Tesla has discounted many of its cars globally, is it due to having too much unsold stock?
The surplus inventory conundrum facing Tesla, the brainchild of visionary entrepreneur Elon Musk, has reached unprecedented proportions, with its unsold cars now visible from space. Despite strategic price reductions, notably on flagship models like the Model Y, Tesla finds itself grappling with an inventory backlog of 46,561 vehicles from the first quarter of 2024 alone, resulting in a staggering USD2.5 billion (roughly RM11.7 billion) free cash flow deficit.
Satellite imagery paints a vivid picture of the magnitude of this challenge, revealing sprawling lots surrounding Tesla’s Texas Gigafactory and scattered across various locations nationwide, including prominent shopping centres in St. Louis and Moreno Valley, teeming with unsold cars.
Moreover, this aerial view serves as a stark reminder of the shift in Tesla’s market dynamics, where once-insatiable demand has dwindled considerably in recent years. The roots of this surplus lie in the brand’s ambitious production targets and evolving consumer preferences.
Fueled by Musk’s unwavering vision of revolutionising the automotive industry with sustainable electric vehicles (EVs), Tesla ramped up production capacities to meet soaring demand. However, as competition intensified and market saturation loomed, the dynamics shifted, leading to a mismatch between supply and demand.
On top of that, despite its pioneering status in the electric vehicle market, Tesla now faces stiff competition from traditional automakers and emerging players alike, each vying for a slice of the burgeoning market. So Tesla either has a huge collection of unsold cars or it is absurdly slow in delivering to customers. Or is there another reason behind this?
This intensified competition, coupled with evolving consumer expectations and regulatory uncertainties, has contributed to the accumulation of unsold inventory, posing a significant financial challenge for the company. In response, Tesla has embarked on a multifaceted strategy to address this surplus inventory dilemma.
This includes aggressive marketing campaigns, targeted promotions, and strategic partnerships to stimulate demand and clear excess stock. Moreover, Tesla is doubling down on innovation, with plans to unveil new models and advanced features to reignite consumer interest and regain its competitive edge.
So now all we do really know for sure is that there are a bunch of cars piled up outside the Tesla gigafactory and while common sense would dictate that these are unsold stock, we (annoyingly) need to take into account the brand’s statement of it simply being a mismatch between supply and demand so in short, surplus of stock, “not” unsold stock.
