Tesla Shipping Delays

We discussed before Tesla’s plans to build mega factories. That is to continue to expand production at its existing sites rather than add new sites.

Third quarter Tesla reported 20,000 vehicles in transit not yet delivered and sold. At current production rates they make 4000 vehicles per day. They say shipping was delayed due to capacity limitations that would have raised costs.

You wonder if shipping capacity will become a constraint limiting Tesla production.

Or will Tesla invest in auto ships (“roll on-roll off vessels”) and railcars for autos? Do ports and railroads have adequate capacity?

The traditional auto industry has plants spread across the country. That has them manufacturing closer to customers–shipping parts to factories rather than long distance finished vehicle shipping. That is they are more diversified in manufacturing locations.

An added advantage of diversified locations is labor force availability.

Will vehicles in transit reach steady state and be a constant? Or will Tesla adjust future plans?

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Not sure who “we” is. Tesla’s plans are to build what they call “gigafactories”. Tesla has already built gigafactories. Tesla has said they will build more gigafactories, about twenty in all. So both your starting statements are wrong.

Everything you write here is wrong as well. Not sure why you confidently state wrong things that come from nowhere you’ve revealed.

In Tesla’s production and delivery report (Tesla Vehicle Production & Deliveries and Date for Financial Results & Webcast for Third Quarter 2022 | Tesla Investor Relations) released on 2 Oct 22 they say of their cars in transit: “These cars have been ordered and will be delivered to customers upon arrival at their destination.” So not yet delivered, sure, but already sold.

And while they produced about 22,000 more cars than they delivered, how many cars they had in inventory (meaning not yet delivered to customers) at the end of Q3 depends on how many they started the quarter with. That looks like about 12,000, so I think the inventory number is close to 34,000.

And no, at current production rates they make way more than 4,000 per day. If you divide the number produced by the number of days in the quarter you get almost 4,000 but that’s misleading. By the end of Q3 they had raised production to much higher levels. For example, in Shanghai they produced (see Tesla (TSLA) China output increases to record 83,000 vehicles in a month | Electrek) 83,135 vehicles in September. This compares to 28,000 vehicles in July and 77,000 vehicles in August. That’s over 700 vehicles per day above the average in September, in Shanghai alone. I’m not sure of specific numbers on the other factories, but they all increased production some over the quarter. So daily production at the end of Q3 was closer to 5000 per day than 4000.

Then you go on to say that “They say shipping was delayed due to capacity limitations that would have raised costs.” No, no they don’t. Where do you get this from? Shipping was sped up, not delayed. While previously they would have produced vehicles only for the local market at the end of the quarter, instead they continued to produce cars for export and shipped them out sooner even though they couldn’t be delivered by the end of the quarter. They sped up shipping and spread out the deliveries, which lowers costs.

Well, I guess you can wonder. It’s pretty obvious that if they continue to grow at 50% per year they’ll have to do something. Maybe, since they’re starting delivery of their semi in December, they’ll build themselves fleets of car carriers. Or maybe they’ll do exactly what they said they would do and build more factories in different locations. Or maybe they’ll solve autonomy and offer their customers a discount to let their cars deliver themselves to wherever they want. Or maybe all three, and more.

Luckily, they’ve already demonstrated that they think ahead and they’re not stupid, so I’m not going to worry about it.

-IGU-

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