As Model 3 deliveries reach fever pitch during the final week of the third quarter, Tesla is coming up with innovative methods to get produced cars to their waiting customers. The latest Model 3 issue being dealt with is the lack of car carriers, so Tesla is building them itself.
Current production level is at around 4000 Model 3s a week, but apparently not enough deliveries are happening in September. To solve that logistics problem, Tesla has done quite a few things.
First was the exclusive delivery experience event that saw hundreds of Model 3s being driven away by their owners. There weren’t enough vehicles on site at the Fremont factory, so Tesla started giving short delivery timelines to customers who came but didn’t get their car.
Another initiative was Tesla Direct, a home delivery service that was also a huge success. Volunteers were then called in to help educate new buyers on the basics. Now, we have Tesla building its own car carriers to help with the Model 3 delivery rush.
On the plus side, Tesla is aiming for record production and delivery numbers. On the down side, such random pushes might not be sustainable through the fourth quarter and beyond. The company will certainly learn from these experiments, but as production numbers keep ramping up Tesla will necessarily need to look at better delivery logistics for the long term.
The key to this is a reliable distribution network, but this would involve outside partners. Tesla might not want to hand over control of deliveries to a partner at this point, so they may not take this route right now.
Expanding its own presence at that scale isn’t going to be feasible considering that the company is making a bid to be cash flow positive from the third quarter onward.
Apologies, we’re upgrading our logistics system, but running into an extreme shortage of car carrier trailers. Started building our own car carriers this weekend to alleviate load.
— Elon Musk (@elonmusk) 24 September 2018
Musk is talking about a logistics upgrade, but what Tesla really needs is a complete revamp with significant investment. And it’s not just going to be a delivery issue. That’s the current one, but once there are hundreds of thousands of Model 3s on the road, their service capability is going to be stretched as well, just like the situation in Norway.
Too many balls to juggle, and Tesla seems to be handing everything on a ‘deal with it as it happens’ basis. Hopefully, their learnings from this quarter will help them put in a more robust logistics network to make sure reservation holders are taken care of before new orders are fulfilled, and it doesn’t look like that’s happening yet. Reservation holders were the early supporters of the Tesla Model 3, and the company shouldn’t forget that in the rush to meet targets.
What Tesla really needs to prepare for is the onslaught of orders when they finally release the $35,000 base Model 3 in 2019 (possibly in May). That’s when they’ll be stretched on every side: battery supply, production capability, delivery capacity, service coverage and just about everything else.
Unless Tesla gets its act together now and addresses potential issues proactively, they’re going to keep struggling quarter after quarter with one issue or another.