Tesla speeds up payment cycle to supply chain partners in China
- Tesla China reduces payment settlement cycle for suppliers to 90 days in 2024, down from 100 days in 2023.
- The company updates its North American referral program with enhanced discounts to meet ambitious delivery goals.
- These changes aim to streamline operations and sustain Tesla's competitive edge in the electric vehicle market despite ongoing sales challenges.
In China, Tesla has taken significant steps to enhance its operational efficiency and supplier relationships by reducing the payment cycle to just 90 days for its supply chain partners starting in 2024. This change, articulated by Grace Tao, Tesla's vice president of External Affairs, represents an improvement from the 100-day cycle implemented in 2023. In stark contrast, four unnamed new energy vehicle manufacturers reportedly take over 150 days to settle their payments, highlighting Tesla's competitive edge in the industry. Additionally, Tesla has overhauled its referral program across North America, introducing new discounts and rewards to motivate sales as the company aims to deliver 515,000 vehicles in the fourth quarter. Enhancements cater especially to the anticipated launch of the Cybertruck, with features aimed at maximizing consumer interest. Furthermore, Tesla has introduced unlimited overnight charging through its Tesla Electric service, a strategic move to attract potential buyers by lowering the cost from $15 to a more appealing offer. Amidst these strategic shifts, Tesla is facing challenges like falling annual deliveries. In response, the company has implemented discounts of up to $4,000 on select Model 3 and Model Y models to maintain its momentum in sales. Despite efforts to boost deliveries, analysts caution that these measures may not be sufficient to prevent an overall decline in yearly sales. The looming threat of the incoming Trump administration's potential repeal of the $7,500 EV tax credit also poses a significant risk to Tesla's sales and could substantially impact its earnings, as expressed by industry analysts such as Gary Black. As Tesla shares experienced a rise of 2.51% to $341.18, the company's proactive strategies aimed at enhancing supplier relationships and attracting customers through attractive discounts reflect its ongoing commitment to maintaining leadership in the competitive electric vehicle market amid economic uncertainties. Should these policies successfully drive sales, they could help Tesla mitigate the effects of external challenges and maintain its pivotal position in the industry.