Tesla Motors Inc (TSLA): Tesla Motors Model 3 Won't Face Supply Chain Issues

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Tesla Motors Inc (NASDAQ:TSLA) has had production and delivery issues in the past which the company is trying to overcome now to keep up with its delivery target. According to a report by Electrek, the Model 3 will have fewer problems with its supply chain as compared to the Model S and X that have encountered numerous problems.

This was said by Tesla’s former Vice President of Supply Chain, Peter Carlsson, who has the credit of developing the supply chain of Model S and X. Speaking at the KPMG Automotive Executive Forum, Mr.Carlsson said that the Palo Alto company does not need to earn the trust of suppliers which they had to in the earlier years of the enterprise.

He stated that at the time of production of Model S and X, they did not have any relation with suppliers making it difficult for them to work with limited supplies. Mr. Carlsson said that often the company found it difficult to get the commitment they needed to get maximum supplies as there was not enough trust built amongst the suppliers.

However, he thinks that the company has worked a lot and has solved its issues through vertical integrations. A lot of these problems were resolved with Tesla making a lot of things internally which also includes battery packs that will be used in the electric car. The electric car maker is currently building its battery pack at the Gigafactory.

Talking about the Fremont factory of the company in California, Mr. Carlsson said that they made the right choice by coming up with a facility that was far away from automobile suppliers but was close to the engineering hub. This process helped the company but increased the logistics cost for Tesla.

The ex-Tesla executive believes that Model 3 volumes will be more attractive in the future once the company launches the car this year. Peter Carlsson was associated with Tesla from 2011-2015 from where he helped the Palo Alto company increase its production to 50,000 cars produced per year in 2015. He was managing the supply chain operations of the company before he left Tesla to join the advisory board of Elementum.

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