Build to order or Cars on lot?

[Robert.Boston]

Here's an interesting bit from Tesla's 10-K, posted yesterday:

Our Tesla stores do not carry large vehicle inventories and, as a result, do not require corresponding large floor spaces. We believe the benefits we receive from distribution ownership, combined with our product design based on modularity and common platforms, will enable us to improve the speed of product development and improve the capital efficiency of our business. We believe that this approach provides us with a competitive advantage as compared to incumbent automobile manufacturers.

 

[Kipernicus]

Having cars on hand may help them upsell the options (how many of you have options that you originally didn't think you wanted?) but I'm not sure if that extra margin covers the cost-to-carry.

 

[richkae]

Like I said before, I think they might carry some inventory - but it wouldn't be a goal to have inventory on hand. I would expect it as a side effect of keeping production smooth.
I think the question is purely academic. My prediction is that they have a backlog of orders at least through the end of 2013. If gas prices go the way I believe they will, the backlog will never be exhausted and they will always be making cars as fast as they can.