Tesla is revamping its electric vehicle production schedule in a bid to ease logistics strains in its delivery network, CEO Elon Musk told investors on a Q3 earnings call.
The company has been struggling to deliver large orders of Tesla vehicles at the end of quarters due to difficulties securing transportation.
"In fact, we’re just fundamentally running out of — there weren’t enough boats, there weren’t enough trains, there weren’t enough car carriers to actually support the wave [of demand] because it got too big," Musk said on the call. "So, whether we like it or not, we actually have to smooth out the delivery of cars intra-quarter because there aren’t just enough transportation objects to move them around."
The electric vehicle maker hit major hurdles in moving cars by ship from Shanghai to Europe. Tesla also ran into trouble securing trucking within some parts of the U.S., CFO Zachary Kirkhorn said on the company's Q3 earnings call. Despite the logistics snarls, the company still managed to deliver a record 343,830 vehicles last quarter.
The automaker historically builds its cars in batches, which leads to "extreme concentrations of outbound logistics needs in the final weeks of each quarter," Kirkhorn told investors. Tesla completed two-thirds of its Q3 deliveries in the final month of the quarter, with one-third in the final two weeks.
The practice has helped keep the company's inventories low throughout each quarter. But given transportation difficulties, the company has begun more evenly spreading out production.
"We expect this to simplify our operations, reduce costs and improve the experience of our customers," said Kirkhorn.
