$TSLAQ. I've just read through the Sheridan deposition, and will summarize what I found interesting here with some context.

Who is Mr. Sheridan? He's a mechanical engineer with an MS in Manufacturing Systems from a great technical school. Before TSLA, he worked at a high 1

tech company as a manufacturing engineer for over a decade. Then he spent more than a decade running manufacturing operations for a premier medical device company. He's very experienced in lean manufacturing, operations, manufacturing systems integrations, and new product 2

introductions.

He joined Tesla in May 2017 as a senior manager of product optimization, which would then be changed to the "Industrial Engineering and Systems Team." His team supported the entire factory: driving manufacturing operations improvements in energy products, 3

powertrain, driving units, and Model 3 battery products. In short, his job was increase efficiencies.

When he started at Tesla in May 2017, the Model 3 equipment was being installed. There were some ''hand-built" prototype units in place, and around July 2017 the actual 4

production lines were also being installed.

In early 2018, Mr. Sheridan was tasked to work with the NCM team (Non Conforming Materials). NCM is different than scrap, in that materials go to NCM to decide whether they are indeed scrap (waste), or whether they can be 5

reworked and put back into the manufacturing inventory.

This is where he got to know Marty. In roughly May 2018, Marty was a NCM lead and worked with Mr. Sheridan for some weeks before they both left Tesla. 6

Their collective job at the time was to "get a handle on all of the inventory in NCM. There was just a lot there. A lot of it was missing, didn't have good inventory controls around it. And we were sorting and finding and looking for this stuff around the gigafactory." 7

Regarding scrap: there was a task force formed, based on Elon's rhetoric "about profitability and going for profitability." led by Jerome Guillen and Drew Baglino. 8

According to Mr. Sheridan, "they basically started driving projects and relaxed specifications to, you know, be able to produce more products and not scrap as much."

I'm going to attach specific parts of the deposition in no particular order next that I found worth noting: 9

Scrap increased significantly as Tesla ramped the Model 3 production, which is no surprise. In response to Tesla's lawyer asking whether Tesla was able to increase efficiencies in Model 3 production, Mr. Sheridan made clear that scrap increased significantly. 10

Mr. Sheridan speculates that $50M per quarter of battery related scrap in 2018. It is clear from Mr. Sheridan's deposition that he's not a finance guy and does defer to their finance team when pressed, which is fair. 11

Here, discussing discrepancies between the MOS (inventory system, aka, Manufacturing Operating/Execution System) and the finance numbers, Mr. Sheridan defers to Scott Kohn and the finance team. These part of depo struck me more as corporate incompetence than a smoking gun. 12

This MOS system was specifically built by Tesla for the Model 3. I don't have enough information to know whether it was built in house or customized from a 3rd party SAAS system. 13

Mr. Sheridan didn't deal with inventory once it was scrapped. At that point, production control folks would take over responsibility. 14

Back to the "profitability task force" that got this whole scrap efficiency program started. It was led by Jerome Guillen and Drew Baglino to "relax specifications so that we could then no longer call that type of defect scrap." 15

They talk specifically about one bundle of product specifically, a containment called AR622. This appears to be the accidental robot f*cking batteries with a teach pin. Mr. Sheridan states that he doesn't know what happened to them afterwards. 16

This is where it gets more interesting. Not being a manufacturing expert, it's hard for me to tell what's normal course process adjustments vs. something more nefarious. Incompetence, lack of discipline, speed over accuracy, and hitting production nos over all, come to mind. 17

TSLA relaxes its manufacturing accountability / standards / parts traceability for speed and to maximize time running. WHY?! Well, of course, it's because Elon and his fat thin skinned person couldn't handle it. He overruled the process and they dumped manufacturing SOP. 18

Now, when did this period occur, what I would describe as manufacturing chaos and quality sacrifice for production output? The model 3 ramp, of course. 19

More confirmation that scrap was stored indefinitely in storage containers. 20

Where did the scrap go? It was recycled. BUT, the company that traditionally recycled it (I don't know which co), couldn't keep up with it. Is this where JB Straubel and Redwood comes in? Or were they always in? 21

Mr. Sheridan spoke very highly of @tripp_martin throughout the deposition. 22. https://twitter.com/NashGrumps/status/1295749384559366147?s=20

Lastly, Mr. Sheridan was fired in June 2018 due to Tesla's push for profitability. Elon fired the most expensive (best quality?) team members. The asshat gave folks, those that moved their lives in order to join his team, four weeks of severance in return. Elon is a douche. END