Tesla Motors (NASDAQ:TSLA) Model X likely had many investors worried earlier this year. Not only did the SUV launch late in the first place, but the vehicle proved to be difficult to manufacturer. As Tesla started to ramp up Model X production during the first half of the year, supplier shortages and production quality issues caused Tesla to miss its vehicle guidance for both Q1 and Q2.
But Model X production and deliveries seem to have turned a corner. Deliveries of the SUV increased about 88% between Q2 and Q3, and third-quarter Model X deliveries alone were higher than Model X deliveries in the last four quarters combined.
Falcon wing doors can be produced in mass after all.
As Tesla ramps up Model X production, some investors might be wondering just how high deliveries of the new SUV could go from here.
Fortunately, Tesla has provided some clues about demand for Model X, as well as made some projections for where it believes Model X deliveries are headed.
Will Model X deliveries soon rival Model S?
Here's what management has said about its expectations for Model X:
- Tesla went into 2016 with 35,000 deposit-backed reservations for Model X, and it has only delivered about 16,000 units. Of course, it's not clear how many of these reservation holders will follow through and actually order a Model X, as the deposits are refundable.
- It wasn't really until the second half of 2016 that Tesla was actively marketing Model X, suggesting demand for the vehicle has remained robust enough for Tesla not to rush marketing campaigns.
- In Tesla's second-quarter earnings call, CEO Elon Musk said Tesla is aiming to deliver 2,000 vehicles per week in Q4 and is "trying to balance the mix to be roughly half X and S."
- In Tesla's most recent update on quarterly deliveries, management predicted it would deliver at least 24,500 vehicles in Q4, though Tesla refrained from specifying the mix of Model S and X it expects.
With Tesla only recently beginning to ramp up its marketing efforts for Model X -- and in light of Tesla's own internal aim for Model X deliveries to rival those of Model S -- Tesla could deliver around 12,500 Model X units in the final quarter.
Beyond dissecting what management has said, the biggest takeaway from Tesla's recently soaring Model X deliveries is that production has likely improved enough for deliveries of this SUV to soon rise to meet demand. In other words, demand -- and not production -- may be the main driver of Model X deliveries in the coming quarters.
Over the next few quarters, therefore, investors will finally see how high Model X deliveries really can go without production constraints. Can Model X live up to management's high expectations?