Elon Musk told Tesla employees to expect a “nutty” end-of-quarter delivery wave this quarter at a new company-wide meeting.
The automaker has been trying to move away from quarterly delivery waves, but special circumstances made one inevitable at the end of this quarter.
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.”
This both increases costs as Tesla does everything logically to get the cars to customers and negatively affects the delivery experience for the customers who are often rushed to take delivery.
At the end of last year, CEO Elon Musk told employees to worry more about cost than delivery waves and that Tesla will move away from brought delivery cycles.
However, he told Tesla workers to expect a significant delivery wave this quarter during tonight’s company-wide meeting.
During the meeting, Musk was asked by an employee when delivery cycles will level off to avoid the “insane end-of-quarter delivery push”.
The CEO responded:
“This has been a challenge since late 2008. There always seems to be something that happens and causes the end of the quarter to be nutty and this quarter will not be an exception – mostly because we had this huge challenge with the COVID restrictions in Shanghai. It basically shut down the Shanghai factory for much of the early part of the quarter. It is only now getting back to full production. It will be pretty intense this quarter.”
Musk tried to reassure employees that “unless something happens”, Tesla should have a “much smaller wave” next quarter and it should get gradually better as Gigafactory Berlin ramps up production and frees up capacity from Gigafactory Shanghai, which is currently exporting a lot of vehicles to Europe.
The CEO previously said that will probably not break another delivery record because of the production shutdown, but he hinted that Tesla could possibly still deliver close to 300,000 vehicles.
Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.