procedures, and that cars are rigorously inspected before shipping. Tesla also said many of the parts used in the Model 3 come with electrical tape on them from suppliers, and showed CNBC photographs of some factory-taped parts. The company said its first-pass yields at the Fremont, California, plant are higher than ever — a measurement that indicates Tesla is producing good cars and is scrapping or reworking fewer units than it did historically. Regarding working conditions in the tent, Tesla said, "We work hard to create a work environment that is as safe, fair and fun as possible, and it is incredibly important to us that employees look forward to coming to work every day. In fact, we have a large number of employees who request to work on GA4 based on what they hear from colleagues and what they have seen first-hand."

A tent is seen at the Tesla factory in Fremont, California, U.S. June 22, 2018. Reuters | Stephen Lam

Pressure to produce under the tent

Tesla assembles some of its Model 3s in a tent, known as GA4 ("general assembly 4") in Fremont. Built in spring 2018, it was supposed to be a temporary measure. The idea was to run the tent mostly on manual labor while Tesla perfected its automated factory lines indoors in what's called "the brick." The tent has now been operating for more than a year. Workers told CNBC that GA4 is now able to produce up to 120 cars per shift, across three shifts per day, amounting to 2,160 Model 3s in a perfect six-day week, or around 30,000 per quarter assuming maximum rates of production. Tesla did not confirm these numbers, but in a statement last year, the company said GA4 was responsible for about 20% of total Model 3 production during a high-output week in July 2018. While the tented line does not crank out the majority of Tesla's Model 3s, it still adds significant volume. When Model 3 lines inside the Fremont factory go down, workers in the tent can stay productive. That's important to Tesla, given its history of over-automation and missed targets. In the tent, Model 3s are put together using manual labor and power tools, lifts and conveyors, but not with any of the sophisticated robotics Tesla uses on the indoor assembly lines. Workers say they do one process at their station repeatedly, usually walking along the line with the car until they're done. Carlos Aranda was a former lead production associate who worked in GA4. Correspondence shared with CNBC shows he resigned from Tesla on June 24, following months of medical leave stemming from injuries he says he sustained on the job. (Tesla claims he was fired for a Twitter post that went against its Workplace Violence Policy, but provided no record of the offending tweet prior to publication, and the separation papers Aranda shared with CNBC do not mention a tweet. After publication, Tesla pointed to a tweet in which Aranda said, "I am so sick of tesla giving me the run around. I am about to quit and burn them to the ground. With what i know i can put a big monkey wrench in the works.") His wife, Maggie Aranda, worked as a Model 3 production associate in another part of GA4. She says she was dismissed on June 11 for using her phone during a shift to book health appointments after an injury. Both the Arandas previously worked on indoor assembly lines at the factory. Six current and former employees supported their accounts of work in GA4 but asked to remain unidentified. These people said that while work in GA4 is physically demanding, many people like working there because the atmosphere is good and camaraderie is strong. They said they can listen to music while they work, with a supervisor's approval, and don't always have to wear a uniform. At the same time, workers were encouraged to take shortcuts to hit their production goals in the tent, according to five people who work or worked there recently. For example, when it's cold in the tent, workers tend to break a high number of plastic brackets and housings that hold critical electronics in place inside of the Model 3, according to four of these people. Rather than waiting for replenishment teams to deliver boxes of new plastic parts to their stations in GA4, they said, supervisors told workers to use vinyl electrical tape to make quick fixes. Carlos Aranda says he personally visited Walmart multiple times to buy the tape and other items for production associates. For instance, this photo shows tape applied to a segment of a white plastic housing where it holds "triple cam" connections in place inside of a Model 3. The Arandas said the edge of this plastic housing piece would frequently crack during installation, and tape was often applied here to hold down the resulting, hinge-like flap.

A photograph sent by a Tesla employee showing how electrical tape was used during Model 3 assembly.

Installed in the windshield of a Model 3, a "triple cam" holds three cameras that allow the vehicle to see the road, traffic lights, lane markings and obstacles ahead. If triple cam connections loosen or break, some of Tesla's safety features — like Sentry mode, AutoPilot, automatic emergency braking or full self-driving — may fail, the Arandas said. The car should then give drivers an alert that AutoPilot is no longer engaged, and the car needs service. Tesla said many of the parts they use in the Model 3 come with electrical tape on them from suppliers, and showed CNBC photographs of some factory-taped parts. Current and former GA4 workers acknowledged this, too. However, they made a distinction — the GA4 workers use tape to fix housings or brackets with cracks or to stop parts from vibrating in the car if they aren't snapped or fastened in perfectly. That's not the same as "factory tape," they said. Factory tape is high-quality and looks as if it's shrink-wrapped on a part, always in the same place. Much of it is wound carefully around bundles of cables and wires in a perfect spiral. The tape that workers would apply in a Model 3 typically has hastily cut or torn ends and varies in placement. A Tesla spokesperson says the company hasn't found evidence of electrical tape being used to make quick fixes in GA4, and would never officially condone or encourage it. The company also emphasized that its cars go through rigorous quality inspections before they leave the factory. A former Tesla technician, who worked in the tent on Model 3s and asked to remain unidentified, analyzed photos from GA4 that were shared with CNBC by current and former employees. This person said Tesla's vehicle engineers would probably not appreciate that Model 3s were being assembled with this cheap vinyl electrical tape, and any processes allowing prodigious use of the tape during assembly should be reevaluated. The technician also emphasized that the Tesla Model 3 is an ideal electric vehicle — as long as it's built exactly to spec.

Other short cuts

Workers say they took other short cuts to hit aggressive new production targets, too. Five people who work or worked in the tent in 2019 said they would frequently pass cars down the line that they knew were missing a few bolts, nuts or lugs, all in the name of saving time. In the tent, most workers have just a couple of minutes to complete a process. If a small item was missing, or a bolt was not torqued in perfectly, they would rather keep cars moving than stop the line and be seen as a bottleneck to production, they said. In particular, these people said, aeroshields are often missing a middle bolt, and loose connections in body controllers are a common issue. For example, this photo shows the power supply for a distribution block in the front right vehicle controller in a Model 3. A nut is missing that should be there to secure electrical connections.

Tesla workers said they sometimes skipped installation of certain bolts, nuts or lugs in a rush to hit their Model 3 production goals.

Wires in this part of the car go to the touchscreen, car computer, door latches and window regulators on the right hand side of the Model 3, while the red cable distributes power into the systems on the right hand side. Although it's a low-voltage connection, if it's not properly secured, it can heat up and cause problems, the former Tesla technician said. Model 3s with loose connections can be hard to detect during inspections, the ex-technician and factory workers said. Tesla said the company "has a robust quality assurance team that reviews each vehicle at the end of the GA4 assembly line to ensure every car was built correctly and is perfect before it leaves our factory to go to customers." Current and former employees also said Tesla reduced "water testing" on cars as the company began ramping up production of Model 3s. In a water test, a vehicle goes into a booth where jets blast it with water from all different directions. Any leaks in the seals are immediately found and fixed. The tests take about 10 minutes each. In late 2018, Tesla changed its policy and now only conducts sample testing for water leaks on Model 3s. Since then, if workers see an issue with the urethane seals around a Model 3 glass roof, for example, they can request a water test. But many in GA4 are hesitant to make that request because of time pressure and a lack of experience or training that they need to identify flaws, a current associate said. A Tesla spokesperson said the company is not aware of any instances where workers were told not to do water testing because that may slow production. The company says it encourages employees to identify opportunities for improvement, and engage all appropriate teams to evaluate potential risks and identify possible solutions. In addition, six current and prior employees said, workers often violated a rule that cars should only be driven in "factory mode," which now limits speed to 10 mph. Workers would sneak freshly built Model 3s out of factory mode to zip them over to a camera calibration station (or "cam cal"), which was located far away from the GA4 tent. (That station has since been moved closer to the tent.) Employees caught doing this would be appropriately disciplined, Tesla said. Mike Ramsey, senior automotive research director at Gartner, said that even before Tesla put a Model 3 assembly line in a tent, it had a "ship-it-now, fix-it-later" mentality inspired by software patching. Tesla's focus, instead, has been to exceed expectations in other areas like brand, vehicle acceleration or charging, he said. While Tesla has been successful with those efforts, he said: "Every time a car rolls off the lot and a piece of trim falls off, or an electrical system is failing after a month, it undermines the brand. That customer is not likely to buy another Tesla." Ramsey also said, "The idea that you would not stop the line, and would patch something with spit and bailing wire — OK, not literally that, but close to it — almost certainly injects quality issues down the road that they are going to have to fix."

Exposed to the elements

Exposure to the elements in GA4 poses another problem for the workers. Six current and recent Tesla employees said GA4 workers have repeatedly asked Tesla's environmental health and safety teams to help with cold temperatures overnight, sweltering heat during the days, and pests — including mice and bugs — in the tent. They say workers commonly deal with heat rash and heat exhaustion. Tesla installed big fans in GA4 to distribute heat and circulate air. However they are not on consistently, these people said, and usually don't make a big difference. Tesla said its environmental health and safety team monitors temperatures to ensure they are within a comfortable range for the safety of employees, production equipment and car parts. They also said they provide temperature controls like cool fans, hydration, rest breaks and heat stress awareness training to employees. Hot, dry conditions can also lead to problems with air quality. Correspondence reviewed by CNBC shows that Tesla required GA4 workers to report for duty even as wildfire smoke floated up from the massive Camp Fire that devastated Northern California in November. On Nov. 9, the day after the Camp Fire ignited, the AirNow Air Quality Index rated Fremont at an "unhealthy" 165, and continued in the unhealthy range for at least another week. Tesla did not proactively distribute respirator masks to GA4 workers in the first few days after the Camp Fire began. Workers had to request the masks, according to internal correspondence shared with CNBC. Inside the building portion of the factory they had HVAC and good air flow, but tent workers were stuck, said Maggie Aranda, and they did not get time off due to the smoke. Tesla says it offered air filter masks who those who wanted them and provided face masks every day as a precautionary measure. When conditions turn cold and wet, other problems arise. For instance, this photo shows rain seeping into the tented roof at GA4.

Rain seeps through a tent above Tesla's GA4 Model 3 assembly line in Fremont, Calif.

Employees wear layers, and big coats that can impede their movement. Supervisors distribute disposable hand-warming packets that workers slip into their gloves or tape to their bodies. Tesla provided big red jackets for GA4 workers last year, but stopped distributing them by early 2019, according to several current and former employees. On cold nights early this year, workers in a tented "paint hospital" sometimes used heat lamps, which are used to dry paint and clear coat on cars, to warm their own bodies, according to current and former production associates. This paint hospital has since been moved indoors, according to public records with the city of Fremont. At a GA4 station where employees checked Model 3 vehicle alignment, Carlos Aranda said, workers used space heaters in late 2018. But when it rained, water seeping into the tent from above and below made these a hazard, he said. He shared photos of a leaking roof and space heater there, plugged in, with rain puddling nearby. Tesla says using space heaters is against company policy.

Tesla workers build cars in a tented assembly line called "GA4" where they are exposed to the elements, including big temperature swings and rain.