# Tesla’s logistical challenges overshadow record deliveries
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-10-03
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Tesla Inc Faces Challenges with Lower-Than-Expected EV Deliveries
Meta Description: Tesla Inc announced lower-than-expected electric vehicle deliveries in Q3 due to logistical challenges and concerns about global demand, impacting the auto
URL: https://financedigest.com/teslas-logistical-challenges-overshadow-record-deliverieshtml

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By Hyunjoo Jin and Mrinmay Dey

-Tesla Inc on Sunday announced lower-than-expected electric vehicle deliveries in the third quarter, as logistical challenges overshadowed its record deliveries.

The top electric car maker said “it is becoming increasingly challenging to secure vehicle transportation capacity and at a reasonable cost,” but some analysts were also concerned about demand for high-ticket items due to the weakening global economy.

The [economy around the edges is still having a negative impact](https://www.financedigest.com/hurricane-matthew-causes-up-to-15bn-impact-to-us-and-caribbean-economies-in-october-according-to-aon-catastrophe-report.html "Hurricane Matthew causes up to bn impact to US and Caribbean economies in October, according to Aon catastrophe report") for Tesla that’s mostly logistical. But that I think there is some demand (issues) sprinkled in there,” Wedbush Securities analyst Dan Ives told Reuters after the [delivery results](https://www.financedigest.com/medherant-announces-positive-phase-i-results-for-its-first-transdermal-drug-delivery-patch.html "Medherant announces positive Phase I results for its first transdermal drug delivery patch").

There is a dark cloud over the [auto sector](https://www.financedigest.com/japans-factory-output-posts-biggest-fall-in-8-months-on-weak-autos-chips-sectors.html "Japan’s factory output posts biggest fall in 8 months on weak autos, chips sectors"). And Tesla is not immune.”

Ford Motor said last month inflation-related [costs would be $1 billion](https://www.financedigest.com/australias-nuclear-submarine-plan-to-cost-up-to-245-billion-by-2055-defence-official.html "Australia’s nuclear submarine plan to cost up to 5 billion by 2055 -defence official") more than expected in the third quarter and that parts shortages had delayed deliveries.

Apple Inc. is backing off [plans to increase production of its new iPhones this year after an anticipated surge in demand failed](https://www.financedigest.com/are-the-over-55s-accessing-their-pensions-early-failing-to-plan-for-later-life.html "Are the over-55s accessing their pensions early failing to plan for later life?") to materialize, Bloomberg reported last month, citing people familiar with the matter.

I think that EVs are in for probably a little [bit of a rough patch, just because people are probably going to be a little bit hesitant and less urgent to buy something new,” OANDA senior market](https://www.financedigest.com/surgical-drill-bits-market-report.html "Surgical Drill Bits Market Report") analyst Ed Moya said.

‘CRAZY WAVE OF DELIVERIES’

Tesla delivered 343,830 [electric vehicles](https://www.financedigest.com/tax-credits-for-eu-electric-vehicles-to-dominate-mondays-trade-talks-with-u-s.html "Tax credits for EU electric vehicles to dominate Monday’s trade talks with U.S"), a record for the world’s most valuable automaker, but less than the 359,162 analysts on average had expected, according to Refinitiv. A [year earlier Tesla](https://www.financedigest.com/elon-musk-focused-on-getting-self-driving-teslas-in-wide-release-by-year-end.html "Elon Musk: focused on getting self-driving Teslas in wide release by year-end") delivered 241,300 units.

The latest deliveries fell short of Tesla’s production of 365,923 vehicles, which is rare for the automaker which has [seen its deliveries higher](https://www.financedigest.com/wall-street-seen-opening-higher-but-u-s-recession-priced-in.html "Wall Street seen opening higher but U.S. recession priced in") or similar to production in many of recent quarters.

As our production volumes continue to grow, it is becoming increasingly [challenging to secure](https://www.financedigest.com/the-challenge-of-keeping-data-secure-why-in-house-security-isnt-enough.html "The challenge of keeping data secure: why in-house security isn’t enough") vehicle transportation capacity and at a reasonable cost during these peak logistics weeks,” Tesla said in a statement on Sunday.

Tesla CEO [Elon Musk](https://www.financedigest.com/elon-musk-and-others-urge-ai-pause-citing-risks-to-society.html "Elon Musk and others urge AI pause, citing ‘risks to society’") said on Sunday “Smoothing out crazy end of quarter delivery wave to reduce expedite costs & relieve stress on Tesla team.

Last year, he said Tesla is having a “crazy wave” of deliveries at the end of each quarter, because its Shanghai factory makes cars for [exports to Europe](https://www.financedigest.com/u-s-oil-exports-to-europe-hit-record-in-march-on-steep-discounts.html "U.S. oil exports to Europe hit record in March on steep discounts") and other countries in the first half of a quarter and then cars to be sold in China.

Tesla again asked employees to help deliver “a very high volume of vehicles to eagerly waiting customers during the final days of Q3” in California, according to an email [seen by Reuters](https://www.financedigest.com/the-logo-of-french-cloud-computing-company-ovhcloud-is-seen-on-a-data-center-building-in-strasbourg-france-october-13-2021-reuters-christian-hartmann.html "The logo of French cloud computing company OVHcloud is seen on a data-center building in Strasbourg, France, October 13, 2021.  REUTERS/Christian Hartmann").

Tesla on Sunday said it has “began transitioning to a more even regional mix of vehicle builds each week, which led to an increase in [cars in transit at the end](https://www.financedigest.com/eu-approves-law-to-end-sales-of-new-co2-emitting-cars-by-2035.html "EU approves law to end sales of new CO2-emitting cars by 2035") of the quarter.

Q4 DELIVERY PUSH

Tesla set an ambitious target to produce almost 495,000 Model Y and Model 3s in the [fourth quarter](https://www.financedigest.com/german-gdp-contracted-by-0-4-in-the-fourth-quarter.html "German GDP contracted by 0.4% in the fourth quarter") of this year, internal plans reviewed by Reuters show.

The company’s production ambitions come against the backdrop of increasingly gloomy outlook for global growth, with Musk himself telling [top managers in June he had a “super bad feeling” about the economy and planned to cut](https://www.financedigest.com/testing-waters-hungarys-central-bank-flags-cut-in-top-end-of-rate-corridor.html "Testing waters, Hungary’s central bank flags cut in top end of rate corridor") staff.

During a conference call in July, Musk said at first that macroeconomic uncertainty [might have some impact](https://www.financedigest.com/brexit-might-impact-our-migrant-pool-magazine.html "“Brexit might impact our migrant pool.”-Magazine") on demand for its electric vehicles, but when pressed for details by an analyst, he said the company did not have a demand problem but a production problem.

The automaker expanded production capacity in Shanghai after a resurgence in COVID-19 cases forced a suspension at the plant and fueled the first dip in [deliveries after a nearly two-year-long record](https://www.financedigest.com/tesla-posts-record-quarterly-deliveries-after-price-cuts-up-4-from-q4.html "Tesla posts record quarterly deliveries after price cuts, up 4% from Q4") run.

In September, Tesla’s [vehicle order](https://www.financedigest.com/rheinmetall-wins-quarter-billion-euro-order-for-e-vehicle-parts.html "Rheinmetall wins quarter-billion euro order for e-vehicle parts") backlog fell, especially in China, Troy Teslike, a Tesla data tracker tweeted.

[Tesla said it delivered 325,158 Model](https://www.financedigest.com/tesla-cuts-u-s-model-s-and-model-x-prices-between-4-and-9.html "Tesla cuts U.S. Model S and Model X prices between 4% and 9%") 3 compact cars and Model Y sport-utility vehicle, as well as 18,672 of its Model S and Model X premium vehicles to customers during the quarter. Meanwhile, Musk on Friday showed off a prototype of its humanoid robot ‘Optimus,’ predicting the electric vehicle maker would be able to produce millions and [sell them for under $20,000 – less than a third of the price of a Model](https://www.financedigest.com/this-is-the-best-week-for-cash-savvy-iphone-fans-to-sell-their-6s-models.html "This is the best week for cash-savvy iPhone fans to sell their 6s models") Y.

Experts were impressed by the speed of development of [Tesla’s humanoid robots](https://www.financedigest.com/factbox-the-challenges-automakers-and-now-tesla-face-with-humanoid-robots-2.html "Factbox-The challenges automakers, and now Tesla, face with humanoid robots"), but they agreed with Musk, who said “there’s still a lot of work to be done to refine Optimus and prove it.

(Reporting by Hyunjoo Jin in [San Francisco](https://www.financedigest.com/paul-jasper-joins-rimon-laws-san-francisco-office-as-partner.html "Paul Jasper joins Rimon Law’s San Francisco Office as Partner"), Savyata Mishra and Mrinmay Dey in Bengaluru, Victoria Waldersee in Berlin; Editing by Sriraj Kalluvila, Lisa Shumaker and Sandra Maler)


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