Tesla prepares to ship a record number of cars

Updated: May 3

SpaceX and Tesla CEO Elon Musk said in a new email to employees that this week will be Tesla's craziest week in terms of the intensity and quantity of new vehicle shipments.

Tesla has the most active shipments at the end of the quarter due to its distribution system, which is very different from that of other automakers using third-party dealerships. Because Tesla sells directly to customers, the automaker owns the vehicle until it is fully delivered to the customer and paid for. This makes delivery times extremely important for Tesla from a financial standpoint, as the automaker bears the cost of building these vehicles and doesn't generate any revenue until customers can pick them up. So when Tesla has a lot of vehicles on their way to its customers at the end of the quarter, the quarter looks bad financially.

This is why Tesla is trying to produce cars for export at its Fremont plant and Gigafactory Shanghai at the beginning of the quarter, and cars for local deliveries later in order to secure transit time by the end of the quarter. However, this strategy resulted in Tesla's sales and the delivery team had to handle significant volumes of vehicles that need to be delivered by the end of each quarter, which are called "delivery waves" or "delivery shocks."

The third quarter of fiscal 2021 ends this week, and Musk said the week will be the busiest in the company's history. Earlier, the head of the company predicted that September will be the craziest month for Tesla.

Musk also said that at the beginning of this quarter, Tesla assembled many vehicles that were not ready for a while due to supply chain problems. Parts were added later, leading to an increase in vehicle inventory towards the end of the quarter.

Musk hopes that the situation will return to normal in the next quarter.


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