Tesla is seeing a massive increase in orders due to all-time high gas prices, and the risk of a bottleneck looms upon the company. The Russia-Ukraine war is driving the rise in gas prices in the U.S. due to sanctions on the country and bans on Russian oil and gas. The world is beginning to wake up to the reality, risks and consequences of depending on foreign gas.
One of the greatest appeals of electric vehicles is their potential to cut off dependency on fossil fuels entirely. The global transition from gas to EVs has historically been slow and progressive, and EV makers have been able to cope with demands. But in the past two years, the switch to green has accelerated. Even before Russia invaded Ukraine, EV carmakers were already having trouble keeping up with their orders.
As Americans switch to EVs due to historically high gas prices, Elektra reports that Tesla is seeing an increase of 100 percent in orders. The company was already battling delayed orders but will now have to speed up the production double-time to steer its way out of a bottleneck. A gridlock in business is a point of congestion in a production system caused by demands and a workload that comes in faster than the production line can handle. The impacts and risks for Tesla are severe. Increase in prices, loss of clients, brand depreciation, stock crash, insolvency, workers and supply chain problems, and even bankruptcy are linked to bottlenecks.
The Domino Effect: War, Gas and EVs
As Tom's Guide reports, from the first models to the Roadster and the Cybertruck, the company has always been vulnerable to delays and let deadlines fly by. During the first years of the company's operation, the demand for EVs was not yet mainstream, orders were much lower than today, and Tesla's delays flew under the radar. But as orders increased and the chip shortage continued, delays in Tesla became evident.
Tesla has a particular way of selling cars. Most car manufacturers produce and then sell the vehicles. But Tesla takes orders online for vehicles that they have not yet built. In normal conditions, from order to delivery, a Tesla takes weeks if optimistic, usually months and sometimes even a whole year to reach its owner. Today, these delays could be extended even more, as orders surge, and essential commodities that run Tesla's supply chain, like gas, nickel and microchips, are impacted by the Russian invasion of Ukraine.
Elon Musk assures the Tesla Fremont California plant will expand soon. Tesla is also set to open a massive factory known as the Giga Texas in April this year. However, it may be too late by then. Musk could find himself between a rock and a hard place, having to decide whether to stop taking online orders, compromising cash flow to increase production, or risk a dangerous gridlock.
Source: Electrek, Tom's Guide