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Mark Your Calendar: Tesla Motors, Inc. Earnings

By Daniel Sparks – Jul 19, 2016 at 8:08PM

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Investors will look for an update on full-year guidance for vehicle deliveries, Model X, and Model 3.

Model X. Image source: The Motley Fool.

On Tuesday, electric-car and energy-storage company Tesla Motors (TSLA 3.23%) announced the date of its second-quarter earnings release. On Aug. 3, the company will provide investors with a detailed look at its second quarter, as well as host a live question-and-answer session to discuss the results with analysts and investors.

The quarterly report comes at a critical time for the company. Among other factors, Tesla's big goals for vehicle delivery growth in 2016, its ongoing Model X production ramp-up, and the development of its Model 3 will be key topics to watch when Tesla announces second-quarter results. Here's some background on each of these topics as investors prepare for the earnings report.

Tesla vehicle deliveries
Tesla has already announced its deliveries for the quarter. But questions linger after the company reported worse-than-expected deliveries.

Tesla delivered 14,370 vehicles, or 9,745 of the Model S and 4,625 of the Model X. These deliveries were well behind Tesla's guidance for 17,000 deliveries during the quarter. Deliveries came in short because the steepest part of the production ramp-up  occurred closer the end of the quarter than management expected, leaving a larger-than-expected mix of customer-ordered vehicles on trucks and ships before the quarter's end.

The quarter's underperformance raises two key questions:

1. With Model S deliveries falling rapidly on a sequential basis, are orders for the vehicle also falling sequentially? Or is there another reason for falling Model S deliveries?

Data for chart retrieved from quarterly Tesla SEC filings and press releases. Chart source: author.

2. After missing its own guidance two quarters in a row, what should investors think about Tesla's full-year guidance for 80,000 to 90,000 vehicles? Up from about 50,600 deliveries in 2015, this guidance is starting to look unrealistic; Tesla has delivered only about 32,300 vehicles year to date.

Model X production and demand

While total second-quarter vehicle production and deliveries fell short of management's guidance, the Model X production ramp in Q2 was actually solid. Tesla delivered 4,625 Model X units in Q2, up from 2400 in Q1 and 206 in the last quarter of 2015.

Data for chart retrieved from quarterly Tesla SEC filings and press releases. Chart source: author.

But Tesla's decision in July to introduce a version of the Model X with a lower price has some investors concerned that demand for the new vehicle may not be as strong as management was expecting. If this is the case, Tesla may be forced to reduce its expectations for what level of Model X deliveries it can reach. So investors should look for some commentary from management on both Model X demand and production plans for the rest of the year.

Model 3

Investors are likely to be keenly interested in the ongoing development of Tesla's Model 3, its lowest-cost vehicle yet. Scheduled to begin production in late 2017, the company should be making significant progress in finalizing the design of the vehicle and preparing for its production. During the company's first-quarter conference call, Tesla CEO Elon Musk said the company was almost done with the design of the Model 3. Did it finish?

The Model 3 is crucial to Tesla's business plan to continue ramping up production. As of May 15, or only about 15 days after the vehicle's unveiling, the company had garnered 373,000 deposit-backed reservations for the vehicle without any significant marketing of the new car.

Investors will be able to find a copy of Tesla's second-quarter shareholder letter shortly after the market closes on Wednesday, Aug. 3, at the company's investor-relations page on its website. The company's live question-and-answer session, which will also be available at the company's investor-relations page, will begin at 2:30 p.m. PT.

Daniel Sparks owns shares of Tesla Motors. The Motley Fool owns shares of and recommends Tesla Motors. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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