Redefining “direct to consumer”
Tesla has faced inventory issues as demand for the company’s cars have increased rapidly. Because the company is finally starting to reach Model 3 production goals, this problem is growing more rapidly.
Since the birth of the company, Tesla has delivered cars straight to consumers’ homes. A buyer can go into the store to order a Tesla and then take it from there after watching an instructional video. However, because of logistical issues of these deliveries and increased demand for the cars, thousands of Tesla vehicles are sitting in the factory parking lot, waiting to ship out to a consumer.
In fact, two years ago, Elon Musk addressed this with investors, explaining, “The delivery of the cars is where the investment is needed. If we deliver three or four times as many cars, we don’t want to have three or four times as many delivery centers. How do we make that delivery process more streamlined, [with] less paperwork, less bureaucracy, and get people ahead-of-time, really well-produced instruction videos for how to use their car?”
This is still a problem today, and the company now has over 400 thousand Model 3’s on hold. CEO Elon Musk decided to address the problem by literally taking matters into his own hands – he drove a car straight from a factory to a buyer’s home.
This was an experiment by Musk to see if it were doable, but the problems are clear for him and investors. Not enough buyers live close enough to the factory for this method to optimize costs, and Musk still needs the manpower to deliver all of these cars, as he obviously can’t drive them all himself.
Musk will need to figure out another option if he hopes to avoid this inventory disaster.
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