Elon Musk wants to fix Tesla’s logistic issues by taking a page out of Amazon’s book

Elon Musk held a call with Tesla employees this week in which he emphasized that Tesla needs to move cars out of the factory faster in order to fix the …

Elon Musk held a call with Tesla employees this week in which he emphasized that Tesla needs to move cars out of the factory faster in order to fix the automaker’s logistic problems.

He made several comparisons to Amazon.

Tesla is not like other automakers in many ways.

One of those ways is that Tesla owns and operates all its own stores, service centers, and delivery centers without doing business with third-party franchise dealerships, like most other automakers.

This business model results in several obvious differences, but one of the least appreciated ones is that Tesla owns and is responsible for all its vehicles all the way until the customer takes delivery.

It creates more complex logistics problems for Tesla than other automakers who simply sell to dealerships who keep a lot of inventory on their lots.

Currently, Tesla’s custom-ordered vehicles often don’t move from the factory until they schedule a delivery date with the customer, which is not always as easy as you would think.

According to people on the call, Musk told employees this week that starting next quarter, Tesla will put the vehicles in transit right away and deliver them to local delivery centers for the customers to pick them up at their convenience.

Tesla is spending a lot of manhours trying to coordinate customer deliveries and it is backing up inventory at the Fremont factory.

Musk wants a constant flow of vehicles going to the end destinations and compare the logistics to Amazon.

The CEO said:

“Amazon would go bankrupt if they would have to wait for customers to be ready to take delivery before shipping.”

Interestingly, it’s also a financial problem since Tesla is investing all the money into building the vehicles and doesn’t get paid until the customer takes delivery.

Therefore, every day that the car is built and not in the hands of the customer, it’s a day that Tesla is several tens of thousands of dollars in the hole.

Musk has been emphasizing that delivering the vehicles faster to customers would greatly improve Tesla’s financials.

On a bigger scale, Tesla having production facilities closer to its customers basez would also have a big impact on reducing transit times.

That’s exactly what Tesla is trying to do with Gigafactory 3 in China and the company claims to be moving forward with a factory in Europe.

Electrek’s Take

According to people on the call, Elon was adamant about fixing Tesla’s logistics issues and he talked about Amazon as a good example of solid logistics.

It was a bold move for Tesla to build its sales, service, and distribution network around company-owned locations instead of franchise dealerships.

I think it paid off in many ways despite the fact that there are still some issues, including some sale bans in a few states, but I like that Tesla is still finding ways to optimize the business model like this and make selling electric vehicles a better and more profitable business in the long run.

Ultimately, it should be easier for customers who will have more availability to just go pick up their cars at Tesla delivery centers.

Amazon is an interesting comparison. It’s definitely an efficient company when it comes to logistics, but it is especially interesting with the context that Amazon has been itself looking into selling cars.


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Hyperloop Technology Market Research, Key Players, Growth Opportunities, Outlook and …

Hyperloop Technology Market Report provides comprehensive insight, business information, market forecasts, and industry analysis. The Hyperloop …

Hyperloop

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    The Battle of Polytopia developers pay tribute to Elon Musk after he Tweets about their game

    When he’s not organising the drilling of holes in cities or sending cars off into space just because Elon Musk plays a game known as The Battle of …

    When he’s not organising the drilling of holes in cities or sending cars off into space just because Elon Musk plays a game known as The Battle of Polytopia. He was recently tweeting about the game, theorising that we basically live in Polytopia. He’s a big believer in the whole ‘the world is a simulation theory’.

    As a response, developers Midjiwan have created a video where they’ve modded him into the game. So now he is definitely living in Polytopia, at least in one corner of the internet. The video, which can be seen below, shows Elon Musk as a member of the Xin-xi tribe.

    He can also gain access to one of his more well-known innovations, the Tesla. Interestingly, the Tesla is all-out attack with very little defence. Not sure if that’s Midjiwan making a statement or simply straight swapping a different unit. Either way, the Tesla is able to move a reasonable distance in one turn.

    Subscribe to Pocket Gamer on

    Though he’s not actually in the game this undoubtedly very cute. Midjiwan is clearly very pleased that the tech entrepreneur plays their game and felt like making a small tribute to him. It’s not the first time Musk has tweeted about the game either.

    He responded to one user on Twitter a while back who asked him what games he was playing where he said Polytopia. He also stated that he was going to try Stellaris, so the man is clearly a fan of strategy game, which isn’t really too surprising.

    Not too long ago Musk was asking for game developers to create games for his electric cars. Seeing as he’s clearly a fan of Polytopia maybe that would be a good option if they ever decided to add to its current library of games.

    The Battle of Polytopia is available on the App Store and Google Play. It’s a free-to-play game with in-app purchases.

    Check out our news section to discover the latest, and greatest, games.

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    WATCH: Tesla breaks record at Laguna Seca Raceway

    According to Tesla’ CEO Elon Musk, the Tesla Model S broke the record for the fastest four-dour sedan around Laguna Seca Raceway. Advertisement.

    According to Tesla’ CEO Elon Musk, the Tesla Model S broke the record for the fastest four-dour sedan around WeatherTech Raceway Laguna Seca.

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    Model S just set record for fastest 4 door ever at Laguna Seca, video tmrw

    — Elon Musk (@elonmusk) September 11, 2019

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    Trump Tweet Tarries Tariffs; Tesla’s Shocking September

    The latest hit to cannabis sentiment was Aurora Cannabis Inc. (NYSE: ACB). Last night, Aurora reported a 52% surge in fourth-quarter sales, but still …

    Great Stuff 9-12-2019

    As the Trade War Turns

    Big news: The hike in Chinese tariffs has been delayed!

    There were also reports from Bloomberg that tariffs could be rolled back in some cases, due to an interim China trade deal. (This interim trade deal was later strenuously denied by the White House.)

    Everybody rally?

    Last night, President Trump announced the delay in typical Trump fashion: via presidential tweet.

    Tariffs on $250 billion of Chinese goods were set to rise from 25% to 30% on October 1. That hike will now go into effect on October 15, which conveniently places the hike after a planned face-to-face meeting between Chinese and U.S. trade representatives.

    According to Trump, he postponed the increase “at the request of the Vice Premier of China, Liu He, and due to the fact that the People’s Republic of China will be celebrating their 70th anniversary.”

    The move arrived on the same day that China said that it would exempt 16 U.S. products from its own round of tariff hikes going into effect on September 15.

    Finally, breaking late this morning, Bloomberg is reporting that an interim China trade deal is in the works. Details are very thin, but Bloomberg says that five sources indicate that such a deal is possible, which could bring about a rollback of existing tariffs.

    The Takeaway:

    How’s that for a happy Thursday?

    We have a pair of olive branches ahead of key trade talks. It’s kinda cute, in a global-trade-war kind of way.

    That said, I feel obligated to post the following trade war cycle update:

    Great Stuff 9-12-2019

    With trade talks scheduled for early October, we won’t have to wait long to see if we finally break out of this pattern, or if we’re in for more of the same.

    Great Stuff, The Good, The Bad and The Ugly

    The Good: A Shocking September

    Ah, Tesla Inc. (Nasdaq: TSLA), the electric carmaker that could … or couldn’t, depending on who you ask.

    So far this year, TSLA shares are down more than 20%. The company has been plagued by profitability and production concerns — which are valid — and accused of lacking demand … which couldn’t be further from the truth.

    On Wednesday, Tesla stock rallied nearly 5%, its best single-day gain in seven weeks. Media reports attributed the rally to CEO Elon Musk’s tweet that Tesla’s luxury sedan is now the fastest four-door sedan “ever.” Ever? That’s a mightly long time, but I’m here to tell you that there’s something else…

    Tesla managed to do what even the largest economy on the planet has failed to do: win concessions from China. At the beginning of September, Tesla gained a 10% tax break from the Chinese government. Now, Tesla wasn’t alone. Thirty-three other automakers also received tax breaks.

    But, it’s no coincidence that TSLA shares are up 9.5% in September following this deal. Tesla doesn’t have a demand problem. It has a production problem.

    It’s about to add a new gigafactory to help solve that problem. One capable of churning out 300,000 to 500,000 vehicles a year, located in the fastest-growing auto market in the world. Now that’s something to be bullish about.

    The Bad: The Hangover

    The hype surrounding the cannabis market continues to evaporate faster than water in Death Valley. The latest hit to cannabis sentiment was Aurora Cannabis Inc. (NYSE: ACB).

    Last night, Aurora reported a 52% surge in fourth-quarter sales, but still managed to come up short of expectations. Earnings were also a concern, as Aurora didn’t release specific earnings per share data. The company did say that it recorded a net loss of less than a penny per share.

    Other highlights included an 86% surge in cannabis production and a 94% spike in cannabis sold during the quarter. Additionally, Aurora saw a 12% rise in medical cannabis sales in the European Union (EU), indicating growing international sales potential.

    The reason that ACB shares are plunging today is that investors were expecting Aurora to turn a profit this quarter. Profitability is clearly an issue for cannabis companies, but the problem could take time to fix.

    Specifically, the biggest issue facing Aurora is a lack of distribution infrastructure and retail locations in both Canada and the EU. This is a problem that will eventually work itself out over time. After all, you can’t just legalize something and have stores and distribution channels instantly materialize out of thin air.

    I recommended Aurora as a buy in Great Stuff for a reason. And if you can hang in there while these distribution problems work their way through the system, Aurora’s surging production capabilities will reward you.

    The Ugly: A Leave of Absence

    There is one fewer chief executive officer (CEO) at Oracle Corp. (NYSE: ORCL). Yes, the software giant has two chiefs … which I’ve heard spoils the broth. (Wait — that’s chefs. Never mind.)

    Oracle co-CEO Mark Hurd is taking a leave of absence for health reasons. Oracle didn’t say what those health reasons were, but it sounds at least somewhat serious. In the meantime, founder Larry Ellison and Safra Catz (the other CEO) will run things in his absence.

    At the same time, Oracle reported flat, but in-line, first-quarter earnings and revenue. Second-quarter guidance, however, came in below Wall Street’s targets.

    Oracle had been on a roll this year, rising more than 24% and executing its move into cloud computing with great aplomb. The company’s track record so far is likely helping mitigate today’s losses. But, the one-two punch of flat earnings and losing a CEO was just too much for ORCL bulls to ignore.

    Great Stuff: Drone-ing on for Profit!

    I don’t give Banyan Hill expert Jeff Yastine, editor of Total Wealth Insider, enough love in Great Stuff. We’re going to try and rectify that today with a look at Jeff’s latest article: “The Commercial Drone Market Is Positioned to Take Off — Invest!

    As you can tell, Jeff is hyped about the commercial drone market. We’re not just talking Amazon-delivery-drone hype, either.

    For instance, according to the Federal Aviation Administration, drone registration has tripled since 2016. Currently, there are some 230,000 commercial drones operating in the U.S. What’s more, that number is expected to skyrocket in the next four years, rising roughly 1,000% to more than 800,000 unmanned aircraft by 2023.

    That’s quite the investing opportunity. But how do you take advantage of it?

    The obvious answer is to read Jeff’s article. The not-so-obvious answer is to watch Jeff’s latest video on the topic below:

    Finally, be sure to check back tomorrow, when I’ll have some exclusive tidbits from Banyan Hill’s Total Wealth Symposium.

    If you’re here in sunny Amelia Island, Florida, stop by and say hi.

    Until next time, good trading!

    Regards,

    Joseph Hargett

    Great Stuff Managing Editor, Banyan Hill Publishing

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