In a recent note, Tesla CEO Elon Musk has asked company employees not to sprint to deliver deliveries before the end of this quarter, and instead focus on minimizing costs, CNBC reports. In the November 26 memo, Musk wrote that he does not want the company to “spend heavily on handling fees, overtime and temporary contractors just so the cars arrive in Q4.”
“What has happened historically is that we sprint like crazy at the end of the quarter to maximize deliveries, but then deliveries fall massively in the first few weeks of the next quarter,” Musk said. “In reality, seen over a six-month period, we would not have delivered any extra cars, but we would have spent a lot of money and burned ourselves to speed up deliveries in the last two weeks of each quarter.”
The memo was sent just over a month after Tesla was able to increase its global deliveries to over 241,000 in its most recent quarter despite global supply chain problems and a chip shortage that has hit sales from other automakers like General Motors and Ford. CNBC notes that Tesla has not released a clear delivery target for 2021, but that it loosely aims to increase deliveries by about 50 percent on an annual basis. It delivered 500,000 vehicles in 2020 and has already reported delivering 627,350 in the first three quarters of 2021. In this context, there seems to be less need for Tesla to rush to reach its targets.
That is not to say that Tesla has not faced any delivery challenges this year. In August, CNBC reported that some customers had seen their cars delayed by weeks or months due to lack of spare parts and manufacturing challenges at the Fremont plant. There were also reports this month of delivered cars lacking features like USB ports, apparently due to the global chip shortage.
Electrek notes that this may not have been the first time Musk has asked employees to focus on costs above the delivery targets, but that practice has nonetheless persisted in the company. This reportedly creates intense end-of-quarter pressure at Tesla, increases costs and can lead to customers rushing to receive their cars.
In its latest note, Musk says the company expects to experience a major delivery wave in late December, as shipments from California and China reach the east coast of the United States and Europe, respectively. But the CEO wants to reduce the size of these waves in the future “in favor of a more stable and more efficient delivery rate.”
“The right principle is to take the most effective action, as if we were not listed and the concept of ‘end of quarter’ did not exist,” he wrote.