The Supply Chain Matters blog once again reflects on Tesla Motors recently reported quarterly operations performance and the potential conflict relative to meeting shareholder expectations and social responsibility practices.

It its typical brief announcement of electric powered vehicle production and deliveries, Tesla Motors reported Q3-2020 performance on Friday of last week.

Tesla supply chain

Highlights of the quarter included total production of 145.036 vehicles and total deliveries of 139,300 vehicles. Wall Street analysts reportedly were expecting a delivery number of upwards of 137,000 vehicles and thus this was a blowout quarter in this dimension. Regarding the breakout of product volume by model, Model S/X production was reported as slightly less than 17,000 vehicles while Model 3/Y production volume slightly exceeded 128,000 vehicles.

As highlighted in our Supply Chain Matters commentary reflecting on the Q2 operating performance, the California based operator was hampered in Q2 by production suspension brought on by large infection rates of the COVID-19 virus across the California and to some extent, within the new China Model 3 production facility.  In May, CEO and technology icon Elon Musk blatantly defied local health authorities directives concerning conditions for restarting production operations at the manufacturer’s U.S. manufacturing facility. Thus, Q2’s total production was limited to 82,272 vehicles while customer deliveries were reported as 90,650 deliveries.

News of Tesla’s Q3 operational performance caused the company’s stock to drop by over 7 percent reportedly for two reasons.

First and foremost, delivery vehicles had fallen short of the original projections for the company.  Tesla’s stated goal for 2020 has been to deliver 500,000 vehicles this year. Incorporating the company’s Q3 delivery performance, the year-to-date delivery numbers stand at 318,350 vehicles, which implies that Q4 deliveries need to exceed 181,000 vehicles to achieve the delivery goal. At the recent Battery Day event held in conjunction with an investor event,  CEO Musk reaffirmed that the annual goal still stands. The other reason for the stock drop on Monday was news that President Trump and the First Lady had tested positive for the COVID-19 virus.

In order for Tesla to make its Q4 operational numbers, all facilities have to be operating at maximum output. While that may well be doable for the new Shanghai facility, the Fremont California facility has dependence on the rate of virus infection within the local area and across the State of California. As we pen this blog commentary, California leads all other U.S. States with an infection rate now exceeding 838,000 cases in excess of 16,000 deaths. The second state with high virus infection is Texas with infection rate exceeding 806,000 cases.

If there is a second-wave outbreak, there will likely be another testy moment for CEO Musk, not to mention added concerns among the electric automaker’s production assembly line workforce.

With sky high stockholder expectations and added competition from mainstream auto competitors, the expectations related to Tesla and its associated product supply and logistics networks increase with every passing quarter.


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