Tesla plans to double service capacity by adding shifts, stocking more spare parts

Key Points
  • Tesla is struggling to fix and maintain customers' cars as its makes and sells a higher volume of them than ever before.
  • The company says it was operating 378 service centers worldwide last year, with 411 mobile service vehicles-- which bring mechanics to the customers' door -- in its fleet.
  • Tesla plans to add shifts to eliminate the backlog at its service centers, and claims 80 percent of repairs can be done off-site, not in the shop.
Tesla Chief Executive Office Elon Musk speaks at his company's factory in Fremont, California.
Noah Berger | Reuters

Tesla has faced complaints on social media about the long wait times customers face before they can book appointments and get their cars fixed. The company just provided some insight into the problem.

In its earnings report Wednesday, Tesla revealed that it was operating only 378 service centers around the world at the end of 2018, around 300 of these outside of California, with a fleet of 411 mobile service vehicles in circulation. Tesla delivered 245,240 vehicles in 2018 alone.

The challenge of providing great customer service is becoming a bigger deal as Model 3s are sold in higher volumes worldwide and Model S and X electric cars age in the field. Tesla said in the shareholder update that it aims to deliver 360,000 to 400,000 vehicles in 2019, a number that could overwhelm existing service capacity.

Unlike other car companies, Tesla runs its own service business and doesn't give outside mechanics access to its diagnostic tools. The company has sometimes been slow to deliver spare parts to both its own service centers and non-Tesla shops.

On an earnings call, Tesla executives said they would stock more spare parts at services centers to address this issue. Specifically, the company plans to stock front and rear fascia in common colors, so they can fix bodywork issues in 15 to 20 minutes.

Tesla also talked up its "Rangers," mobile service that sends mechanics to the customers' home to repair their cars off-site. Tesla's website says that 80 percent of repairs can be taken care of through this service, and the company says it doesn't need to invest solely in brick-and-mortar service centers to ramp up its service.

"We see upgrading our service capacity and improving customer service as a top priority at the moment," the company said on Wednesday. "Where needed, our service centers are moving to two-shift operations in order to double service capacity quickly, and we are simplifying processes in order to increase service throughput."

Tesla also said that it's changing its "parts distribution approach to ensure that spare parts are available in a timely manner at all our service centers globally."

One analyst asked whether a change in spare parts distribution would have a significant capital impact. Musk said, "Our costs will improve, I think, actually quite a lot." He also admitted, "We've been just, like, super dumb in some of the things we've done," recounting how Tesla sent vehicle parts that were made in China to the U.S., then back to service centers in China when they were needed.

"Service and Other" business at Tesla-- including used car and merchandise sales-- operated at a negative gross margin of 26 percent in the fourth quarter of 2018, a loss that represented an improvement over the prior quarter.

WATCH: Tesla owner grew so frustrated, he now repairs his own model S and says it's as easy as Legos.

Tesla owner frustrated so repairs his own Model S and says it's easy as 'Legos'
Tesla owner frustrated so fixes his own Model S: easy as 'Legos'