While Tesla is yet to release its September China sales, in August, its Shanghai factory exported more than two-thirds of its vehicles to Europe and Asian countries
Tesla Inc said last week that it delivered a record 241,300 vehicles for the Q3 (July-September) of 2021, which is a sequential increase of 20% and a year-on-year increase of around 73%.
The number was so impressive that it even surpassed what the analysts’ predicted. According to Refinitiv data, analysts had expected the electric-car maker to deliver 229,242 vehicles.
These many deliveries by Tesla clearly show that the company has become successful in overcoming the considerable supply chain issues of semiconductor chips impacting the auto industry.
To put it into perspective, even Toyota, with its most well-oiled supply chain in the automotive business, had to slash worldwide vehicle production by 40% in September on account of the global semiconductor shortage.
Meanwhile, Elon Musk said that Tesla did suffer from a severe parts shortage earlier in the third quarter and had urged employees to make a quarter-end delivery push, Reuters reported last month, citing an internal company email.
"The end of quarter delivery wave is unusually high this time," he said in the email.
How did Tesla make it happen?
Forbes believes that it has to do something with Tesla being a premium vehicle focused company. According to its report, Tesla’s automotive gross margins stood at almost 26% in Q2 of 2021, excluding regulatory credit sales, compared to margins of under 10% for the broader auto and truck space.
This puts the company in a better position to secure supply, as semiconductor companies could prioritize higher value players.
The same was seen in the consumer electronics space as well, with high-margin Apple managing its chip supply much better versus the broader industry.
It’s also likely that Tesla’s Chinese business played a strong role in its deliveries for this quarter. In China, rising exports to Europe and the introduction of a cheaper Model Y helped boost Tesla's production, analysts told Reuters.
The sale of electric vehicles has been booming in China, and it appears that Chinese players have had less trouble securing chip supply.
For example, China’s premium EV players Nio and Li Auto posted 100% and 190% year-over-year growth respectively over Q3 2021.
While Tesla is yet to release its September China sales, in August, its Shanghai factory exported more than two-thirds of its vehicles to Europe and Asian countries. It is likely that it may have helped the company.
Tesla also appears to be more confident about the capabilities of its system, according to the Forbes article.
The company bumped up pricing for its full-self driving software upgrade from $7,000 to $8,000 starting from July 1, and its CEO Elon Musk has indicated that prices could only keep inching upward going forward as capabilities are added.
Tesla is toying with the idea of offering its self-driving software as a subscription service, a move that could boost recurring revenue streams for the company while potentially increasing the adoption of the package.