Read the email Elon Musk sent to Tesla workers to cut delivery costs
Tesla’s Model Y compact crossover cars at a showroom in Shanghai, China, January 18, 2021.
VCG | Visual China Group | Getty pictures
Amid ongoing port restrictions and rising shipping costs, Tesla CEO Elon Musk urged employees on Friday, in a company-wide email obtained by CNBC, to look for ways to reduce the cost of delivering electric vehicles to customers, instead of rushing orders in the past. small. to reach their sales targets by the end of the quarter.
This year, Tesla has struggled to deliver new cars to customers in the US in line with originally promised date periods. As CNBC previously reported, some Tesla customers here experienced delivery delays of months, which led to them paying out of pocket for rentals and driving apps, and having to reapply for loans due to slippery deadlines.
Tesla is not alone in making customers wait longer than they had hoped for their new, all-electric cars. Last week, for example, the recent public competitor Rivian Automotive notified people who had reserved the R1[ads1]S, a sports car, about delivery delays.
Nevertheless, sales have grown this year for Tesla, which is apparently not bent by unpredictable delivery dates.
Vehicle deliveries, which are the closest approach to sales reported by Elon Musk’s electric car and renewable energy business, amounted to around 500,000 in total in 2020. During the first three quarters of 2021, Tesla had already reported deliveries of 627,350 vehicles.
Since the start of 2021, the company has not set a clear target for 2021 vehicle deliveries. But Tesla has reiterated its loose guidance for “50% average annual growth in vehicle deliveries” over a multi-year horizon, including on the third-quarter earnings call.
JL Warren Capital’s CEO and head of research, Junheng Li, wrote in a note to investors last week that she expects Tesla sales to continue to rise, at least in China this quarter. “Pushing gas prices is in favor of all new energy car brands,” she noted in the country.
Around 1.3 million electric vehicles were sold in China in 2020, according to Canalys surveys. The company predicted that the number would grow to 1.9 million EV sales in China by the end of this year.
China is still the world’s largest market for new cars, with strong government support to go electric.
Here is the entire email that Elon Musk sent out on Friday to all Tesla employees (transcribed by CNBC).
From: Elon Musk
To all
Subj. Q4 deliveries vs. cost-effectiveness
Date: November 26, 2021 [time stamp redacted]
Per my email several weeks ago, our focus this quarter should be on minimizing cost of deliveries instead of spending 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 weeks of the next quarter. In fact, 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 out to speed up deliveries in the last two weeks of each quarter.
We will still have a fairly large wave of deliveries in the last weeks of December, as we do not yet have high volume production in either Europe or Texas, which means many cars on boats from China to Europe and on trucks [and/or] rail from California to the east coast arriving late in the quarter, but this is still the right time to start reducing the size of the wave in favor of a smoother and more efficient delivery pace.
The right principle is to take the most effective action, as if we were not listed and the term “end of quarter” did not exist.
Thanks,
Elon
