Read Elon Musk’s e-mail to Tesla workers about cutting delivery costs

Tesla’s Model Y small crossover at a showroom in Shanghai, China, on January 18, 2021.

VCG | Visual China Corporation | beautiful pictures

Amid ongoing and increasing port restrictions transportation costs, Tesla CEO Elon Musk urged employees Friday, in a company-wide email obtained by CNBC, to find ways to reduce the cost of delivering electric vehicles to customers, rather than rushing orders. at the last minute to hit the quarter-end sales target. .

This year, Tesla has struggled to deliver new cars to customers in the US on time. As CNBC previously reported, some Tesla Customers here have experienced delivery delay for many months, leaving them out-of-pocket for rentals and ride-hailing apps, and the need to reapply for loans because of past deadlines.

Tesla isn’t alone in keeping customers waiting longer than they had hoped for their new, all-electric cars. Last week, for example, a new competitor went public Rivian Automotive notified those who had pre-ordered the R1S, a sport utility vehicle, of the delivery delay.

However, the sales that have increased this year for Tesla are unlikely to be affected by unpredictable delivery dates.

Vehicle deliveries, the closest approximation to sales reported by Elon Musk’s electric and renewable energy vehicle businesses, amount to about 500,000 units in 2020. For the first three quarters of 2021, Tesla reported delivery report 627,350 vehicles.

As of early 2021, the company has not set a clear target for 2021 vehicle deliveries. But Tesla has reiterated its loose guidance of “50% average year-on-year growth in deliveries. vehicle” over the years, including third quarter earnings call.

Read more about electric vehicles from CNBC Pro

Junheng Li, CEO and Head of Research at JL Warren Capital, wrote in a note to investors last week that she expects Tesla sales to continue to grow, at least in China. in this quarter. “Higher gas prices benefit all new energy vehicle brands,” she noted.

About 1.3 million electric vehicles were sold in China in 2020, According to research by Canalys. The company predicts that number will grow to 1.9 million EV sales in China by the end of the year.

China remains the world’s largest market for new cars, with strong government support for electric car production.

Here’s the full e-mail that Elon Musk sent on Friday to all Tesla employees (transcribed by CNBC).

From: Elon Musk

To: Everyone

Subj. Q4 delivery compared to cost effectiveness

Date: November 26, 2021 [time stamp redacted]

According to my email a few weeks ago, our focus this quarter is on minimizing Price of deliveries instead of spending heavily on expedited fees, overtime and temporary contractors just letting cars arrive in Q4.

What has happened historically is that we sprinted like crazy at the end of the quarter to maximize deliveries, but then deliveries dropped massively in the first few weeks of the next quarter. In fact, looking at a period of more than six months, we won’t deliver any more cars, but we’ll spend a lot of money and do our best to speed up deliveries in the last two weeks of each quarter.

We’ll still have a sizable wave of deliveries in the last few weeks of December, as we don’t have large volumes in Europe or Texas yet, which means a lot of vehicles on board from China to Europe. and on the truck. [and/or] rail from California to the East Coast will arrive later this quarter, but it’s nonetheless the right time to start downsizing the wave for more consistent and efficient delivery speeds.

The right principle is to take the most effective action, as if we weren’t publicly traded and the concept of “quarter-end” didn’t exist.

Elon Read Elon Musk’s e-mail to Tesla workers about cutting delivery costs

Sarah Ridley

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