When it comes to electric-car maker Tesla Motors' (NASDAQ:TSLA) vehicle deliveries this quarter, Model X represents the biggest unknown. Launched at the end of last year, production is still ramping up, making guessing deliveries a difficult talk. Scheduled to report second-quarter deliveries anytime between July 1 and July 3, investors will soon get a glimpse of how Tesla's Model X production ramp is fairing.
While it's difficult to make a good estimate of how many Model X deliveries Tesla could have delivered during Q2, one thing is nearly certain: Deliveries will likely be meaningfully higher than they were in Q1.
Addressing production constraints
In Q1, Tesla's Model X deliveries soared from about 200 units in Q4 to 2,400 units. Similarly, Model X production jumped from 507 to 2,659 units during the same period. But despite the large relative increase in Model X production and deliveries between Q4 and Q1, Tesla was behind schedule during Q1. Indeed, Model X production issues meant Tesla missed its guidance for 16,000 total Model S and Model X deliveries by over 1,000 units.
"The Q1 delivery count was impacted by severe Model X supplier parts shortages in January and February that lasted much longer than initially expected," Tesla said in its April 4 press release detailing first-quarter vehicle deliveries.
Tesla delivered 14,820 vehicles during the quarter.
Following Tesla's worse-than-expected first quarter, investors expect Tesla to demonstrate improved Model X production in Q2. Fortunately, management indicated that it looks like this is exactly what will happen during.
Model X could help Tesla crush its own guidance
In the same press release explaining Tesla's Model X production issues during Q1, Tesla gave investors an important update on how Model X production was faring as the company went into Q2:
"Once these issues were resolved, production and delivery rates improved dramatically. By the last full week of March, the build rate rose to 750 Model X vehicles per week; however, many of these vehicles were built too late to be delivered to their owners before end of quarter."
Looking toward the end of Q2, Tesla is particularly bullish about the trajectory of Model X production.
"I feel confident that we're going to hit the 2,000-vehicles-a-week target by the end of this quarter, of which on the order of 40% are X," Tesla CEO Elon Musk said during the company's first-quarter earnings call.
With these previews and estimates for second-quarter production in mind, Tesla will probably report a large jump in Model X production and deliveries in Q2 compared with Q1.
And if any investors are worried about demand for the Model X during the quarter, this shouldn't be a problem. First, Tesla entered the year with around 35,000 deposit-backed reservations for the SUV yet it's delivered less than 3,000 of them. Second, in conjunction with rising production of the Model X, Tesla also began to pull some levers for demand generation in April, opening up the online Model X configurator in North America to non-reservation holders, and shipping the Model X to many of its U.S.-based stores.
It's difficult to estimate how many Model X units Tesla may have delivered during Q2, but based on what Tesla has said about the trajectory of Model X production, it seems conservative to estimate Tesla delivered 4,000 or more during the quarter -- a level that would probably help Tesla easily beat its own guidance for 17,000 Model S and Model X deliveries combined during the quarter.