It's the cost-cutting season.
The global pandemic has caused major issues for car manufacturers across the board. From logistical backlogs and parts shortages to low economic growth figures affecting sales, and not to mention the ongoing chip shortage. One of the hardest-hit companies has been Tesla, which is struggling to meet delivery deadlines on popular models such as the Model S and Model X. Tesla's market dominance is also being tested by Chinese newcomers, while CEO Elon Musk faces major recalls at home. To help keep Tesla in the black, Musk has urged workers to reduce the cost of vehicle deliveries by any means necessary. This comes at the end of the final quarter, a period when deliveries are usually ramped up.
In a company-wide email obtained by CNBC, the eccentric CEO asked employees to look for ways to reduce delivery costs. This comes at a time when the company usually rushes orders to hit sales targets. Tesla has been frequently increasing the price of its vehicles in the last few months, which clearly hasn't covered enough costs. Tesla's failure to deliver cars on time has left many of its customers having to spend significant amounts of money on ride-hailing apps and car rentals, with some even having to apply for vehicle loans. Despite major setbacks this year, Tesla has already managed to deliver 627,350 vehicles. That's up from the 500,000 delivered in 2020. The company did not set any clear delivery target for 2021, but still clings on to its 50 percent annual growth in deliveries.
In the email, Musk highlights the fact that deliveries drop off after an end-of-quarter rush and that the company should forget that the notion of "end of quarter" exists at all: "In effect, looked at over a six month period, we won't have delivered any extra cars but we will have spent a lot of money and burned ourselves out to accelerate deliveries in the last two weeks of each quarter," he said.
Tesla is not alone in its troubles; fellow American EV manufacturer Rivian has also been struggling with supply issues, and the automotive industry as a whole is playing catch up.