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Tesla is addressing its repair service challenges by doubling capacity in 2019

(Photo: Claribelle Deveza)

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As Tesla heads towards the mass market with vehicles like the Model 3 sedan and the upcoming Model Y SUV, the challenges of supporting an ever-growing fleet is becoming more and more evident. Over the past month, numerous Tesla owners, including influencers with large followings on social media, have brought up the issue of the company’s vehicle service problems. In its recent Update Letter and following earnings call, the electric car maker provided some insights into this issue.

Tesla stated that it is currently operating 378 service centers around the world by the end of the fourth quarter, with 300 of the sites being located outside of CA. Augmenting this support system is a fleet of 411 mobile service vehicles. While this might seem sufficient to provide service to the company’s Model S and Model X, these sites are quickly proving insufficient when faced with the company’s increasing sales and its ever-growing Model 3 fleet.

In 2018, for example, Tesla delivered 245,240 vehicles across the globe. This year, Tesla noted in its shareholder letter that it aims to increase vehicle deliveries to 360,000 to 400,000 worldwide — an increase of 45% to 65% compared to 2018’s already record-breaking numbers. With this in mind, there is a need for Tesla to ensure that its service capabilities are enough to support the company’s increasing number of vehicles. 

During the recently held earnings call, Tesla noted that it would be rolling out vast improvements for its parts distribution systems. Elon Musk added that Tesla’s strategies for servicing vehicles have been pretty inadequate, at one point candidly describing the policies as “boneheaded.” Musk also noted that some of its service processes were “super dumb,” referring to a system where a part made in China gets shipped to the US, only to be sent back to China where they were ordered.

“We’re also improving parts distribution. I think we made a strategic error in the past about not having service parts located at our distribution centers. We had them in parts distribution warehouses which basically meant it was impossible to have a fast turnaround on service on your car because the car would come in, then the parts would be requested (before) they come to the service center. Basically, for even for a very simple repair, it could take days.

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“We’re going to move to stocking all common parts at the service centers, so it’s possible to get your car service in 20 or possibly 15 minutes. Lightning fast. It’s also gonna make sense for our service centers to do basic bodywork or essentially if all you need to do is replace a front or rear feature, it makes sense to pre-stock the front-rear feature in the common colors. So unless you have (an) unusual color, we can literally replace your feature in 15-20 minutes, and there’s none of this like weeks at a body shop stuff.”

One thing that the company emphasized in the earnings call was the potential of its Tesla Rangers service, which sends certified mechanics to customers’ homes or offices to repair cars on the spot. Considering that the Rangers could address around 80% of repairs needed for Tesla’s electric cars, a serious ramp of the mobile service would likely result in an improvement for the company’s vehicle service systems.

In its Q4 2018 Update Letter, the company noted that its centers would be moving to two-shift operations in order to double the capacity of a site. Improvements to the Tesla app are also expected to make scheduling service an easy and seamless affair. Ultimately, these initiatives are expected to allow the electric car maker to vastly improve its capabilities to address its owners’ vehicle concerns.

Tesla’s areas for improvement in its service systems appear to be a notable topic for Elon Musk. In last year’s Annual Shareholder Meeting, Musk announced that Tesla is opening in-house body shops to reduce the time it takes for vehicles to be repaired. Tesla eventually launched several in-house repair centers across the United States, and the reception from the community has largely been positive. Model 3 owner and YouTube influencer Kim of Like Tesla, for one, shared her experience with one of the company’s in-house body shops, which was able to complete the repairs to her damaged vehicle in 24 hours.

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Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Elon Musk

Tesla CEO Elon Musk’s $1 trillion pay package hits first adversity from proxy firm

ISS said the size of the pay package will enable Musk to have access to “extraordinarily high pay opportunities over the next ten years,” and it will have an impact on future packages because it will “reduce the board’s ability to meaningfully adjust future pay levels.”

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tesla elon musk

Tesla CEO Elon Musk’s $1 trillion pay package, which was proposed by the company last month, has hit its first bit of adversity from proxy advisory firm Institutional Shareholder Services (ISS).

Musk has called the firm “ISIS,” a play on its name relating it to the terrorist organization, in the past.

The pay package aims to lock in Musk to the CEO role at Tesla for the next decade, as it will only be paid in full if he is able to unlock each tranche based on company growth, which will reward shareholders.

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However, the sum is incredibly large and would give Musk the ability to become the first trillionaire in history, based on his holdings. This is precisely why ISS is advising shareholders to vote against the pay plan.

The group said that Musk’s pay package will lock him in, which is the goal of the Board, and it is especially important to do this because of his “track record and vision.”

However, it also said the size of the pay package will enable Musk to have access to “extraordinarily high pay opportunities over the next ten years,” and it will have an impact on future packages because it will “reduce the board’s ability to meaningfully adjust future pay levels.”

The release from ISS called the size of Musk’s pay package “astronomical” and said its design could continue to pay the CEO massive amounts of money for even partially achieving the goals. This could end up in potential dilution for existing investors.

If Musk were to reach all of the tranches, Tesla’s market cap could reach up to $8.5 trillion, which would make it the most valuable company in the world.

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Tesla has made its own attempts to woo shareholders into voting for the pay package, which it feels is crucial not only for retaining Musk but also for continuing to create value for shareholders.

Tesla launched an ad for Elon Musk’s pay package on Paramount+

Musk has also said he would like to have more ownership control of Tesla, so he would not have as much of an issue with who he calls “activist shareholders.”

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Investor's Corner

Barclays lifts Tesla price target ahead of Q3 earnings amid AI momentum

Analyst Dan Levy adjusted his price target for TSLA stock from $275 to $350, while maintaining an “Equal Weight” rating for the EV maker.

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Credit: Tesla China

Barclays has raised its price target for Tesla stock (NASDAQ: TSLA), with the firm’s analysts stating that the electric vehicle maker is approaching its Q3 earnings with two contrasting “stories.” 

Analyst Dan Levy adjusted his price target for TSLA stock from $275 to $350, while maintaining an “Equal Weight” rating for the EV maker.

Tesla’s AI and autonomy narrative

Levy told investors that Tesla’s “accelerating autonomous and AI narrative,” amplified by CEO Elon Musk’s proposed compensation package, is energizing market sentiment. The analyst stated that expectations for a Q3 earnings-per-share beat are supported by improved vehicle delivery volumes and stronger-than-expected gross margins, as noted in a TipRanks report.

Tesla has been increasingly positioning itself as an AI-driven company, with Elon Musk frequently emphasizing the long-term potential of its Full Self-Driving (FSD) software and products like Optimus, both of which are heavily driven by AI. The company’s AI focus has also drawn the support of key companies like Nvidia, one of the world’s largest companies today.

Still cautious on TSLA

Despite bullish AI sentiments, Barclays maintained its caution on Tesla’s underlying business metrics. Levy described the firm’s stance as “leaning neutral to slightly negative” heading into the Q3 earnings call, citing concerns about near-term fundamentals of the electric vehicle maker.

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Barclays is not the only firm that has expressed its concerns about TSLA stock recently. As per previous reports, BNP Paribas Exane also shared an “Underperform” rating on the company due to its two biggest products, the Robotaxi and Optimus, still generating “zero sales today, yet inform ~75% of our ~$1.02 trillion price target.” BNP Paribas, however, also estimated that Tesla will have an estimated 525,000 active Robotaxis by 2030, 17 million cumulative Optimus robot deliveries by 2040, and more than 11 million FSD subscriptions by 2030.

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Investor's Corner

BNP Paribas Exane initiates Tesla coverage with “Underperform” rating

The firm’s projections for Tesla still include an estimated 525,000 active Robotaxis by 2030.

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Credit: Tesla China

Tesla (NASDAQ: TSLA) has received a bearish call from BNP Paribas Exane, which initiated coverage on the stock with an Underperform rating and a $307 price target, about 30% below current levels. 

The firm’s analysts argued that Tesla’s valuation is driven heavily by artificial intelligence ventures such as the Robotaxi and Optimus, which are both still not producing any sales today.

Tesla’s valuation

In its note, BNP Paribas Exane stated that Tesla’s two AI-led programs, the Robotaxi and Optimus robots, generate “zero sales today, yet inform ~75% of our ~$1.02 trillion price target.” The research firm’s model projected a maximum bull-case valuation of $2.7 trillion through 2040, but after discounting milestone probabilities, its base-case valuation remained at $1.02 trillion.

The analysts described their outlook as optimistic toward Tesla’s AI ventures but cautioned that the stock’s “unfavorable risk/reward is clear,” adding that consensus earnings expectations for 2026 remain too high. Tesla’s market cap currently stands around $1.44 trillion with a trailing twelve-month revenue of $92.7 billion, which BNP Paribas argued does not justify Tesla’s P/E ratio of 258.59, as noted in an Investing.com report.

Tesla and its peers

BNP Paribas Exane’s report also included a comparative study of the “Magnificent Seven,” finding Tesla’s current market valuation as rather aggressive. “Our unique comparative analysis of the ‘Mag 7’ reveals the extreme nature of TSLA’s valuation, as the market implicitly says TSLA’s 2035 earnings (~55% of which will be driven by Robotaxi & Optimus, w/ zero sales now) have the same level of risk & value-appropriation as the ‘Mag 6’s’ 2026 earnings,” the firm noted.

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The firm’s projections for Tesla include an estimated 525,000 active Robotaxis by 2030, 17 million cumulative Optimus robot deliveries by 2040 priced above $20,000 each, and more than 11 million Full Self-Driving subscriptions by 2030. Interestingly enough, these seem to be rather optimistic projections for one of the electric vehicle maker’s more bearish estimates today.

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