3 am delivery: Tesla’s mad dash to make its quarter in China

Model 3 arrive in China. Picture courtesy Automotive News/Bloomberg

For the last two weeks, China has been the center of Tesla’s universe as the company is going all-out to deliver cars – and a better-looking quarter. After “closely monitoring delivery activities at all 7 of Tesla’s China delivery centers,” noted China analyst Junheng Li of New Yok based JL Warren Capital has up-revised her Q1 estimate of Model 3 deliveries to China, while noting that the following quarters likely will be less rosy.

Ms. Li now estimates that 6,780 Model 3 were delivered in China in the first quarter of the year. With Model S and X included, she expects the total to be 8,780 units. Tesla notoriously only supplies delivery data every three months, and it does not break them out by region, forcing Tesla-watchers to rely on estimates, or official registration data that become available only after a long delay.

Mad dashes to deliver cars before the quarter ends are common at Tesla, but this time, matters became even madder when Model 3 imports were held up in Chinese customs on a regulatory SNAFU. According to Junheng Li, “the first batch of M3s arriving in China were released by Customs on approximately March 14, and as such the first volume deliveries of the month of M3s took place the week of March 18th.”  Some 14% of Tesla’s global deliveries went to China last year, making the country Tesla’s second-biggest market after the U.S.

Ms. Li letter to her subscribers says that “Tesla China has worked around the clock to push out deliveries.” According to the report, Tesla’s China operation occasionally resorts to what Ms. Li calls “forced deliveries.” Writes Ms. Li: “When owners have not bought insurance, and/or don’t have time to come to delivery centers, the staff drive Model 3 and shows up at their homes.”  

Occasionally, cars are delivered in the dark of night, “3 am delivery was observed,” the note says.

Tesla is in such a rush to push out cars that the time to explain the car to customers can get shortened from an hour to hurried 15 minutes, reports on Chinese social media say. According to China’s  Weibo short message service, Tesla staff left an owner with the unexplained mystery of opening the car door, and  rushed on to the next customer. There are reports of fights between Tesla staff and customers wanting to return the Model 3.

Already, China’s social media is ablaze with a discussion of shoddy quality. According to Ms. Li, “it’s a trending discussion whether the Model 3 lives up to the expectation of an import car and many shared their pictures of poor quality of the build such as broken sideview mirror housing properly damaged during loading/unloading, flawed body paint, and glue coming off.”

Foreign carmakers have been dragged over the coals in China for much lesser infractions. Chinese customers, especially those in the higher brackets, are expecting flawless quality of their higher-priced imported goods, and they can become very vocal when disappointed.

Ms. Li expects that the rushed customer service “will certainly backfire down the road,” making her reduce her estimates for the following due to “pulled forward deliveries.”  In all of 2019, she forecasts around 53,000 Teslas going to China.