When Tesla (NASDAQ:TSLA) announced its second-quarter vehicle deliveries on Monday, one concern was the unusually large difference between production and deliveries. Some investors may have been concerned that Tesla's production capabilities were outpacing demand by the end of the quarter -- even after taking into account the company's manufacturing challenges during the quarter for its vehicles with its new 100 kilowatt-hour battery. But Tesla addressed these worries in a press release on Friday.

To provide some more context about the quarter's vehicle activity, Tesla shared how many units were in transit to customers. Tesla said that, of the 25,708 vehicles it produced during the quarter, it delivered just over 22,000 to customers, and about 3,500 were in transit to customers, set to be delivered in Q3.

Tesla Model S (left) and Model X (right).

Tesla Model S and X. Image source: Author.

Here's a closer look at what these numbers mean.

Breaking down Tesla's production and delivery numbers

It's easy to see why investors were concerned with the large difference between Tesla's vehicles produced and its deliveries. In Tesla's first quarter, not only did the company's production exceed deliveries by a small sum of just over 400 vehicles, but Tesla also said it had about 4,650 vehicles in transit to customers at the end of the quarter.

Vehicle Activity












Data source: Tesla quarterly vehicle delivery updates. Asterisk indicates actual deliveries were "just over" this figure, according to Tesla. Table source: author.

By clarifying with investors that it finished its second quarter with 3,500 vehicles in transit to customers, the large gap between Tesla's production and deliveries is easier to understand, especially with the additional context Tesla provided for the quarter's deliveries.

Tesla previously attempted to justify the discrepancy between production and deliveries by noting that a "severe production shortfall" of its 100 kWh batteries led to vehicle production averaging about 40% below demand in early June. "Once this was resolved, June orders and deliveries were strong, ranking as one of the best in Tesla history," Tesla had said. In addition, Tesla also said it used the quarter to beef up its fleet of fully loaded service loaner cars.

Tesla explained:

We always want our customers to experience the newest versions of Model S and X while their cars are in service, so we added fully loaded, newly built cars to our service loaner fleet. We always want the service loaner Tesla to be *better* than the customer car being serviced. The customer should never suffer for something that is our fault.

Finally, Tesla said it used the extra production to help achieve a sufficient level of Model X test-drive units during the quarter after operating its stores with fewer units than what was needed.

Model S and X demand may still be peaking

Despite Tesla's efforts to explain the difference between production and deliveries during the quarter, there's still good reason to believe that the electric-car maker may have trouble growing sales of the two vehicles meaningfully from here. After all, in the same quarterly delivery update, Tesla only predicted that combined Model S and Model X deliveries in the second half of the year will "likely" exceed deliveries in the first half of the year. Any sequential growth in Model S and Model X sales, therefore, will likely be slow.

Model X in a Tesla store

Model X. Image source: Author.

Sure, Tesla also said in its press release that it sees "substantial untapped sales potential" for its Model X, but the SUV is still relatively new -- it wasn't until late 2015 that Tesla started delivering the vehicle -- so further growth in the near term should be expected. But it's not clear how sustainable this demand growth is as the model ages. In addition, Tesla was notably mute about demand for Model S during the quarter, suggesting orders may be down sequentially.

Last, it's worth noting that, as Tesla's Model 3 officially begins delivering to customers later this month, demand for Model S and Model X could be negatively impacted more than management expects.

As Model S and Model X sales level off, Tesla will need its lower-cost Model 3 to serve as the company's next major growth driver.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.