With COVID-19, it's likely all of Tesla's production timelines could be pushed back, aside from perhaps the Cybertruck.
For years, a chorus of naysayers leveled criticism against Tesla's Elon Musk for missing deadlines. And during the company's recent Q1 earnings call, Elon Musk admitted, “Punctuality is not my strong suit, but I always come through in the end.”
While promises of full self-driving haven't (yet) come to fruition, some Tesla deadlines imposed by Musk have surprisingly happened ahead of schedule. Initial Model Y deliveries and Tesla's Shanghai Gigafactory shocked critics who assumed Musk's timelines would slip. To the contrary, Musk came through ahead-of-schedule.
That said, COVID-19 will, undoubtedly, push a multitude of 2020 milestones back. Already, Musk has decided to move the Tesla Semi launch to 2021. He also said the Roadster launch would be pushed back.
But it's not just the pandemic that's causing delays. Loup Ventures analyst, Gene Munster, had an intriguing explanation (albeit some time ago) for Musk's ongoing punctuality problem. Munster argues that, "Musk misses expectations because he publicly sets the same targets for all four of the company’s stakeholders" — investors, suppliers, employees, and customers.
Some investors on Wall Street struggle to understand Musk's missed deadlines. Yet, Tesla is different than most public companies. Why? Munster explains, "Most public companies have the luxury of sending different messages to each of their stakeholders. By comparison, most other public companies don’t have to carefully balance these groups for 3 reasons: 1. they can source parts from multiple suppliers; 2. they have a broader product line; 3. they [may] have a more favorable cash position."
Looking back at the Model 3 launch, Munster reminds us, "Tesla needs to pressure suppliers to promptly deliver parts. If the company tells those suppliers that they need to have parts to produce 5,000 Model 3’s per week by the end of June, and tells investors that they expect 5,000 by the end of September, that may cause some of its many suppliers to believe they have wiggle room in what Tesla has asked them to deliver." Even worse, "If one supplier misses its target, the entire production line misses its target. As Musk wrote in an internal letter, 'actual production will move as fast as the least lucky and least well-executed part of the entire Tesla production/supply chain system.'"
Employees also need to get consistency and alignment when it comes to deadlines. Once suppliers hit their milestones, "The next step is assembly. Employees need to be held to the same goal as the suppliers to assemble the Model 3 [or Y] on target. Like the supplier, if the employees think there’s wiggle room in the target, they will likely fall short."
In addition, "customers are notified via email when to expect delivery of their vehicle. Those communications to customers are also picked up by suppliers, investors, and employees. If any one of the stakeholder groups senses wiggle room, they’ll slow down; it’s human nature. And speed of production is a critical element to Tesla’s success."
With COVID-19, it's likely all of Tesla's production timelines should (realistically) be pushed back. The good news: Cybertruck could actually be pushed forward. In any event, regardless of possible delays, investors should value Elon Musk's weighty accomplishments over perfect punctuality. As Trent Eady, writing on Seeking Alpha, once put it, “If Musk promises you the moon in six months and delivers it in three years, keep things in perspective: you’ve got the moon.”
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