Supply Chain Matters highlights electric automaker Tesla’s disappointing Q3 production and delivery performance and the implications.


Electric vehicle producer Tesla reported disappointing total production and vehicle delivery performance for the recent Q3-2023 period.

The EV maker reported the production of 430,488 vehicles in the quarter, the majority of which, 96.8 percent, were the Model 3 and Model Y vehicles.  Customer deliveries were reported to be 435,059 vehicles in the quarter. The vehicle delivery number declined 6.7 percent on a quarter-over-quarter basis.

According to the announcement, the sequential decline in volumes was because of planned downtimes for factory upgrades, including preparation for the production of the Tesla Cybertruck pick-up.  Founder and CEO Elon Musk warned investors of this need in the previous report to investors on Q2 financial performance.

As Supply Chain Matters has highlighted in our prior commentaries related to Tesla, the auto maker has been aggressively cutting prices of both the Model 3 and Model Y to seize market share from competitors and to stymie would be competitors in their need to ensure profitability levels when new models are released into the market.

In July, CEO Musk reiterated the company’s goal to produce and sell 1.8 million vehicles in 2023, reflecting a 37 percent increase in production performance last year. With that goal in mind, the automaker will have to produce in excess of 476,000 vehicles in the final quarter.

Tesla is scheduled to formally report Q3 financial performance on October 18th. Investors and equity analysts will be probing especially for overall margin and profitability performance along with updated indications on expected Q4 and full year performance.

Global Market Leadership in Jeopardy

Bloomberg reported this week that China based EV automaker BYDis poised to overtake Tesla Inc. as the world’s biggest seller of electric vehicles as the Chinese automaker’s global sales gain greater traction.

BYD reportedly produced and shipped 431,603 vehicles globally in Q3, considerably narrowing the gap with Tesla. The China automaker further reportedly sold a total of 822,094 of a combination of hybrid and electric vehicles in the latest quarter, maintaining the recognition as China’s best-selling car brand.

European Union Subsidy Probe

The EU has launched an investigation into subsidies that China may have provided to EV automakers that are now exporting these vehicles specifically to EU countries such as Germany. The concern is that with these subsidies, EU produced EV’s may have a cost disadvantage. BYD, Nio, SAIC and Tesla are reportedly all part of this probe.

This investigation, that could take up to a year, depending on findings, could result in EU import tariffs being placed on China produced electric vehicles.

According to a separately published Bloomberg report, during the first seven months of this year, Tesla exported a reported 93,000 EV’s produced in its Shanghai factory to Western European destinations. The next largest EV exporter to EU markets was automaker SAIC.

Supply Chain Matters readers are likely aware that Tesla has opened its gigafactory production facility near Berlin, and that facility is in volume ramp-up mode. In July, Tesla announced that the company has applied for approval to double the capacity of the Berlin facility with indications of upwards of one million cars and associated batteries in annual production. The Wall Street Journal noted at the time that if accomplished, the move would represent “an expansion that could make the plant the largest auto-manufacturing facility in Europe.”

In July, Supply Chain Matters made specific reference to an Economist Intelligence report: Tesla’s surprising new route to EV domination. (Paid subscription) It is recommended reading because the tenets raised are already playing out across global markets and industry supply networks.


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