Nine days ago, Musk blamed an “extreme shortage” of car carriers for the supposed “logistics hell” at Tesla. This is yet another lie. Tesla has never had an issue with car carrier capacity. The Auto Haulers Association of America is also not aware of any car company, whether they’re producing a few thousand cars a week or 100,000+ cars per week, that’s having issues with insufficient car hauler capacity. If that is ostensibly the case, why are there close to 100 empty car carriers either on the factory grounds or within a half-mile of it, idly waiting for load preparation? Tesla clearly doesn’t need all these carriers on or near the premises as it isn’t producing cars at that rate. Was Tesla forced to order far more carriers than it actually needs because of something legal or contractual surrounding whether the company is legitimately producing the cars it says it makes?Matters Concerning Inventory Part of the long thesis on this stock is that there is at least one buyer for each unit of vehicle inventory. This is false. Cars are piling up in lots in Burbank, Lathrop (below), Antioch, Los Angeles, Scottsdale, Las Vegas, Bellevue (WA), Salt Lake City, Dallas, Chicago, and New Jersey. Who are the buyers of all these idle vehicles? A Tesla spokesperson stated that these are “logistics transit hubs.” This has some truth to it in non-local regions. But most of these cars (heavily concentrated in northern California) are either lemons and/or spare inventory because demand is softer than what the company is portraying. The starting price point on the Model 3 is $49,000. They don’t have enough customers willing to buy them. Most have defects off the assembly line, given its first-pass yield is less than 20%. (80%+ is normal for quality auto manufacturers.) To those who think it’s a logistics problem and not a mismatch between inventory and demand, why didn’t the company have this cleaned up ahead of time in terms of efficiently delivering vehicles? If you ask Tesla investor relations directly whether the vehicles in the Burbank and Lathrop lots are sold or unsold inventory, they won’t answer the question. This obviously has big implications. If these are sold to actual legitimate paying customers, that gets booked as revenue. If they are unsold inventory, that is not revenue. If they are sold inventory, then who are they being sold to? If sold, then why are they not in transit to the customer? Unless these are defective or unsold, at no point is it logical for thousands of vehicles to simply sit around unprotected and exposed to the elements for long durations of time (i.e., months). This is very far from normal. Based on Tesla’s Q3 revenue expectations of $5.5 billion, cars produced should match cars sold by matching the number produced of each model and multiplying by their average price point. So these cars are all likely booked as revenue; it’s just not certain who they are sold to and why they’re not being delivered. On Twitter and other online communication channels, there are hundreds of examples of complaining customers who have ordered a car only for their delivery to be pushed back after paying in full – taking the cash while delaying the delivery of a vehicle. This is not administrative in nature (e.g., Tesla needing a sales license in certain states). If this were true, Tesla would say this. Briefly on Q3 To put more revenue on its financials for Q3, Tesla held a “sales event” in early September. Such promotions, such as the $64,000 Model 3 being offered in exchange for free lifetime use of its charging station network. This, however, is not economically sustainable and is a tactic made to pull forward demand. Others who reject a car due to defects are also usually getting replacement cars, denoting the availability of spare demand. Another issue with Tesla is that its production numbers are contrived given the company includes partially completed vehicles in that figure. It did this in response to criticism of its constant misses on its production figures, which were deliberate overestimates to help raise funding and keep the stock elevated. This is currently the subject of an ongoing SEC investigation. The oft-cited “Bloomberg metric” is not robust because it relies on VINs, which are purchased before production, not after, and do not represent cars sold to the public. To find a credible proxy for sales figures, the best bet is looking public vehicle registration data. Not all states make this available. I showed in a previous post that only a fraction of the cars Tesla is saying it’s making are showing up in the public registration data. Another question: In Q2’s release, Tesla advertised its reservation figure at 420,000. Now it only mentions it as “strong.” Why is that? Many questions, and not enough answers.