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Tesla Has News That Will Delight Customers

The leading maker of electric vehicles is trying to satisfy strong worldwide demand for its cars.
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The demand for electric vehicles has never been stronger. From disruptors to legacy carmakers, all groups producing battery-powered vehicles have full order books. 

But the question that has been agitating the sector for several months comes from the supply side: Can car manufacturers meet demand?

The supply-demand imbalance has been worsened by China's zero-covid policy. The country is home to several suppliers of critical parts, and its lockdowns, designed to contain the pandemic, have continued to disrupt auto-parts-supply chains. 

To this add Russia's war in Ukraine, which sent prices soaring on raw materials for batteries, like nickel. 

And for the past few days, the sector has been facing another threat: High temperatures in certain regions of China have led local authorities to ask manufacturers to suspend production in some of their factories, according to local media

Case in point: lithium battery giant CATL, a Tesla  (TSLA) supplier, which has been ordered to shut production in the landlocked province of Sichuan to help alleviate pressure on the power grid. The pause is set to last from Aug. 15 to 20.

Tesla Cuts Delivery Times

All these factors make it difficult for a potential electric-vehicle customer to know when a vehicle that they order today will arrive. Wait times have increased considerably at most car manufacturers. 

And with startups like Rivian  (RIVN)  and Lucid Group  (LCID) , which are ramping up production rates, the uncertainty is even greater.

"Note, we are trying to reduce delivery times as quickly as possible," Tesla's CEO. Elon Musk, recently posted on Twitter. "Long wait times are not a good thing."

Shortly after this tweet, Tesla, which dominates the market, updated the delivery times of its Model Y SUV/crossover in China. 

The delivery times for this vehicle, one of the Austin group's bestsellers along with the entry-level Model 3 sedan, have indeed been shortened. 

This suggests that the firm has returned to high production levels after a lockdown-induced slowdown in Shanghai where its only Asian factory is located.

Tesla Model Y Lead

Wait times for the entry model of the Model Y SUV have been reduced to four to eight weeks from eight to 12 weeks previously, according to Tesla's Chinese website. The wait has thus been reduced by an average of four weeks.

Similarly, the wait is now 16 to 20 weeks instead of 20 to 24 weeks for the Model Y dual-motor all-wheel drive. And Model Y Performance Edition customers will wait 12 to 16 weeks once they place their orders compared with 16 to 20 weeks previously.

Equipment Updates

U.S. customers aren't so lucky. For the Model Y Long Range, a customer ordering today will, best-case scenario, wait five months for delivery. Indeed, Tesla indicates on its website that new orders for this model will be satisfied between January and April 2023.

Customers will have better luck with the more expensive Model Y Performance model. Delivery time is between September and October 2022.

Besides the Model Y, Tesla has also reduced the delivery time for the Model 3 in China. Customers ordering the base Model 3 will receive it in 12-16 weeks, 2 weeks earlier than previously expected. 

Customers who ordered the Model 3 High Performance will take possession of the vehicle within 12 to 16 weeks as well, four weeks earlier than previously.

Tesla Model 3

The significant reduction in wait times comes after Tesla Shanghai factory in recent months made upgrades to boost production.

"While the Shanghai factory was shut down fully and then partially for the majority of Q2, we ended the quarter with a record monthly production level," the company said during its second-quarter-earnings conference call on July 20. 

"Recent equipment upgrades will enable us to continue to increase our production rate further."

Tesla's Shanghai factory currently produces the Model 3 and Model Y for the Chinese market and also for the rest of Asia. Until the the European production site near Berlin opened, the vehicles produced in Shanghai also served Europe. 

Shanghai currently has production capacity of more than 750,000 vehicles a year, according to Tesla, which makes it Tesla's largest production site. 

It's ahead of Fremont, Calif., which can produce 650,000 vehicles, including 550,000 of the Model 3 and Model Y, and 100,000 of the Model S and Model X.