Blog Tesla is Building Car Carriers to Keep Up With Model 3 Deliveries

Tesla is in a sprint to deliver as many cars as possible ahead of the end of the third quarter. Chief Executive Elon Musk has called it “delivery logistics hell.”

In fact, Tesla is delivering so many cars that it’s having trouble finding car carriers. So, the company has started manufacturing their own trailers. Musk shared that tidbit in a tweet today.

https://twitter.com/x/status/1044294753041313792

Tesla has struggled with production bottlenecks since the Model 3 sedan was introduced, but is now reportedly churning out around 4,000 of those cars every week. The ramp in production is now creating a bottleneck in delivery.

TMC members and Tesla watchers have observed large lots packed with Model 3s, as well as trucks pulling full loads of Model 3s en route to new owners. Tesla is aiming to produce around 50,000 Model 3s in the third quarter.

Musk did not provide more details about the car carriers built by Tesla, but it’s interesting to see the company work out a solution when it’s up against a tough challenge. Musk has also tried to remove some pressure from Tesla’s delivery team by inviting existing Tesla owners to help “educate” new owners taking delivery.

Has anyone spotted a Tesla-built car carrier?

 

[mattjs33]

This makes sense to Elon, as his company is going to produce more and more cars, why not built their own carriers that will be more efficient, higher capacity, etc. Tesla could not predict how many cars they would produce some 6 months ago, assuming that roughly a time needed to reserve/allocate and pay for capacity. Dont be surprised if Tesla decided to make their own tires and other items that suit Tesla better.

You do realize that the entire rest of the industry figured out decades ago that outsourcing to experts who specialize in certain tasks / products, is way more efficient and cheaper than trying to do everything in-house?

This is exactly what happens when Silicon Valley thinks they can do something better than "all of those idiots in Detroit".

Who would have known that 100 years of experience had already led thousands of people in the industry to the best way of doing things?

 

[Xenius]

You do realize that the entire rest of the industry figured out decades ago that outsourcing to experts who specialize in certain tasks / products, is way more efficient and cheaper than trying to do everything in-house?

This is exactly what happens when Silicon Valley thinks they can do something better than "all of those idiots in Detroit".

Who would have known that 100 years of experience had already led thousands of people in the industry to the best way of doing things?

If it's ALREADY led them to the best way of doing things, why is Tesla eating BMW's lunch? Why are we still burning our resources in order to move from point A to point B?

 

[mongo]

Because that's literally not how accounting works.

The destination fee was $1000 before they suddenly noticed they needed to hire a ton of 3rd party delivery trucks

Meaning the average cost to get the car from Factory to the delivery centers was figured by Tesla as $1000.

They still have that same cost today since excluding anything home-delivered local to the factory they're all still going to delivery centers first.

but now they also have additional cost of hiring 3rd party drivers and delivery trucks.

Meaning it's costing them more money to deliver cars than accounted for in the actual price of the car.

Multiply that amount per car by all the cars they're having to deliver that way. It's a substantial cost.

Certainly higher than the cost would have been if they'd hired enough large car carriers in advance to not need to do this at all.

(you can also add the cost of delayed deliveries- not just all the wasted internal churn on their end scheduling, canceling, and rescheduling, but also the lost value from taking longer to receive/recognize revenue on delivered cars when they take longer to actually deliver)

You are talking about the worst case situation and adding in-person delivery to a car that was already on the most expensive route (factory->carrier->train->carrier->delivery center->wait for customer to show up).
I'm talking about California or closer deliveries (factory->carrier->prep center->driver->customer) or (factory->driver->customer). Which should be lower cost than (factory -> carrier-> holding lot -> carrier -> delivery center -> wait for customer)

There is no such shortage. Again, just a year or two ago the industry was carrying more cars than Teslas claimed "shortage" this quarter adds up to by a wide margin.

The problem isn't lack of car carrying capacity in general- it's a lack of it that Tesla bothered to plan for having on hand when they needed it.

And again, physics does not allow excess capacity in Michigan to haul cars in California.
If general vehicle sales are down 300k, that would be expected to be uniform over the country. Not something that can be focused onto the only volume OEM in California.

 

[mattjs33]

If it's ALREADY led them to the best way of doing things, why is Tesla eating BMW's lunch? Why are we still burning our resources in order to move from point A to point B?

Tesla's doing what now? BMW has sold 199,000 cars in the US through August. Tesla delivered 63,000 during that time.

Truth is hard.

 

[jelloslug]

You do realize that the entire rest of the industry figured out decades ago that outsourcing to experts who specialize in certain tasks / products, is way more efficient and cheaper than trying to do everything in-house?

This is exactly what happens when Silicon Valley thinks they can do something better than "all of those idiots in Detroit".

Who would have known that 100 years of experience had already led thousands of people in the industry to the best way of doing things?

"That's the way it's always been done" is not the best response.

 

[mattjs33]

"That's the way it's always been done" is not the best response.

Except for the fact that nearly every other manufacturer on the planet has already figured out how to get their cars delivered in a timely manner. Logistics and stuff. I don't see companies hand delivering cars by pickup truck and trailer to people's homes because they can't figure out how to get them to the dealerships on time.

You know, every so often, experience counts for something.

 

[mattjs33]

Can anyone confirm that there is even a lick of truth to this "building our own trucks" thing, or is it just another one of the things Elon says to appease complaints? Because a tractor-trailer is considered a highway vehicle just as an automobile or truck, and one can't just "start building them this weekend" without already registering them with the NHTSA and all the other legal stuff required to begin building on road vehicles.

 

[Knightshade]

You are talking about the worst case situation and adding in-person delivery to a car that was already on the most expensive route (factory->carrier->train->carrier->delivery center->wait for customer to show up).

Right. Which is what is happening in the majority of the country.

And shouldn't be- because Tesla knew this was coming years in advance.

I'm talking about California or closer deliveries (factory->carrier->prep center->driver->customer) or (factory->driver->customer). Which should be lower cost than (factory -> carrier-> holding lot -> carrier -> delivery center -> wait for customer)

Should be seldom is- as we see in the huge delivery backups all over the country.

And again, physics does not allow excess capacity in Michigan to haul cars in California.

If only trucks could be moved from place to place with advanced notice!

If general vehicle sales are down 300k, that would be expected to be uniform over the country. Not something that can be focused onto the only volume OEM in California.

Not sure what your weird fixation with CA is.

Cars right here in North Carolina are unable to be delivered due to a huge inability to deliver them from the regional locations to the in-state delivery centers and hold them there in the quanitites Tesla knew were coming years in advance

So much so that the entire state has been switched to "at home delivery"

Which is also hugely backed up due to lack of having planned for any of this.


And the same thing is happening all over the country

So yes, those 300k capacity of trucks could've easily handled this if Tesla had bothered to plan to use it in advance.

 

[Knightshade]

If it's ALREADY led them to the best way of doing things, why is Tesla eating BMW's lunch?

They aren't.

As pointed out BMW sold many more total vehicles for the quarter... and unlike Tesla they sold them PROFITABLY.

Something Tesla will have an increasingly hard time with if they keep paying unexpected costs and delaying deliveries because it never occurred to anybody at Tesla that actually building 50,000 cars in a quarter requires an ability to ship and delivery 50,000 cars in a quarter.

 

[crmatson]

https://cleantechnica.com/files/2018/09/August-Tesla-Mode-3-Sales-USA.png

 

[AviP]

If this story is true, then it's only going to add to their costs and they either pass it to the consumer or soak it in themselves. If they absorb the cost, the shorts will have some more fun. Seems like a poorly managed company from a logistics perspective.

 

[MP3Mike]

Except for the fact that nearly every other manufacturer on the planet has already figured out how to get their cars delivered in a timely manner.

We don't know that. Since most cars are purchased while they are sitting on a lot, we don't know if they arrived on time or 6 months late. The buyers made a selection from what was available. It is a completely different model where exact delivery dates don't matter the same way.

 

[mattjs33]

We don't know that. Since most cars are purchased while they are sitting on a lot, we don't know if they arrived on time or 6 months late. The buyers made a selection from what was available. It is a completely different model where exact delivery dates don't matter the same way.

Ah! Another argument for Tesla having built up an inventory first, before opening sales.

Sorry just playing devil's advocate here, but yes you are correct. It only helps to illustrate the differences in the models and why it's so important for Tesla to get this smoothed out.

 

[Knightshade]

We don't know that. Since most cars are purchased while they are sitting on a lot, we don't know if they arrived on time or 6 months late. The buyers made a selection from what was available. It is a completely different model where exact delivery dates don't matter the same way.

I special ordered my Lexus back in 2007. It was a unique config that did not exist on any "on the lot" car in the US.

It came from the factory in Japan to California by ship- then rail and truck to the dealer in NC.

I was kept informed through the entire process, I had visibility and tracking during the entire process, and it went from built, to driven home by me, in less than 2 weeks.

I was not required or expected to pay for the vehicle, or trade in a vehicle against it, until it was physically in NC and ready for me to pick up.



In contrast I ordered my Tesla in 2018 (after a 2016 reservation).

It's now over 5 weeks since it left the factory in California, not Japan.

I've no idea where it is. And nobody has been willing or able to tell me that recently either (at least a week or two ago it was "somewhere between Alabama and NC" and nobody has been willing to be more specific since then).

I was required to pay for it, and trade my existing car in for it, in advance.

With no genuine date given on when I'd get the new one.

And I still don't have one.


But sure- Teslas model is WAY better somehow.

 

[mongo]

Except for the fact that nearly every other manufacturer on the planet has already figured out how to get their cars delivered in a timely manner. Logistics and stuff. I don't see companies hand delivering cars by pickup truck and trailer to people's homes because they can't figure out how to get them to the dealerships on time.

You know, every so often, experience counts for something.

At a much lower ramp rate. Other OEMs back fill dealer inventory, they have more dealers that sell at a lower rate with flexible delivery timing.

Can anyone confirm that there is even a lick of truth to this "building our own trucks" thing, or is it just another one of the things Elon says to appease complaints? Because a tractor-trailer is considered a highway vehicle just as an automobile or truck, and one can't just "start building them this weekend" without already registering them with the NHTSA and all the other legal stuff required to begin building on road vehicles.

Trailers, not tractors. They can convert standard ones if needed.

So yes, those 300k capacity of trucks could've easily handled this if Tesla had bothered to plan to use it in advance.

17.46 million to 17.13 million, a 1.9 percent drop. If each carrier hauls 8 cars, then that provides a <0.2 car per carrier surplus. 17.46 million vehicles shipped on one day routes 365 days a year is ~6,000 carriers. so 1.9% of that is 114 carriers free. Or a little over 2 per state, capacity 16 cars per state.
At 250 days a year it's 8,730 carriers, 1.9% is 166 carriers free. Say only 30 state have Tesla centers, that is 5.5 carriers per state total capacity of 44 cars. Tesla is pumping out upwards of 100 a day in some locations.
Further, the timing is ASAP, not when available.

If this story is true, then it's only going to add to their costs and they either pass it to the consumer or soak it in themselves. If they absorb the cost, the shorts will have some more fun. Seems like a poorly managed company from a logistics perspective.

Tesla is shipping LR, AWD, P and P+ (all with premium upgrades) along with, I'd expect, a decent take rate on EAP. Even with 1k extra per car (2k total delivery), they are way on the plus side of gross margin.
Shorts: ha ha, you only made 10k per cars instead of 11k... Oh wait, you make 10k per car...

 

[lklundin]

Presumably Tesla is taking some sales away from other car companies and a few hundred thousand cars a year is only 2% of total US vehicle sales.

Don't forget that those "other can companies" are so different that their unsold production is still sent out to dealers, where it sits around while the dealer tries to push someone into buying.

 

[Knightshade]

https://cleantechnica.com/files/2018/09/August-Tesla-Mode-3-Sales-USA.png

Good thing all those other companies sell other models besides those listed.

Which, when combined, give them MUCH higher sales than all teslas models combined.

BMW Group U.S. Reports August 2018 Sales.

23,789 vehicles sold by BMW in August.


Audi Newsroom

20,907 for Audi in August.


Mercedes-Benz USA Reports August Sales of 20,339 Units

20,339 for Mercedes in August.


Facts matter.

 

[mattjs33]

Trailers, not tractors. They can convert standard ones if needed.

Maybe I'm misunderstanding you here, but no they can't. A car carrier trailer (and the tractor that tows it) are quite specifically built for the duty and no amount of "converting" will turn a non-car carrier into one.

Trailers of all types carry 17 digit VINs just like all other on road vehicles do, and in this case I might think the NHTSA would even require a new WMI for Tesla tractor trailers. It's an involved process and if they did in fact start building them this weekend, the groundwork was laid months ago.

So my question was not flippant but genuine, is there any truth to what Elon has said?

 

[mongo]

Good thing all those other companies sell other models besides those listed.

Which, when combined, give them MUCH higher sales than all teslas models combined.

BMW Group U.S. Reports August 2018 Sales.

23,789 vehicles sold by BMW in August.


Audi Newsroom

20,907 for Audi in August.


Mercedes-Benz USA Reports August Sales of 20,339 Units

20,339 for Mercedes in August.


Facts matter.

Facts do matter, Tesla makes more cars than the 3.

Tesla: 23,175 (S+X+3)
Higher than Audi and Mercedes
614 or 2.6% less than BMW, you have a low threshold for much higher.

Estimates from Monthly Plug-In Sales Scorecard

 

[Knightshade]

17.46 million to 17.13 million, a 1.9 percent drop. If each carrier hauls 8 cars, then that provides a <0.2 car per carrier surplus.

This makes some unfounded assumptions. Including that 17.46 million was 100% capacity in the first place and the system had 0 slack even then.

Not sure how it's any more valid than pointing out 17.46->17.13 million means over 300,000 cars excess capacity at a minimum.

Which is more than Tesla needed by a wide margin.

17.46 million vehicles shipped on one day routes 365 days a year is ~6,000 carriers. so 1.9% of that is 114 carriers free.

That's even more assumptions... Some have longer routes... some shorter...but let's see where this gets us...

. Say only 30 state have Tesla centers, that is 5.5 carriers per state total capacity of 44 cars. Tesla is pumping out upwards of 100 a day in some locations.

So you're saying simply having planned to use already existing capacity in advance would've given then room for nearly half of their shipping cars.


This tells us 2 things:

They'd be a lot better shape if they'd done it.

They should've been aware they'd have a major lack of transport capacity years in advance.

Neither of those things appear to have happened though- and thus they've moved from production hell to delivery logistics hell.


I'm most worried about that first manned Mars mission.

"Wow, this is awesome! we made it to mars....uh...hey... did anybody remember to pack food?"

SpaceX control: "sorry about that- major shortage apparently... good news though, we're developing our own brand of bread right now!"

Tesla is shipping LR, AWD, P and P+ (all with premium upgrades) along with, I'd expect, a decent take rate on EAP. Even with 1k extra per car (2k total delivery), they are way on the plus side of gross margin.
Shorts: ha ha, you only made 10k per cars instead of 11k... Oh wait, you make 10k per car...

That'd be great if they weren't hemorrhaging money elsewhere.

So hemorrhaging it on the delivery side too is not helpful.

Not to mention they don't get to recognize that 10k gross margin until they DELIVER THE CAR.

Which they seem unable to do in the numbers they are producing them.

Which again, is bad, because math.