In a latest memo, Tesla CEO Elon Musk has advised the corporate’s employees to not dash to make deliveries by the tip of this quarter, and to as a substitute concentrate on minimizing prices, CNBC studies. In the November twenty sixth memo, Musk wrote that he doesn’t need the corporate “spending heavily on expedite fees, overtime and temporary contractors just so that cars arrive in Q4.”
“What has happened historically is that we sprint like crazy at end of quarter to maximize deliveries, but then deliveries drop massively in the first few weeks of the next quarter,” mentioned Musk. “In effect, looked at over a six month period, we won’t have delivered any extra cars but we will have spent a lot of money and burned ourselves out to accelerate deliveries in the last two weeks of each quarter.”
The memo was despatched somewhat over a month after Tesla was in a position to increase its international deliveries to over 241,000 in its newest quarter, regardless of international provide chain points and a chip scarcity that’s hit sales from different automakers like General Motors and Ford. CNBC notes that Tesla hasn’t launched a transparent supply goal for 2021, however that it loosely goals to increase deliveries by round 50 p.c on an annual foundation. It delivered 500,000 automobiles in 2020, and has already reported delivering 627,350 within the first three quarters of 2021. In this context, it seems like there’s much less of a necessity for Tesla to rush to hit its targets.
That’s not to say that Tesla hasn’t confronted any supply challenges this 12 months. In August, CNBC reported that some prospects had seen their vehicles delayed by weeks or months due to components shortages and manufacturing challenges at its Fremont plant. There have been additionally studies this month of delivered vehicles lacking options like USB ports, apparently on account of the worldwide chip scarcity.
Electrek notes that this may occasionally not have been the primary time Musk has advised employees to concentrate on prices over supply targets, however that the apply has however persevered throughout the firm. This reportedly creates intense end-of-quarter pressures at Tesla, will increase prices, and might lead to prospects being rushed to take supply of their vehicles.
In his latest memo, Musk goes on to say that the corporate is anticipating to expertise a big supply wave on the finish of December, as shipments from California and China attain the east coast of the US and Europe respectively. But the CEO desires to scale back the scale of those waves sooner or later, “in favor of a steadier and more efficient pace of deliveries.”
“The right principle is take the most efficient action, as though we were not publicly-traded and the notion of ‘end of quarter’ didn’t exist,” he wrote.