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Could ‘Delivery Logistics Hell’ Affect Tesla’s Q3 2018 Results?

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Tesla Model 3 production

In the previous part of this series, we saw how Tesla’s (TSLA) vehicle manufacturing process has progressed in the last year. After facing bottlenecks in its Model 3 production process in the third quarter of 2017 for the first time, the company noted that it has learned several key lessons.

Although Tesla previously relied heavily on the automated production process, it made some changes to its Model 3 production process manual in the last year. Let’s look at some recent updates on Model 3 deliveries.

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Delivery issues

On July 31, 2017, Tesla CEO Elon Musk referred to its Model 3 production ramp-up period as “manufacturing hell.” Later in the year, this comment was realized as Tesla faced challenges as it worked to ramp up its Model 3 production and fix production bottlenecks. In 2018, the company is still striving to rapidly increase its Model 3 production.

On September 16, Musk responded to a Tesla vehicle reservation holder on Twitter and noted, “Sorry, we’ve gone from production hell to delivery logistics hell, but this problem is far more tractable. We’re making rapid progress. Should be solved shortly.”

To avoid these delays, TSLA has turned to an option that auto giants (XLY) such as General Motors (GM), Ford (F), and Fiat Chrysler (FCAU) typically don’t implement. A September 22 electrek report noted that Tesla is delivering Model 3 vehicles directly to customers via its Tesla Direct service.

Impact on Tesla’s third quarter

Going from “manufacturing hell” to “delivery logistics hell” may sound like progress in a way. This transition implies that Tesla is able to produce more cars than it can ship and deliver to customers. Nonetheless, logistics delays in vehicle deliveries could affect the company’s third-quarter results.

Continue to the next part to learn what to expect from Tesla’s third-quarter vehicle delivery data.

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