Why Tesla’s High Inventory Is a Huge Deal

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Tesla currently has thousands of cars in inventory, and it could possibly present a significant change on the electric automaker’s business model. The brand is known for having a different approach to its competitors, and one of those differences is its direct-sale business model.

Unlike other car producers, Tesla does not have third-party dealerships and does everything by itself up to the delivery stage. They take control of every step of the transaction, unlike other car brands that deliver the units to third-party dealers who then take charge of selling them.

Tesla’s high volume of car inventory may have an effect on the company’s business model

One of Tesla’s strategies is to focus on the production of inventory vehicles at the end of each quarter since these take a shorter delivery time compared to custom orders. These inventory vehicles are mostly for the North American market, with the team there having highly efficient skills and are able to deliver the units in just a span of several weeks.

This process could prove to be quite challenging, however, due to the current situation with the coronavirus. Tesla has been ordered to stop most of its operations, and it is now sitting on hundreds of units in inventory.

The closing of several malls has also taken its toll on the brand because it also relies on sales from these establishments. To adapt to recent events, they have taken several measures such as no-contact delivery and no co-pilot test drives to continue providing service to customers who are still interested in purchasing cars during these times.

Mall closures have also affected their sales

These are quite difficult times for Tesla, especially considering that they have been expecting to reach up to 80% of their delivery goal within the previous week in North America.

With them mostly relying on the end of every quarter for their sales, they could see a drastic drop for this quarter and have their highest number of cars in inventory ever, which is a major change in their business model.

The electric automaker supposedly projected to complete the majority of their delivery goal in North America last week

Although Tesla is currently halting production, they are making use of this time to optimize their production capacity and may start to go back in production in several weeks. But with the high number of inventories at the moment, it might take some time for them to be back on track with their usual business model. They might be taking quite a hit presently; but eventually, things will most likely be going back to normal.


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