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Tesla, Inc.'s Model 3 Deliveries to Begin This Month

By Daniel Sparks – Jul 3, 2017 at 11:46AM

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Tesla updates investors with more specific expectations for its Model 3 deliveries in 2017.

Over the weekend, electric-car maker Tesla (TSLA 1.72%) followed through on the Model 3 news it promised. Late Sunday night, Tesla CEO Elon Musk confirmed that the company's Model 3 is set to begin deliveries this month.

A Model 3 update

"Model 3 passed all regulatory requirements for production two weeks ahead of schedule. Expecting to complete [serial number 1] on Friday," Musk said on Sunday night. In addition, Tesla said it planned to hold its final unveiling event for delivering the first 30 cars to customers on July 28.

Model 3

Model 3. Image source: Tesla.

Musk also shared an update on Tesla's delivery expectations for the vehicle for the rest of the year. He said Tesla should be able to deliver 100 Model 3s in August, more than 1,500 in September, and 20,000 units in December. The CEO's timeline for Model 3 delivery growth expectations reflects the exponential curve of a vehicle production ramp-up, which Musk has admitted is difficult to predict.

This is the first time Tesla has provided clear guidance for its delivery expectations for Model 3 in 2017. Up until now, Tesla has only said it expected to produce and deliver the first Model 3 vehicles in July, but hadn't provided any forecasts for deliveries.

However, Tesla has previously provided some concrete forecasts for Model 3 production toward the end of the year and in 2017. Management expects to achieve a production rate of 5,000 vehicles per week before the end of 2017, and 10,000 vehicles per week "at some point in 2018," Tesla said in its first-quarter shareholder letter in May. Driven by soaring production and deliveries of Model 3 next year, Tesla has also said it expects to produce 500,000 vehicles total in 2018, up from an annualized run rate of about 100,000 vehicles today.

Why production is the focus

Tesla's emphasis on its ability to ramp up production of Model 3 as quickly as possible is a byproduct of the fact that the electric-car maker has already received hundreds of thousands of deposit-backed reservations for the car. As of the company's last official update on Model 3 reservations in May of last year, Tesla had garnered about 373,000 Model 3 deposits from customers. But Tesla said in May 2017 that reservations were growing every week.

Tesla vehicle production.

Tesla vehicle production. Image source: Author.

This impressive demand for Tesla's Model 3 persists even as the company does very little to market the vehicle. Further, with just weeks before the first Model 3 deliveries, information about Model 3 is limited. The main things Tesla has said about Model 3 are that it will have a starting price of $35,000, be slightly smaller than the Model S, and have at least 215 miles of range.

While investors should keep an eye on Tesla's timeline for Model 3 deliveries as the year goes on to make sure the electric-car maker can hit its targets, it will also be worth keeping tabs on any updates on demand for Model 3 as the vehicle officially comes to market. Could the vehicle's official launch send reservations even higher?

Daniel Sparks owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

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