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?

 

[MP3Mike]

I see Tesla sold less total vehicles than BMW. So they're not really "eating their lunch" are they?

You don't have to sell more total vehicles than them to eat their lunch...

 

[Knightshade]

You don't have to sell more total vehicles than them to eat their lunch...

I suppose we can debate semantics all day if you want... but "selling less cars and being far more unprofitable while doing it!" is gonna be a hard sell for eating anyones lunch.

Especially when BMWs sales are up year over year DESPITE the surge in Model 3 sales.

 

[mongo]

Doesn't matter if they are for sale or not. The trailer needs to be registered, so it needs to have a VIN. Yes they are standard fifth wheel but you cannot convert and existing trailer, you've seen them, you know why.

NHTSA requires VIN decoding info submitted like 60 days or whatever before the first vehicle is sold. As of now, there is nothing submitted by Tesla for car carrier trailers.

Honestly I seriously doubt Tesla is building their own car carriers today, where would they build them? I think it's more nonsense from Elon, similar to "body repairs in an hour". I don't mind being proven wrong but there's no evidence to support this happening.

Yep, need to be register/ inspected in the the state. In Michigan, home built trailers (not for sale) get the VIN assigned by the state.

NHTSA VIN requirement is not purely 60 days: https://www.nhtsa.gov/document/final-rule-20

(d) The information required under paragraph (c) of this section shall be submitted at least 60 days prior to offering for sale the first vehicle identified by a VIN containing that information, or if information concerning vehicle characteristics sufficient to specify the VIN code is unavailable to the manufacturer by that date, then within one week after that information first becomes available.

I would guess Tesla would farm out assembly to Freightliner, Navistar or such. There is also the question of where they build the two semi prototypes...

 

[mongo]

By arranging enough logistical capacity to meet the production targets their own CEO forcast they would be outputting.

You know- like literally every other company in the world, not just car companies, does in order to insure their products can move through their distribution channels to customers.

Right, but what is the carrier's incentive to develop that capacity?
Every other OEM has a sizable volume that slowly adjusts over time with some flexibility. Tesla had an unknown inflection point with multiples of previous volume.

They don't have enough delivery centers in general for the # of cars.

They don't have enough space at the DCs they DO have for the # of cars.

They don't have anywhere near the # of staff they need at the DCs (or the SCs...or acting as IDAs....or handling trade ins...etc) for the # of cars.

Agree here, but that is partly due to Tesla's sales process. Their cars should not be sitting on the lot or at the delivery center for more than prep+delivery time. However, once that bogs down, any amount of capacity is too low...
Home delivery both gets the cars of the DC area and forces increase in personnel, allowing for more parallel deliveries with minimal resource conflicts.

Based on us knowing there's enough excess capacity already in the system, I don't expect "long term contracts" would've been needed.

but even if it were- why is that bad?

Is Tesla magically NOT going to need to move this many cars or more next year?

Long term, only an issue if the carrier is not good or demand falls. On the front end, you don't want to pay for capacity you aren't using (pre ramp time period).

 

[ItsNotAboutTheMoney]

That's an interesting number on the Model 3, I wonder where it comes from. As Tesla only reports quarterly, all monthly figures are estimates. Interesting to note, Automotive News estimates the Model 3 at 4000 for August. Likely the truth is somewhere in between.

Will be interesting to see the Q3 numbers.

Numbers are estimated based on other source information like registrations. Registration data are public. They're usually pretty good at it.

 

[Knightshade]

Right, but what is the carrier's incentive to develop that capacity?

Again- enough trucks already existed. Nothing to develop.

It was arranging contracts for them to be in the right places, and delivery to the right places, that someone, anyone, at Tesla should have perhaps given some thought to before now.

But again, even if they'd need to get new trucks/hire new people, doing so in advance would have been the way to avoid the problem. The trucking company motivation for doing so is generally money paid for services rendered.

Tesla had an unknown inflection point with multiples of previous volume.

Not really "unknown"

Unless you're suggesting a tremendous amount of incompetence much further up the chain at Tesla.

Again 2-3x more output in the last 6 months was the explicitly stated intent and goal 6 months ago.

It's not like they started to plan for that 6 months ago and aren't quite there.

they appear totally caught by surprise today and have done nothing to prepare.

Agree here, but that is partly due to Tesla's sales process. Their cars should not be sitting on the lot or at the delivery center for more than prep+delivery time. However, once that bogs down, any amount of capacity is too low...

But the reason it's bogging down is they appear to have done literally nothing over the last year or more to prepare for needing to delivery 5-10x as many cars as usual.

That's a major failure on the part of the company.

Home delivery both gets the cars of the DC area and forces increase in personnel, allowing for more parallel deliveries with minimal resource conflicts.

Not sure that follows.

How it "should" work is cars get to DC- DC has enough space to hold the cars to be prepped and delivered, enough staff to prep the cars, then enough staff to deliver them to customers right after.

How HD works-

Same thing but cars get picked up from DC after being prepped to go to customers homes- so you save literally nothing other than the "deliver to customers" step- and you're replacing it with "Pay a third party to deliver it to customer after a long drive"

How's that better?

Not only is it slower and more expensive to deliver than way then at DCs, it backs things up FURTHER because since DC to customer deliveries are slowed down, the DCs run out of space to store cars, and now the regional centers supplying the DCs are ALSO getting backed up.

Simply size and staff the DCs properly and this all clears up. AND you don't need a ton of extra car carriers doing HD.


Even worse- all those DC deliveries the owner gets to look the car over- and if he finds issues they can go to the service center and be fixed right then.

With HD you have 2 days to find problems... at that point all the cars with problems will either:

A) Need to go back to the place it originally came from (SC/DC) to get fixed AND give the owner a loaner while it's happening.... again an inefficiency/cost)

or

B) Be rejected- then they need to get a 3rd party to go BACK and pick the car up from the home and bring it back to...the DC/SC yet again.

How's that better?

Long term, only an issue if the carrier is not good or demand falls.

That's my point.

Having lined up carriers in advance, even if required a contract, is win-win in every case where the car is successful.

if this car wasn't succesful the company was done anyway.

So now instead of high production and high delivery they're stuck in delivery logistics hell and generating a lot of frustrated customers without delivered cars.

How's that better?

 

[Knightshade]

You are in the wrong place for assuming that Tesla would lie in statements that fall under SEC's purview.

you don't appear to understand the discussion to which you are replying.

Someone else insisted Tesla had no idea how many cars they'd need to deliver 6 months ago.

I'm pointing out that Tesla knew the production numbers six months ago based on their public statements, so the only way the original claim they did not know could be true is if they were lying.

I'm pointing out they weren't lying- and so it's all the more incompetent they're now acting surprised by hitting their own publicly stated targets while being unable to handle shipping and delivering that number of cars.

They knew it was coming way in advance.

And you cannot assume that Tesla did not do anything to prepare for the increase in deliveries.

I'm not assuming it, I'm stating it as an obvious and established fact.

They don't have enough transport capacity for the increase in deliveries

They don't have enough delivery centers or staffing at those centers for the increase in deliveries

They don't have enough capacity at the DCs to handle parking enough cars while they work through the backlog all the above problems have created.

They don't have enough internal staffing to handle the internal sales items (IDAs, trade in staff, etc) for the increase in deliveries.

they don't have enough service centers/body shops or staff at those places to handle the repairs cars are needing AT delivery time from increased deliveries... nor are they getting parts through the system quickly or in sufficient numbers to handle those repairs.


All of these are well known, well discussed, facts with multiple threads about them on the forums (and in the news)


This isn't a case of "Eh, they've run into one small bottleneck at one point in the logistics chain"

It's an utter failure in every aspect of the shipping and delivery (and repair since so many cars are needing rework on delivery) process.

 

[mongo]

But again, even if they'd need to get new trucks/hire new people, doing so in advance would have been the way to avoid the problem. The trucking company motivation for doing so is generally money paid for services rendered.

if this car wasn't succesful the company was done anyway.

So, with that worst case, does the carrier cover the expansion themselves, or does Tesla foot the bill in advance?

But the reason it's bogging down is they appear to have done literally nothing over the last year or more to prepare for needing to delivery 5-10x as many cars as usual.

Not so:
Tesla hiring activity jumped 19% since July 1

How it "should" work is cars get to DC- DC has enough space to hold the cars to be prepped and delivered, enough staff to prep the cars, then enough staff to deliver them to customers right after.

Customers are the wild card, do they take 15 minutes to pick up their car or 2 hours? That is an 8:1 ratio of required space for vehicles.
The delivery event in Canada seemed to go fairly well, but they had more time to get the cars in position for a short term burst.

Same thing but cars get picked up from DC after being prepped to go to customers homes- so you save literally nothing other than the "deliver to customers" step- and you're replacing it with "Pay a third party to deliver it to customer after a long drive"

You get the the cars off the lot immediately, you eliminate the parking needed for customers, you bypass the step of disposing of trade in vehicles at the DC.

With HD you have 2 days to find problems... at that point all the cars with problems will either:

A) Need to go back to the place it originally came from (SC/DC) to get fixed AND give the owner a loaner while it's happening.... again an inefficiency/cost)

or

B) Be rejected- then they need to get a 3rd party to go BACK and pick the car up from the home and bring it back to...the DC/SC yet again.

How's that better?

The 2 day guarantee applies to cars picked up at the DC also. With multiple HD teams, there is more capacity to do a car swap, if needed rather than have more customers at the DC along with the parking issues. A home drop off can also provides a more relaxed environment to check the car out. If the cars are driven to the house/ business, then that also serves as an additional quality check.

 

[jelloslug]

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.

What is a "timely manor"? Virtually every other manufacturer makes cars that are stocked at distribution centers and then stocked at dealerships before they are sold. There is usually several months between when the car is manufactured and when it's even available to be sold.

 

[mattjs33]

What is a "timely manor"? Virtually every other manufacturer makes cars that are stocked at distribution centers and then stocked at dealerships before they are sold. There is usually several months between when the car is manufactured and when it's even available to be sold.

So... The cars are ready upon delivery time?

We agree then? Just making sure.

 

[Knightshade]

So, with that worst case, does the carrier cover the expansion themselves, or does Tesla foot the bill in advance?


Not so:
Tesla hiring activity jumped 19% since July 1

That 19% increase if you read the story is posting a whole extra 312 jobs across the entire company.

They break down the job listings... Only 34 are delivery specialists. Even if you counted customer experience specialists as able to do delivery (it's not in their job description at all, but I guess they're a body at the DC at least) you're looking at their "surge" in hiring amounting to roughly ONE extra person per delivery center in the US.

To handle a 5-10x increase in number of cars.

You can quibble over if that's more than "nothing" I guess. It's laughable too little at the very least.

You get the the cars off the lot immediately, you eliminate the parking needed for customers, you bypass the step of disposing of trade in vehicles at the DC.

...huh?

First the third parties don't handle trade ins. Those are STILL done at the DC. So the customer STILL has to go there, park there, and tie up a Tesla person to do the paperwork.

I know, because I had to do it.

If my car had been there I could've done 5 more minutes of such paperwork and TAKEN THE CAR HOME.

Instead it's almost a week later and I don't even have a delivery date (after my first one this past weekend was canceled or never really existed-nobody will tell me which).

Mainly I was talking about parking for the Model 3s though.

At the Raleigh DC for example they don't have enough space to park more than a handful of new, undelivered, cars. Total.

They've known this since they opened the place years ago.

They've done nothing to solve this parking capacity issue for the big ramp up they knew was coming long term.

Initial solution was just park them up and down the street- untagged. The cops stopped that.

Second solution was renting a parking lot from a closed-down gym a few miles away. That worked fine until the owner sold the property.

Now? Everyone in NC gets home delivery because the DC can't store more than 1 truck worth of cars at a time so they can't do in person deliveries AT ALL except for rare exceptions like the guy who got a delivery Friday because the hurricane made it literally impossible for a semi to take the car to him.

The 2 day guarantee applies to cars picked up at the DC also.

The email I received from Tesla only mentioned home delivery with the 2 day thing.

Can you link to some place it's officially in writing for DC deliveries? (officially, not Elons vague tweet)

With multiple HD teams, there is more capacity to do a car swap, if needed rather than have more customers at the DC along with the parking issues.

...Again...huh? What car swap?

They don't take trade ins.

They don't bring loaners out to you either.

They deliver your car. Period. In some cases they don't even wait for you to meet them they just drop the car, and you have to call Tesla when you get home to remote unlock it.

If there's anything wrong with it then either you drive it to the DC and leave it there and get a loaner... or you reject delviery and wait for a truck to come back and get it.

Then wait for a rematched VIN

Then ANOTHER truck will come deliver THAT car... and you're back to hoping nothing's wrong with it.


It's less efficient and more expensive for Tesla in every conceivable way.

A home drop off can also provides a more relaxed environment to check the car out. If the cars are driven to the house/ business, then that also serves as an additional quality check.

They're not. The come in a semi truck.

As mentioned they drop it even if you're not there to look at or approve of it.

They aren't Tesla employees- and they don't care about issues with the car.

If you don't reject it immediately their job is done.

If you have fixable problems you take that up with Tesla and HOPE someone will fix it after the fact.

Versus a DC delivery where you can get in writing that Tesla will fix it before you accept delivery.

So again, HD is worse.

 

[jelloslug]

So... The cars are ready upon delivery time?

We agree then? Just making sure.

The difference is that most manufacturers make cars that they hope to sell at some time in the future where Tesla is making cars to fill orders. There is a huge difference there.

 

[Lasairfion]

Just going to point out my Youtube rule.

"If you're having to type more than three comment replies then you're probably no longer talking about the video and locked into a pointless argument."

 

[mattjs33]

The difference is that most manufacturers make cars that they hope to sell at some time in the future where Tesla is making cars to fill orders. There is a huge difference there.

I mean, I guess so? If the cars all eventually sell, what's the difference?

Industry ideal days inventory on hand is considered to be 60 days. This is to have inventory on hand to be able to sell. I get that Tesla went all-in on the just-in-time, build-to-order method; my point is, that was a huge mistake. It's a philosophical difference that some of us have to live with. But I can special order a car from almost any other manufacturer, not from dealer inventory, and I highly doubt I'd hear some idiot excuse like, "we can't get your car to you when we said we would, until we build some more trucks first."

That's the crux of this problem here, and the Model 3 section is currently littered with threads to the result of Tesla's failure to get this set in place ahead of time.

 

[mattjs33]

Just going to point out my Youtube rule.

"If you're having to type more than three comment replies then you're probably no longer talking about the video and locked into a pointless argument."

Then you might as well leave this forum entirely? Most threads are more than one page of responses. It's called conversation, what's wrong with it?

 

[jelloslug]

I mean, I guess so? If the cars all eventually sell, what's the difference?

Industry ideal days inventory on hand is considered to be 60 days. This is to have inventory on hand to be able to sell. I get that Tesla went all-in on the just-in-time, build-to-order method; my point is, that was a huge mistake. It's a philosophical difference that some of us have to live with. But I can special order a car from almost any other manufacturer, not from dealer inventory, and I highly doubt I'd hear some idiot excuse like, "we can't get your car to you when we said we would, until we build some more trucks first."

That's the crux of this problem here, and the Model 3 section is currently littered with threads to the result of Tesla's failure to get this set in place ahead of time.

You still seem to be missing the point completely.

 

[mattjs33]

You still seem to be missing the point completely.

No, I'm not.

They OEMs that build to stock inventory, are doing so in anticipation of future orders. The cars aren't likely to not sell. I don't see lots worth of 2016 cars sitting around. So whether you build to future orders or build to orders in hand, is only a matter of where the car sits. In Tesla's case, it's in rolls of steel next to the plant. In everyone else's case, it's on the lot, ready to ship. Do you see the difference? Everyone else has inventory on had to balance out ebbs and flows of demand. It's a buffer against lots of things.

So you're going to argue that Tesla is so awesome that their demand is huge. Which is true. But if I'm going to sell hot dogs at the ball game, wouldn't it be better to have a couple thousand hot dogs ready to hand out, as opposed to cooking each bun to order from scratch? What's the best way to meet huge demand?

Tesla building to order exactly just-in-time supply management (to the end user). That's awesome and cost-effective, but if you're going to do that, you had better have a reliable and efficient supply chain. Tesla clearly doesn't at this scale.

 

[mongo]

You can quibble over if that's more than "nothing" I guess. It's laughable too little at the very least.

Then don't use "literally"

The email I received from Tesla only mentioned home delivery with the 2 day thing.

Can you link to some place it's officially in writing for DC deliveries? (officially, not Elons vague tweet)

There's a thread for that. Michigan pickup, found issues, they came and got the car.:
Staggering amount of issues found at/after delivery. Considering returning the car.

Ok, I see we are talking about your direct experience with a 3rd party delivery system, versus what I had read of other at home deliveries. I'm sorry your experience has been so rough.

 

[jelloslug]

No, I'm not.

They OEMs that build to stock inventory, are doing so in anticipation of future orders. The cars aren't likely to not sell. I don't see lots worth of 2016 cars sitting around. So whether you build to future orders or build to orders in hand, is only a matter of where the car sits. In Tesla's case, it's in rolls of steel next to the plant. In everyone else's case, it's on the lot, ready to ship. Do you see the difference? Everyone else has inventory on had to balance out ebbs and flows of demand. It's a buffer against lots of things.

So you're going to argue that Tesla is so awesome that their demand is huge. Which is true. But if I'm going to sell hot dogs at the ball game, wouldn't it be better to have a couple thousand hot dogs ready to hand out, as opposed to cooking each bun to order from scratch? What's the best way to meet huge demand?

Tesla building to order exactly just-in-time supply management (to the end user). That's awesome and cost-effective, but if you're going to do that, you had better have a reliable and efficient supply chain. Tesla clearly doesn't at this scale.

That's why Tesla is changing the way they deliver cars. When they hit a roadblock, they figure out a way around it. If the best solution for Tesla is to make their own car haulers or to deliver cars directly to customers locations, then they will do it that way. Just because Ford's system is to make 100,000 F-150s just to have them sitting in inventory, it does not mean that it will be the best solution for Tesla.

 

[mongo]

So you're going to argue that Tesla is so awesome that their demand is huge. Which is true. But if I'm going to sell hot dogs at the ball game, wouldn't it be better to have a couple thousand hot dogs ready to hand out, as opposed to cooking each bun to order from scratch? What's the best way to meet huge demand?

Tesla building to order exactly just-in-time supply management (to the end user). That's awesome and cost-effective, but if you're going to do that, you had better have a reliable and efficient supply chain. Tesla clearly doesn't at this scale.

If people are lined up to buy your hot dogs before your cooker is even warmed up, how are you going to get ahead? Make them wait longer? What if there are more people than dogs?

Tesla is not building 3s as they are ordered, they are pumping out the few versions that exist as quickly as they can. However, with the backlog, that doesn't matter since they already have umpteen orders for each configuration. So you could say it's a prematched order, but not a just in time order (more like, it's about time )