Tesla, once renowned for selling cars as quickly as they could be produced, is now grappling with an oversupply crisis. The situation has escalated to the point where the surplus of unsold Teslas can be seen from space, signalling troubling times for the electric vehicle (EV) manufacturer.
Tesla rolled off the production line straight into the eager hands of buyers. According to Tesla’s Q1 2024 report, the company produced 433,371 vehicles, but only 386,810 of these were sold. This leaves an alarming surplus of 46,561 vehicles sitting idle in various storage lots.
The slowdown in EV demand, compounded by increasing competition and market saturation, has contributed to this surplus. As Tesla’s Chief Financial Officer Vaibhav Taneja explained, “The primary driver of this was an increase in inventory from a mismatch between builds,” Tesla Chief Financial Officer Vaibhav Taneja said of the company’s -$US2.5 billion in free cash flow (spending on AI computers was also to blame). “We expect the inventory built to reverse in the second quarter and free cash flow to return to positive again.”
Using satellite imagery from SkyFi, a satellite imagery marketplace, Sherwood News has documented the extensive storage lots filled with unsold Teslas. Images from Tesla’s Texas Gigafactory reveal that parking lots around the facility have transitioned from partially full in October 2023 to full by March 2024.
This phenomenon is not limited to Texas. According to Sherwood News People have reported Tesla stock taking up space at a mall near the factory as well as in parking lots and airports around the world. Just this week, a local news network in Australia showed aerial footage of a “Tesla graveyard,” a port in Melbourne where “thousands” of unsold Teslas are piling up.
ALSO READ: Teslas Still Easy to Steal with Radio Hack Despite New Keyless Tech
Several factors are contributing to Tesla’s current predicament. The overall demand for electric vehicles has seen a significant slowdown. The initial excitement and adoption have plateaued, with consumers now having more alternatives, including competitive offerings from Chinese manufacturers.
Moreover, Tesla’s mercurial CEO, Elon Musk, has arguably exacerbated the situation. Musk’s erratic behaviour and divided attention between his multiple ventures have alienated some potential buyers. Despite slashing prices on popular models like the Model Y, Tesla has struggled to entice new buyers and offload its growing inventory.
Tesla’s inventory issues are causing unease among investors. The company’s financial performance in Q1 2024 was far from ideal, and with production outpacing demand, the financial strain is palpable. The buildup of unsold inventory is not just a logistical headache but a significant financial burden as well.
ALSO READ: Elon Musk Announces Removal of Steering Wheel Nag in Tesla’s FSD v12.4
Adding to the company’s challenges, Tesla’s shareholders are poised to vote on Musk’s controversial $56 billion pay package this week. The outcome of this vote could significantly impact Musk’s future with the company. In a recent letter, Tesla chair Robyn Denholm hinted at the high stakes involved, underscoring the critical nature of the decision.
As Tesla navigates through these turbulent times, the company faces the daunting task of realigning production with demand. While Taneja’s optimistic outlook suggests a potential turnaround in the second quarter, the reality remains that Tesla’s image and financial health are currently under significant strain.
Elon Musk remains a polarizing figure.Musk claimed over the weekend that the “public sentiment is unequivocally supportive,” without saying where he’s getting that information. Nonetheless, the disconnect between Musk’s statements and the visible evidence of unsold cars suggests a more complex and challenging road ahead for Tesla.
