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?

 

[mongo]

They're not. More cars used to be transported by train than are now; there are a lot of autoracks around. Unfortunately, Tesla thoughtlessly ripped up their on-site train loading facilities (because Musk has a serious blind spot about trains), so they're limited in ability to load trains by their ability to truck cars to the Richmond CA railyard.

That said, overall train movement capacity is limited by several national chokepoints, particularly in Chicago.

Thanks for that. I was thing saturated as in Tesla outbound equaling other OEM inbound.
The Fremont train set up required breaking down the train then reconnecting it. I also read that the train blocked the road during this process. Not sure how much if an impact that had, nor the overal economics if the current setup (but I expect the transportation charge covers it). (Also doubt it was really thoughless, I'm half expecting Tesla is building a straight load system under the automated storage building. There was some serious dirt moving going on there)

Only 4,000/wk? Where did that number come from?

Lowball numbers so that my argument wasn't sidetracked by bias. 100 days in a quarter 50k cars. 500 a day, 8 per carrier, 60 carriers per day. Real numbers just make the carrier shortage worse.

 

[mongo]

Man, if only someone at Tesla had known in advance they'd eventually need to transport a lot of cars or something...

Instead, it seems they had no way of realizing this would ever happen, just as they apparently had no way to ever know they'd need to have delivery centers staffed and physically large enough to accommodate delivery of this volume of car, or an IT back end capable of tracking and keeping up with this volume or orders...

I mean, it's clear nobody at Tesla had any way of knowing how many cars Tesla planned to make or sell right?

if only they'd had a few years with hundreds of thousands of preorders and multiple quarters in a row with publicly stated production and delivery goals as a warning or something....but nope, no way to have known!

Other than building their own carrier fleet, how do you suggest they create the capacity to handle the step change in volume? And at what point do they (or anyone else) take on the costs if this fleet given the delays in production ramp?

Beyond giving guaranteed carrying contracts to companies to allow them to buy more capacity two years ago (lead time for carrier builders and the original volume date), I don't see a solution. And that solution would have been a major cash waste (in retrospect).

 

[neroden]

I'm half expecting Tesla is building a straight load system under the automated storage building. There was some serious dirt moving going on there

Hope so. Doubt it. (With electric cars eliminating the exhaust-based restriction which prevented driving through large numbers of racks, arguably the best design would be a long siding connected at both ends, which they seem to be precluding.)

 

[Knightshade]

Other than building their own carrier fleet, how do you suggest they create the capacity to handle the step change in volume?

There remains 0 evidence there's a lack of capacity- just a lack of capacity available to Tesla.

US car sales in total are down significantly from the #s even a couple of years ago. So either people just scrapped a ton of carrying capacity in the last year, or there's more than enough out there.


This is why supply chain planning and fulfillment planning is a thing.

A thing Tesla sucks at really badly. They sucked at it before the 3 but volumes were so small it wasn't as obvious (waits for some repair parts mostly).

Now it's glaring as hell.

Not just with this, but with things like delivery centers where they only have room to park 10 cars at a time when they KNEW YEARS IN ADVANCE they'd be trying to deliver 10 times that many a day on a slow day.

See also where they appear shocked they don't have enough people working those centers- or enough IDAs to respond in timely or organized fashion.

And at what point do they (or anyone else) take on the costs if this fleet given the delays in production ramp?

Beyond giving guaranteed carrying contracts to companies to allow them to buy more capacity two years ago (lead time for carrier builders and the original volume date), I don't see a solution.

Again, nobody had to "build" anything.

In 2016 US light vehicle sales were 17.46 million... in 2017 they dropped to 17.13 million...that's over 300,000 cars of carrying capacity we know for a fact was unused but existed as of 2017. And 2018 car sales so far have been flat or lower than 2017.

Where'd those 300,000+ cars worth of moving capacity go? Because that's several times how much capacity Tesla is short this year.

And that solution would have been a major cash waste (in retrospect).

How much are they wasting now being unable to deliver cars in a timely fashion and having to use insanely expensive methods like 3rd party home delivery instead of much cheaper, larger, pre-rented, carriers?

 

[mongo]

Where'd those 300,000+ cars worth of moving capacity go? Because that's several times how much capacity Tesla is short this year.

That would be 300,000 over an entire year over the entire country. 20 cars a day worth of capacity in every state is not equivalent to 300k originating in one state. At just 50k a quarter, Tesla needs 200,000 a year concentrated at Fremont. 2/3 rds of the national capacity

How much are they wasting now being unable to deliver cars in a timely fashion and having to use insanely expensive methods like 3rd party home delivery instead of much cheaper, larger, pre-rented, carriers?

If 3rd part home delivery is less than the 1k or so destination charge, it isn't costing Tesla anything (other than more margin on a thing that technically shouldn't have margin).

 

[Jedi2155]

I'm just thinking this is just part of the logistical puzzle since Tesla probably doesn't own the car carrier, which probably comes with the semi tractor and driver together.

Supposedly, there were stories of those delivery trucks waiting 2-3 hours trying to find all the VINs to load up the trucks causing huge delays.

Now imagine if Tesla had a stockpile of car carriers which their own employees could load up the appropriate VINs, and a semi could just pull up and pickup, that'd solve the issue nicely. I'm not familiar with any type of trucking logistics so I have no idea if this is the case but seems very logical given the stories I've heard so far.

 

[the_danimal]

Man, if only someone at Tesla had known in advance they'd eventually need to transport a lot of cars or something...

Instead, it seems they had no way of realizing this would ever happen, just as they apparently had no way to ever know they'd need to have delivery centers staffed and physically large enough to accommodate delivery of this volume of car, or an IT back end capable of tracking and keeping up with this volume or orders...

I mean, it's clear nobody at Tesla had any way of knowing how many cars Tesla planned to make or sell right?

if only they'd had a few years with hundreds of thousands of preorders and multiple quarters in a row with publicly stated production and delivery goals as a warning or something....but nope, no way to have known!

This.

Tesla clearly should of known the limitations of its current infrastructure — it goes WAY beyond car carriers here folks. They just weren’t prepared for this kind of scale.

Elon even sidestepped the Twitter users question around reservation order. Car carriers are but a single variable in this equation.

Listen, I want Tesla to be successful. I too have a vested interest in the success of this mission, but I’m also not going to be a fan boy and justify #allthethings.

 

[boriszima]

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.

 

[Knightshade]

If 3rd part home delivery is less than the 1k or so destination charge, it isn't costing Tesla anything.

that's...really not how accounting works.

Tesla could not predict how many cars they would produce some 6 months ago.

Really?

That's weird.

Since every quarter they've announced production goals for the coming quarters, including more than 6 months ago.

Heck- here Elon is almost 6 months ago doing exactly that setting a goal of 3-4k a week in May and aims to hit 6k a week by end of June.

Elon Musk raises Tesla Model 3 goal, rips inefficient contractors in internal email


It's almost October now. That they're making this many cars is a surprise to literally nobody (heck, technically they're behind schedule... imagine how screwed they'd be on delivery if they'd actually hit their production targets reliably!)

 

[mongo]

I'm just thinking this is just part of the logistical puzzle since Tesla probably doesn't own the car carrier, which probably comes with the semi tractor and driver together.

Supposedly, there were stories of those delivery trucks waiting 2-3 hours trying to find all the VINs to load up the trucks causing huge delays.

Now imagine if Tesla had a stockpile of car carriers which their own employees could load up the appropriate VINs, and a semi could just pull up and pickup, that'd solve the issue nicely. I'm not familiar with any type of trucking logistics so I have no idea if this is the case but seems very logical given the stories I've heard so far.

Interesting. After the first run, the tractors have to return the carriers to be refilled. So now you have tractors with no trailer. Driver could then hook up to a loaded carrier (duty time permitting). Same as trailer drops at warehouses.

that's...really not how accounting works

How so?
Destination charge should be the average cost of deliveries. Even paying 2 people (driver and ride back) a full day's fully burdened wages per car (only one car per day), you'd need a salary over 60k a year to hit the 1k per car level.

 

[mos6507]

but nope, no way to have known!

Add to that the body-shops/service centers for all those cars scratched during delivery.

While everyone's busy giving Musk credit for Mission Accomplished his company seems to be stumbling over every well-known issue in scaling up a business. That's not exactly a mark of quality CEOing.

 

[P85_DA]

Lol already see panel gaps in those trailers

 

[Lasairfion]

Elon Musk tweeted about building a Tunnel. Suddenly Boring Company. Does anyone here really think he just created it over-night? Tunnelling requires forests worth of directory sized paperwork.

Elon Musk is like the person who said "Can you keep a secret? So can I".

I'd expect that Tesla was well aware of a shortage in capacity of the car-carrier industry and has been working on this, in the dark, for a long time. I reckon they've just found themselves a few weeks off parity due to Elon Time.

 

[Olle]

Elon Musk tweeted about building a Tunnel. Suddenly Boring Company. Does anyone here really think he just created it over-night? Tunnelling requires forests worth of directory sized paperwork.

Elon Musk is like the person who said "Can you keep a secret? So can I".

I'd expect that Tesla was well aware of a shortage in capacity of the car-carrier industry and has been working on this, in the dark, for a long time. I reckon they've just found themselves a few weeks off parity due to Elon Time.

Exactly!

 

[jdcatc]

I am wondering if I can still expect my M3 AWD to be delivered in the window of September - November. I live way out in Northern Virginia. I reserved mine on day one and ordered this June. Should I sit tight and wait? Should I ask if I can fly out west and drive my car back here myself? I am getting anxious and hoping it gets here before January 1. C'mon Tesla stork......please let "Milo" arrive here quickly. Hey wait!
Maybe one of those white M3s with the upgraded rims in the picture for this thread is Milo! Oh please, be heading out to the Commonwealth!

 

[Knightshade]

How so?
Destination charge should be the average cost of deliveries. Even paying 2 people (driver and ride back) a full day's fully burdened wages per car (only one car per day), you'd need a salary over 60k a year to hit the 1k per car level.

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)

Elon Musk tweeted about building a Tunnel. Suddenly Boring Company. Does anyone here really think he just created it over-night? Tunnelling requires forests worth of directory sized paperwork.

Elon Musk is like the person who said "Can you keep a secret? So can I".

Apprently the secret he was keeping was "I have no idea how logistics and fulfillment work, and neither does anyone I hired at Tesla"

I'd expect that Tesla was well aware of a shortage in capacity of the car-carrier industry

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 has been working on this, in the dark, for a long time.

Maybe if he'd turned the lights on he'd have noticed they suddenly have 10x as many cars as normal to deliver and no way to do so.

See also the lack of delivery center staffing to handle it (or is there a shortage of humans now too?)

Also the "shortage" of parking spaces at many DCs to store cars...

Also the "shortage" of actual replacement parts for all the cars that need to be reworked at the over-capacity service centers...


The only real shortage here has been planning and foresight for actually dealing with the outcome of doing exactly the things Elon promised the factory would be doing for the last 2 years- building lots of cars.

 

[MikeQ]

I've got to believe "building their own" means they are having someone build car carriers for them who is in the business of building carriers. I'm pretty sure such trailers would need all kinds of regulatory certifications and inspections. I can't imagine it would be time efficient to try to invent and certify something through government channels as opposed to just having a company build one that's already gone through the certification process.

 

[Atari2600]

Did the shorts buy all available trailers?

 

[Darmie]

I've got to believe "building their own" means they are having someone build car carriers for them who is in the business of building carriers. I'm pretty sure such trailers would need all kinds of regulatory certifications and inspections. I can't imagine it would be time efficient to try to invent and certify something through government channels as opposed to just having a company build one that's already gone through the certification process.

That's true. They could also just purchase the company that makes trailers. On another note, they may want to look into acquiring the trucks and maybe a few drivers.

 

[larmor]

Man, if only someone at Tesla had known in advance they'd eventually need to transport a lot of cars or something...

Instead, it seems they had no way of realizing this would ever happen, just as they apparently had no way to ever know they'd need to have delivery centers staffed and physically large enough to accommodate delivery of this volume of car, or an IT back end capable of tracking and keeping up with this volume or orders...

I mean, it's clear nobody at Tesla had any way of knowing how many cars Tesla planned to make or sell right?

if only they'd had a few years with hundreds of thousands of preorders and multiple quarters in a row with publicly stated production and delivery goals as a warning or something....but nope, no way to have known!

Someone forgot to renew the microsoft office/excell subscription, and were forced to use burnt siena crayons and construction paper to work out the logistics...