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It’s been going this way for Tesla lately…

I have been intending to write about Tesla’s difficulties in Model 3 production–and related matters  There have been a great many articles about Elon Musk personally participating in production, sleeping on the factory floor, customers demanding their deposits back, all manner of production difficulties, financial problems, poor quality control, plummeting stock prices, and the list goes on and on. Now, Zero Hedge provides a concise update:

The once months-long window between when Model 3 orders were placed and the time that these vehicles were delivered has collapsed. What once was an ‘exclusive’ sounding waitlist is turning into a ‘department store closeout’ style effort by Tesla to deliver whatever Model 3s they can as soon as possible, according to a new reportby Electrek.

Even the pro-Tesla blog was forced to conclude that Tesla may be ‘trying a bunch of new delivery methods in order to push Model 3 deliveries higher by the end of the quarter’, suggesting that much of Elon Musk’s bizarre behavior in recent weeks may have been due not to supply bottlenecks but an unexpected drop in demand.

Elon Musk demonstrating his leadership skills…

To what “bizarre behavior” do they refer?  Oh, drinking whiskey and smoking pot on a CNBC podcast?  You know, the kind of thing in which every CEO regularly indulges in public?  That bizarre behavior?

The report comes just hours after Tesla hosted a “delivery event” at its Fremont factory. This event was offered to Model 3 buyers, offering them an ‘exclusive’ chance to pick up their vehicle at the factory. It also substantially cuts down on the amount of work and resources Tesla would need to deliver these vehicles to their respective owners.

‘Tesla apparently made a large batch of Model 3 vehicles with popular configurations and it is trying to match them to custom orders from local buyers,’ an article from earlier this week states.

Model 3 buyers, many of whom reportedly had upcoming delivery dates, were sent the following invitation:

Tesla 3

That sounds a great deal more like desperation than an honest concern for customer satisfaction.

Now, Tesla is taking their delivery proactivity one step further: they are offering ‘immediate delivery’ of Model 3s on a first come first serve basis. It was also reported that the company was sending out emails to Model 3 reservation holders who have been in line since day one, trying to entice them to come in and take delivery of vehicles that are apparently sitting around with nowhere to go.

One can only imagine what Tesla’s suppliers, investors and potential customers might be thinking. Greenie street cred tends to lose its luster if there’s no cred to put on the street.

In other words, Tesla appears to be dealing with the ‘leftovers’ from batch productions and trying to entice reservation holders to take a vehicle that they may not have ordered or want, to help them move stagnant inventory.

Additionally, according to the report, many of the people that received this email from Tesla are people who have been waiting for the $35,000 version of the Model 3. This follows a reportthat we posted last month highlighting that Tesla’s bottleneck had ominously gone from production to delivery, or from supply to demand.

And while Tesla can ultimately control supply – at a cost – it now appears to have little control over coolnessdemand.

Translation: even previously excited greenies are deciding they don’t want to buy non-existent cars, or cars with an unknowable record of longevity, quality and reliability.  It would seem there are limits to even greenie sensibilities and social conscience.  Who knew?

A report from late August by Electrek had claimed that the company was having trouble dealing with the ‘insane workload’ of Model 3s that it was producing. The ‘insane workload’ as it was called in the title of electrek’s report is then referred to as just ‘gradually improving’ production in the story’s lede.

This sounds very much like a company that has no idea what actual automotive production actually is.

Tesla 3

But more importantly, we ask: is the ‘people’s electric car’ – the $35,000 Model 3 – ever going to happen?

Considering all EV makers are now facing the sunsetting of the $7500 federal subsidy for electric cars.  As I’ve often written, it is about the upper 7% of the population in income that buys EVs, but the long term success of any EV company depends on volume, not exclusivity.  That’s a subsidy President Trump might very well allow to disappear.  How many will be willing to shell out $35,000 for a Model 3 when one can have any number of very nice and reliable conventionally powered vehicles for that figure and less.  Consider too that the $35,000 figure is likely not for a well equipped model, but a bare bones model, few of which any manufacturer actually makes.

As a reminder, yesterday we reported that Tesla had put out a blog on Friday claiming it was ‘about to have the most amazing quarter in [its] history, building and delivering more than twice as many cars as [it] did last quarter’. This will most certainly not happen if demand has plateaued, or worse, is shrinking.

It sounds like Musk has been smoking more weed than anyone previously suspected