Elon Musk tells Tesla (TSLA) employees to worry more about cost than delivery wave this quarter
by Fred Lambert
Elon Musk stayed true to his word and told Tesla employees not to worry as much about delivering as many cars as possible during this end-of-quarter delivery wave and instead focus on cost.
It’s a significant change to what has been Tesla’s strategy for years.
Tesla has been known to have intense end-of-quarter, and this time end-of-year, delivery pushes due to its distribution system, which is very different from other automakers that use third-party dealerships.
Since Tesla sells directly to customers, the automaker owns the vehicle until it is fully delivered to the buyer and paid for.
It results in transit times being extremely important for Tesla financially since the automaker takes on the cost of building those cars and doesn’t get any money until the customers can actually pick them up.
Therefore, when Tesla has a lot of vehicles in transit at the end of a quarter, the quarter looks bad for them financially.
It’s why Tesla tries to build vehicles for exportations at its Fremont factory and Gigafactory Shanghai early in the quarter and vehicles for local deliveries later in order to allow for transit time by the end of the quarter.