Elon Musk said Tesla workers shouldn’t “sprint like crazy” just to get cars delivered by the end of the year to increasingly frustrated customers — some of whom have faced months-long waits.
The end-of-the-year push to finish as many cars as possible is an effort to meet annual sales goals, but it costs the company big money in overtime pay, rush shipping fees and temporary labor, Musk said.
Instead, Musk said, he wants workers to focus on smoothing out deliveries to a steady flow throughout the year, ending the need for a last-minute rush at the end of every quarter, including this one.
“Our focus this quarter should be on minimizing cost of deliveries rather than spending heavily … just so that cars arrive in Q4,” Musk said in an email obtained by CNBC.
“What has happened historically is that we sprint like crazy at end of quarter to maximize deliveries, but then deliveries drop massively in the first few weeks of the next quarter,” Musk said in the email.
In effect, the company hasn’t delivered any extra cars, but will have spent a lot of money — and “burned ourselves out” — to accelerate deliveries in the last two weeks of every quarter in an effort to burnish sales numbers for earnings reports, Musk said.
Meanwhile, Musk in a later tweet, said employees wouldn’t let down too much when it comes to a push for production numbers.
“It will still be very intense,” he said in a Monday afternoon post. “Just slightly less than in the past.”
As the company tinkers with its production timelines, unhappy customers have complained of months-long delays in receiving their cars.
The company has been hampered by port backlogs and a chip shortage, which has led to customers complaining about months of delays in getting their new cars delivered.
Rival electric car maker Rivian has also reported delays in deliveries of its products. The chip shortage has also hampered production at legacy automakers General Motors and Ford.
As for the rest of the year, Musk told his employees that he expected a large delivery wave at the end of December, when shipments from California and China reach the East Coast of the US and Europe, respectively.
The Tesla CEO said he wants to reduce the volume of these deliveries “in favor of a steadier and more efficient pace of deliveries.”
“The right principle is: take the most efficient action, as though we were not publicly traded and the notion of ‘end of quarter’ didn’t exist,” he wrote.
Tesla does not report global sales numbers, though it does release its total number of deliveries. In the third quarter of this year, Tesla produced 237,823 cars and delivered 241,300.
So far this year, Tesla has reported 627,350 vehicle deliveries — surpassing last year’s total of about 500,000.
Since the start of this year, Tesla has not set a clear target for vehicle deliveries this year, though the company has aimed for a “50 percent average annual growth in vehicle deliveries” year-over-year.
Tesla anticipates selling 1.9 million electric vehicles by the end of this year.