Tesla has thousands of electric cars available in its inventory at the end of the quarter and that might change how the company operates.
There are many differences between Tesla and the most established automakers, but one of the most interesting differences is Tesla’s direct-sale model.
The electric automaker doesn’t use third-party franchise dealerships.
Unlike most other automakers, Tesla owns its vehicles all the way to the point customers take delivery.
When you combine this difference with the fact that until recently, all of Tesla’s cars were coming out of a single factory in California, it makes for a vastly different business model.
Every quarter, Tesla has to jump through hoops in order to optimize transporting the more than 100,000 cars coming out of Fremont factory all around the world to individual customers.
On the other hand, most automakers are making cars from several different factories and they deliver them in volume to third-party dealers who are then responsible for selling them to customers.
Part of Tesla’s optimization process is to focus production at the end of a quarter on inventory vehicles for the North American market since they can be delivered faster than custom orders.
The automaker’s North American retail and delivery team has an incredible ability to deliver most of those inventory vehicles in just a few weeks at the end of each quarter.
However, it is going to be an issue this quarter since Tesla is forced to stop or significantly reduce its operations in many North American markets due to the coronavirus.
With only just over a week left in the quarter, we now see thousands of inventory vehicles across North American markets.
In the LA area alone, Tesla has over 150 Model 3 vehicles in inventory for sale:
We can find similar amounts of inventory Tesla vehicles in dozens of other markets in the US.
Normally, Tesla would be able to sell most of those utilizing its marketing tools and foot traffic in its stores in malls, but most of those have closed this week.
Like we previously reported, Tesla has taken some measures like no co-pilot test drives to try to help sales and they are doing no-contact delivery or even home deliveries in order to help customers who are still willing to go through with purchases and delivery during the coronavirus crisis.
The automaker is expected to announce its delivery and production numbers during the first week of April.
Electrek’s Take
Not gonna lie, I think it’s going to be a hard one. A reliable source told Electrek that Tesla was tracking at about 70-80% of its delivery goal in North America last week.
Normally, that’s not that big of a deal with its end-of-quarter delivery push coming, but this quarter’s push is likely going to be extremely small or even non-existent.
Tesla is likely going to be sitting on thousands of inventory vehicles at the end of the quarter – more than before.
This might create an interesting scenario where Tesla is going to have a significant inventory of vehicles going forward.
As we reported this morning, despite the fact that Tesla had to stop production, they are using the shutdown to increase production capacity. They could be able to go back to producing vehicles in just a few weeks.
With new vehicles coming to inventory next month, it might be a while before Tesla goes back to its usual low inventory business model.
It might be a hit on its balance sheet for now, but I think that ultimately, it should turn out to be a good thing and more consistent delivery operations for Tesla. One could even say that it should flatten the curve of Tesla’s quarterly deliveries.
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