GADGETS

Musk tells Tesla employees to focus on reducing delivery costs


Tesla vehicles were exhibited in the showroom in Manhattan on April 4, 2019 in New York.

Tesla vehicles were exhibited in the showroom in Manhattan on April 4, 2019 in New York.
Photography: Spencer Platt (Getty Images)

Tesla CEO Elon Musk told all employees in the e-mail not to “sprint like crazy ” for car delivery, emphasizing that although the company consumes a lot of effort, haste and spending a bunch of money doesn’t actually deliver more cars.

In his email, which was sent on Friday and got CNBCMusk instead encouraged workers to focus on “minimizing delivery costs” instead of spending buckets of money on accelerated fees, overtime and temporary contractors just to ensure cars reach customers in the fourth quarter, which would contribute to sales targets.

Tesla’s vehicle deliveries are closest to the sales data that the company publishes, because its sales are global, not publish regional data. U third quarter this year the company produced 237,823 cars and made 241,300 deliveries.

“What happened historically is that we run like crazy at the end of the quarter to maximize deliveries, but then deliveries fall en masse in the first few weeks of the next quarter,” Musk wrote, according to a transcript provided by CNBC. “In fact, in a six-month period, we’re not going to deliver any extra cars, but we’re going to spend a lot of money and burn to speed up deliveries in the last two weeks of each quarter.”

Tesla’s CEO added that the company has had a “big wave of deliveries” in the last few weeks of December because it has not yet achieved a large volume of car production in Europe or Texas. For example, many cars are transported by boat from China, where Tesla has a Gigafactory in Shanghai that has production capacity of 450,000 electric vehicles per year, to Europe.

Meanwhile, in the U.S., new cars are being shipped by trucks and trains from California to the East Coast. In both cases, these cars will arrive late in the quarter. Musk stressed that this is the right time to “start reducing the size of the wave” and focus he achieving a more stable and efficient delivery pace.

“The real principle is to take the most efficient actions, as if we were not publicly traded and the notion of ‘end of the quarter’ does not exist,” Musk wrote.

That’s easy to say when you own the most valuable car companies in the world, despite Musk’s best efforts to reduce the value of the company’s shares. (Case in point: A tweet this past May where he said that “the price of Tesla’s shares is too high”, which wiped out billions of the market value of the company).

Although Musk’s email makes perfect business sense, Tesla customers who expect deliveries in the next few weeks may not be too happy about it. Many Tesla customers have been waiting for their new cars for months and have seen the expected delivery dates change over and over again, CNBC reported. Some of these customers have to spend even more money on car rental and transportation services In the meantime. Customers who financed their new Tesla were also affected, as delays could affect their credit rates and insurance prices.

In October, Tesla announced its own highest quarterly net earnings in history,, a total of $ 1.62 billion. At the time, the company acknowledged its delay in delivery, which is attributed global supply chain and logistical challenges. To date, it has delivered 627,572 cars this year.



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Naveen Kumar

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