Yes
I'm not quite sure how old that email is but it certainly is in agreement with one at the start of the quarter.
The move to supply exports from China alone, sorted out the US wave, as North American domestic production was now spread out throughout the quarter which was stage 1 and was achieved in Q3. As Elon said the idea was not only to reduce the cost of sales but also the immense pressure on staff. Additionally, the balance sheet was now strong enough to support unsold vehicles in transit.
The next stage was to try and do the same in Shanghai where domestic sales have been strangled by export production (not so much feast and famine but just famine) however I suspect the delay to Giga Berlin has put a spanner in the works to that plan. Shanghai is going to have to continue to supply Model Y to the EU at significant quantitities throughout Q1 and probably into Q2, whilst at the same time supplying UK with MY for Q1 at least. Nobody likes uncertainty and GF Berlin must be a pain in the backside to the planners in Tesla who are not used to production targets not being met.
The message from Elon however is pretty clear in that traditional cost controls will be introduced in order to limit the capability of an end of quarter push by regions.
This is pretty timely as it's pretty evident from this thread that Q4 shipments to EU/UK will have already surpassed previous records.
As far as the UK is concerned we have seen some significant delivery numbers in November with very little evidence of an attempt to holdover deliveries to December for the sake of the figures. This is probably because the deliveries forecast for December is already at a record level.
When this is coupled with the woeful sales figures of the traditional car manufacturers (stifled by production delays) Tesla can be pretty confident that they will achieve high placing in 'best selling' rankings for December and even perhaps November.
So there is potential for the traditional end of quarter rush not to happen this year however old habits die hard and I don't see it being suppressed much in the UK at least this quarter. There may be evidence of oversupply of M3 in December. This is actually no bad thing and will also achieve the aim of suppressing the end of quarter wave in Q1 by increasing sales earlier in Q1. It could also possibly address an anticipated reduction in production over the Chinese new year, or reduced shipping capacity due to MY demands.
As far as shipping is concerned, vehicle manufacturing in the Far East appears to have resumed and there are no longer the ships around that can be readily chartered at a reasonable cost. This is why I think we are seeing an increased use by Tesla of space on scheduled services no matter how long it takes to get to the final destination. That space however is becoming increasingly scarce and more expensive (probably as a result of Tesla buying it all up!). Had GF Berlin come online as planned it would have been perfectly timed but....
The cost of sale of supplying EU/UK from China will likely increase significantly in Q1 onwards. It would probably be financially worthwhile Tesla chartering a number of vessels for long term use on the Shanghai/EU run even if they end up running empty on the return leg. M3 export production would be based on the ship schedules and would therefore overlap quarter-ends. Two birds, one stone.
The delays to RoRo shipping we saw at Shanghai earlier in the year have reduced markedly and ships are running in/out of Shanghai more or less on schedule however the port is running at 100% capacity with little or no vacant pier slots. I'm not sure what the plans are to expand the port operations at Lu Chao (Shanghai South/Pier 4). Certainly the ad hoc arrangement at present is not ideal but it would require a big investment to introduce a permanent deep water export facility there. For the moment, the port of Shanghai will continue to be a bottleneck especially for end of quarter surges and so I think any move to flatten the wave of export production will be of benefit. There is a bit of tail wagging the dog here which is normally a sign of logistical failure however this will hopefully only be a transitional effect until GF Berlin gets its act together. An efficient logistical chain can't cope with surges and one that can, isn't efficient - you can't have it both ways! Elon has decided it's time to move to the efficient model but it's not a binary switch, it will take a little time.
Last edited:
