As Tesla went through production hell in the second quarter of 2018, the electric car maker is now facing delivery hell. Tesla is now building around 7,000 cars every week and nearly 6,000 of them has to be delivered to customers in the United States.
If production keeps inching higher, deliveries are going to be strained because Tesla does not have enough stores and delivery centers across the country.
As you can see from the picture above, there are plenty of states where Tesla does not even have a store. There are several factors that forced Tesla’s hand from expanding its store footprint.
“For now, more than 20 states already allow the California automaker to sell its own vehicles, while others have set up a system that at least partially bans manufacturers from direct sales and effectively protects auto dealers. Those states include Texas, Michigan, West Virginia, and Utah, among others. Last year, court rulings and changes in the law in Arizona, Missouri, Indiana, and other states have paved the way for Tesla to sell directly to the public.” – Arstechnicia
But Tesla cannot use lack of delivery centers as an excuse if they want customers across the country to order Tesla cars. Tesla was indeed aware of this looming trouble over the horizon.
Tesla CEO Elon Musk told investors in early 2017, “The delivery of the cars is where the investment is needed. We need to deliver three or four times as many cars. But we don’t want to have three or four times as many delivery centers. How do we make that delivery process more streamlined, less paperwork, less bureaucracy and get people really ahead of time with really well-produced instruction videos for how to use their car. And well, of course, the best instruction is like not having instructions. And you will actually be able to play all of the instructions needed for your car on your car.”
The only way to address the delivery issue is by taking the car to customer, and Tesla has set the ball rolling on that front.
When @elonmusk hand delivers your #Teslamodel3 ???⚡ thanks to the #Tesla team for an unforgettable day!! pic.twitter.com/Xr4MI7x8TM
— Devin Scott (@MichiganMan2007) July 30, 2018
“The first images of Tesla’s factory-direct delivery system were recently posted online by Devin Scott from Playa Vista, CA, a beachside enclave and tech hub of Los Angeles that’s located roughly 2-miles from the company’s Marina Del Rey delivery center. Scott noted that his vehicle’s delivery became extra special since his Model 3 was delivered by none other than Elon Musk himself. ” – Teslarati
It is just one car, but we now know that Tesla is looking at alternate methods to deliver cars to its customers and resolve its growing delivery pains.
Tesla is now building nearly 6,000 cars every week for US customers. At that rate, Tesla needs to deliver nearly 857 cars every day. If Tesla sets up 50 holding locations across the country and set them as the base to deliver cars in the region, each location will have to average around 20 deliveries per day to deliver 1000 cars in a day.
Even if Tesla uses third party enclosed carriers, a fleet of few hundred carriers should get the job done. Not an impossible task and scaling up will not be difficult either. Using third party providers will also allow Tesla hire on demand.
Tesla can even transfer direct home delivery cost to its customers for speeding up the delivery. Though I don’t think Tesla would want to charge customers for shipping, it’s an option available to Tesla.
Making both options available to customers, direct home delivery or pick up at the nearest delivery center, will not only resolve Tesla’s delivery bottleneck but will also encourage customers in remote locations to order Tesla.
