Tesla realizes the urgency to improve its service capacity

Tesla CEO Elon Musk finally addressed the looming service capacity bottleneck the electric maker faces due to surging sales in North America.

Tesla Worldwide Quarterly Deliveries All Models
Tesla Worldwide Quarterly Deliveries All Models

In the first three-quarters of the current fiscal Tesla has sold 154,220 Model S/3/X, which is already well above the 103,220 units the company delivered in 2017.

Just reviewed Tesla’s service locations in North America & realized we have major gaps in geographic coverage! Sorry for this foolish oversight. Tesla will aim to cover all regions of NA (not just big cities) within 3 to 6 months.Elon Musk, 17 Oct 2018

As unit sales look set to more than double in 2018 compared to 2017, Tesla’s service center footprint has so far failed to keep up with the pace.

The number of Global Store and Service locations increased from 265 by the end of 2016 to 330 by the end of 2017. During Q2-18, Tesla opened eight new store and service locations, taking the overall number to 347 locations worldwide.

For the past several years, Tesla has relied on its mobile service fleet to service Teslas at the customer’s doorstep. According to the company, “nearly 80% of repairs can be done outside of a service center” and “90% of the time the company can remotely diagnose an issue and what is needed to repair it.”

But unfortunately, Tesla is yet to step on the pedal to increase its service center footprint and its mobile service fleet. By the end of the second quarter (June 18), Tesla’s mobile service fleet had more than 340 vehicles on the road.

347 Global Store and Service Locations + 340 Mobile Service Vehicles to serve more than 440,000 Teslas on the road.

The numbers are stacked against Tesla in this case and things would have quickly gone south for Tesla as the company already has capacity in place to build more than 7000 cars every week.

We have written about this issue several times in the past. Will Doubling Global Service Capacity Be Enough for Tesla?

Tesla Global Store and Service Locations
Tesla Global Store and Service Locations

Our criticism: Tesla’s service capacity is not expanding at a pace that can match the company’s sales growth. The longer this goes on, the bigger the trouble will be in the future.

Thankfully, Tesla has now realized that its service capacity is nowhere near where it should be in North America. The earlier the company expands its mobile fleet as well as its service centers in North America, the better it will be for all its existing and potential customers.

No one wants a repeat of the service capacity issues Norwegians faced this year. Tesla needs to first improve its service center footprint in North America and needs to stay aggressive in major international markets.