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It reminds me of a discussion I had with a franchised, non-Tesla dealer. He mentioned that car manufacturers would require him to have a minimum parts order per year in the contract. Why didn't Tesla implement the same requirement for its service centers?

We don't necessarily need to, because of our structure. A major metric we look at is the percentage of cars we can fix without ordering a part. Although it's a different approach, it serves a similar purpose. You can't achieve 80% parts availability with only 1,000 SKUs on site. It really depends on the volume. However, about six or seven years ago, Elon stated that the service department wasn't meant to be profitable; it was just meant to break even and ensure Teslas are reliable and repairable after accidents. This perspective has shifted slightly in recent years. In the latest quarterly report, we were profitable in service, but it wasn't our main focus. This approach allows us to make decisions that franchises, which aim to maximize profits, might not choose because they aren't the most financially efficient.

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