Elon Musk said that this week will be Tesla’s (TSLA) “most intense delivery week ever” in a new email to employees.
In a short email to employees over the weekend and obtained by Electrek, Tesla CEO Elon Musk thanked Tesla workers for the “hardcore delivery push.”
Tesla has been known to have intense end-of-quarter delivery pushes due to its distribution system, which is very different from other automakers that use third-party dealerships.
Since Tesla sells directly to customers, the automaker owns the vehicle until it is fully delivered to the buyer and paid for.
It results in transit times being extremely important for Tesla financially since the automaker takes on the cost of building those cars and doesn’t get any money until the customers can actually pick them up.
Therefore, when Tesla has a lot of vehicles in transit at the end of a quarter, the quarter looks bad for them financially.
It’s why Tesla tries to build vehicles for exportations at its Fremont factory and Gigafactory Shanghai early in the quarter and vehicles for local deliveries later in order to allow for transit time by the end of the quarter.
However, this strategy results in Tesla’s sales and delivery team having to handle significant volumes of vehicles to deliver toward the end of each quarter, which are called “delivery waves” or “delivery pushes.”
The third quarter of 2021 is ending this week, and it sounds like this delivery push is particularly intense.
Earlier this month, we reported on Musk telling employees in a company-wide call that “‘this is the craziest month of deliveries Tesla (TSLA) will ever have.”
In the new email sent this weekend, the CEO is saying that it comes down to the last week:
This will be the most intense delivery week ever for Tesla.
Musk previously disclosed that Tesla built a lot of vehicles earlier this quarter that had to sit with missing parts for a while due to supply chain issues.
The parts were added by service teams later, which contributed to pushing deliveries toward the end of the quarter.
In the email, the CEO also reiterated previous comments that delivery pushes should be more manageable in the future:
Hopefully, a lot easier next quarter.
Musk said that Tesla could let more deliveries slip into next year, but the main difference-maker when it comes to flattening the delivery waves is going to be Gigafactory Berlin, which is going to reduce the need for vehicles to be exported from Gigafactory Shanghai and Fremont Factory.
It is going to both shorten transit times and increase production capacity for local demand throughout the entire quarter.
However, while Tesla is expected to start Model Y production at Gigafactory Berlin next month, the production ramp is expected to take a year.
We likely won’t see a significant impact until next year.
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Author: Fred Lambert
Source: Electrek
