Auto News Car Advice Car Reviews

Tesla produced a record number of cars in Q3, but it’s still having trouble getting them to customers

In the third quarter of 2018 Tesla has delivered a total of 83,500 vehicles while producing 80,142 vehicles, the company said earlier this month, painting a picture of dramatic improvement as “production hell” has given way to “delivery logistics hell.” The automaker delivered 14,470 units of the Model S, 13,190 units of the Model X, and finally 55,840 units of the Model 3, as the midsize sedan has sharply overtaken the other two vehicles currently in production.

Overall, this is very good news for the automaker: in Q2 Tesla delivered just 40,740 vehicles. Tesla indicated during the first week of July that in the second quarter it had delievered 18,440 Model 3 cars, 10,930 Model S cars and 11,370 Model X crossovers. Effectively, Tesla has delivered approximately twice as many Model 3s than in all previous quarters, dating back to the start of Model 3 production in July 2017.

“53,239 Model 3 vehicles, which was in line with our guidance and almost double the volume of Q2,” the automaker said. “During Q3, we transitioned Model 3 production from entirely rear wheel drive at the beginning of the quarter to almost entirely dual motor during the last few weeks of the quarter. This added significant complexity, but we successfully executed this transition and ultimately produced more dual motor than rear wheel drive cars in Q3. In the last week of the quarter, we produced over 5,300 Model 3 vehicles, almost all of which were dual motor, meaning that we achieved a production rate of more than 10,000 drive units per week.”

The third quarter was nevertheless an eventful one for Tesla even aside from the actual production of cars. CEO Elon Musk faced an SEC probe in early August after tweeting that he was considering taking the company private, dropping the bid after about two weeks amid confusion about who could fund such a move, estimated to require tens of billions of dollars. Musk and Tesla are in the process of finalizing the settlement with the regulator which will require Musk and Tesla to pay $40 million into a fund for shareholders harmed as a result of stock fluctuations following the tweet, and will see Musk leave his position of chairman while remaining CEO of the automaker. Some two months after the scandal erupted, it appears to have been something that could have been easily avoided.

Elon Musk and Tesla have agreed to pay $20 million each to U.S. regulators in a settlement over the controversial tweets in August of this year, in which the CEO claimed to have secured funding for a …

In fact, most of the smaller controversies faced by the automaker in the third quarter appear to have been linked to tweeting by Musk or by other public actions, as actual car production appears to have been uneventful. If one point of concern remains — and this is something Tesla has admitted on multiple occasions — is that it is having trouble delivering cars to buyers on time.

“With production stabilized, delivery and outbound vehicle logistics were our main challenges during Q3,” the automaker noted. “We made many improvements to these processes throughout the quarter, and plan to make further improvements in Q4 so that we can scale successfully. As part of this effort, we plan to continue to expand direct deliveries to customers at their home or office, a service we launched in Q3 to improve customer convenience.”

Last month Tesla CEO Elon Musk indicated that the company entered a phase called “delivery logistics hell,” when a number of Model 3 reservation holders reported delays in receiving completed cars that they had determined to be sitting in some lot with hundreds of other Teslas. A number of photos posted on social media by Model 3 buyers have shown these large lots, the purposes of which Tesla has explained away as regional collection points.

Calling all volunteers, Tesla is looking for help. Yes, the company that is constantly in the news for production hell, paint hell, delivery logistics hell, criminal investigation hell and spaceship …

The Tesla CEO himself then indicated that the company had been running out of car carriers for actual delivery to customers, and that Tesla itself had turned to building car carriers in the face of this shortage.

“Apologies, we’re upgrading our logistics system, but running into an extreme shortage of car carrier trailers. Started building our own car carriers this weekend to alleviate load,” Musk tweeted on Sept. 24.

This claim received immediate publicity and also some pushback from the operators of large car carrier companies, who indicated that there was no such shortage.

But more importantly, who has seen these car carriers that Tesla claims to have built by itself?

First of all, it’s difficult to pinpoint what exactly Musk meant by “car carriers.” Did he mean the double-decker trailers pulled by three-axle trucks on the highway, each of which can carry as many as nine Model 3s? Or did he mean a smaller carrier used within the factory to move cars around the lot, a carrier that does not leave the factory grounds? The distinction is important because any kind of trailer that uses public roads has to be DOT-certified. More importantly, it’s a complex thing with hydraulics and lots of moving parts, and other systems that are not apparent just from looking at one of these things on the highway for a couple of minutes.

For all the assembly issues faced by the Tesla Model 3 in the first year of production, from battery modules to steel-welding robots, perhaps the last thing that many industry observers were expecting …

Musk’s comment had been taken at face value at the time, but has anyone seen one of these carriers that Musk claimed that Tesla had built to address an alleged carrier shortage?

Granted, it is possible to convert an enclosed trailer meant to deliver something like groceries to carry a car, but it’s not the best idea ever. For one thing, those trailers tend to have a very high point of entry, requiring a steep climb for a car unless it enters through a warehouse port that’s several feet off the ground. Second, those trailers can carry a grand total of two Model 3s due to size and weight restrictions because (once again) they were not built for that sort of thing. Finally, this seems like an expensive thing to get involved in just out of the blue as it’s still cheaper to buy carriers on the open market than build them from scratch, or contract carrier companies to deliver cars, which is what Tesla has been doing.

Perhaps Tesla has been buying car carriers and knocked-down kit form from some manufacturer and assembling them by itself? If that’s the case, that requires an indoor facility as there are electrical systems and hydraulics that have to be installed, so it’s unlikely that this is happening in the tent city or just in the great outdoors in Fremont.

 

Tags