Tesla CEO Elon Musk told all employees in an email not to “sprint like crazy” to deliver cars, pointing out that although the company expends great effort, rushing and spending loads of money actually does not deliver more cars.
In his email, which was sent on Friday and obtained by CNBC, Musk instead prompted workers to focus on “minimizing the cost of deliveries” instead of spending buckets of money on expedite fees, overtime, and temporary contractors just to ensure that cars reach customers in the fourth quarter of the year, which would contribute to sales goals.
Tesla’s vehicle deliveries are the closest thing to sales data the company releases, as its sales are global, and it does not publicize regional data. In the third quarter of this year, the company produced 237,823 cars and made 241,300 deliveries.
“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,” Musk wrote, according to a transcript provided by CNBC. “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 Tesla CEO added that the company has a “big wave of deliveries” being made in the last few weeks of December because it hadn’t achieved high volume production of cars in Europe or Texas yet. For instance, there are many cars being transported on boats from China, where Tesla has a Gigafactory in Shanghai that has a production capacity of 450,000 electric vehicles per year, to Europe.
In the U.S., meanwhile, new cars are being delivered on trucks and trains from California to the East Coast. In both cases, these cars will arrive late in the quarter. Musk emphasized that this was the right time to “start reducing the size of the wave” and focus on obtaining a more steady and 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,” Musk wrote.
That’s easy to say when you own the most valuable car company in the world, despite Musk’s best efforts to push down the value of the company’s stock. (Case in point: A tweet this past May where he said that “Tesla stock price is too high imo,” which wiped billions off the company’s market value).
While Musk’s email makes perfect business sense, Tesla customers that are expecting deliveries over 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 expected delivery dates changed again and again, CNBC reported. Some of these customers are having to dish out even more money for rental cars and ride-hailing services in the meantime. Customers who financed their new Teslas are also being impacted, as the delays could affect their loan rates and insurance quotes.
In October, Tesla posted its biggest quarterly net earnings in history, totaling $1.62 billion. At that time, the company acknowledged its delivery delays, which it attributed to global supply chain and logistics challenges. To date, it has delivered 627,572 cars this year.