One of the biggest questions on the minds of many Tesla (NASDAQ:TSLA) investors right now is how many Model 3 vehicles the automaker will be able to ship this quarter. With just a few days left in the quarter, the electric-car maker is likely trying to deliver as many of the new vehicles as possible. Will the car's early production ramp live up to expectations?
In addition, investors likely are interested in how many Model S and X vehicles the company will ship during its fourth quarter. After all, Tesla guided for record annual Model S and X deliveries of 100,000 units. Will the automaker ship enough of the two vehicles in Q4 to hit this guidance?
Here's a look at what to expect from Tesla's vehicle deliveries in Q4.
Model S and X: Expect more growth
For Tesla's fourth quarter, management's guidance for 100,000 Model S and X deliveries in 2017 implies the electric-car company expects to deliver about 27,000 Model S and X units combined during the quarter. The number would mark a new quarterly record for combined sales of the two vehicles.
Tesla's guidance highlights the company's continued growth. Its guidance for a total of 100,000 Model S and X deliveries in 2017 implies about 31% year-over-year growth compared to the 76,000 vehicles it shipped in 2016. Further, 27,000 Model S and X deliveries in Q4 would represent 21% year-over-year growth compared to S and X deliveries in the year-ago quarter.
The guidance for strong growth in deliveries for the two vehicles follows record deliveries and orders for Model S and X combined in Tesla's third quarter.
Model 3: Tesla's big wildcard
While investors will undoubtedly pay attention to Tesla's reported Model S and X deliveries for Q4, Model 3 deliveries will likely be the metric that investors will be watching the closest. Launched this summer, Tesla's Model 3 is expected to be the automaker's first high-volume vehicle. Tesla believes it will ultimately help the company's annual production soar from a rate of around 100,000 units today to about 500,000 units in about a year's time. But the Model 3's production ramp has disappointed so far.
Tesla initially said it would be able to achieve a production rate for Model 3 of 5,000 units per week by the end of Q4. But after encountering some unexpected bottlenecks, Tesla delayed this target to late Q1. This leaves investors wondering what production rate Tesla will be able to achieve by the end of its fourth quarter of 2017.
Will the achieved rate be high enough to make Tesla's ambitious target of a weekly production rate of 5,000 units by late Q1 look more believable? Or will Tesla whiff yet again on Model 3 production?
There have been several signs of improving Model 3 production, including Tesla confirming that it started delivering vehicles to non-employee customers and sightings of hundreds of Model 3 units parked at delivery centers in California. But there's still no concrete evidence that Model 3 production is where it needs to be for Tesla to be on track to hit its target delivery rate of 5,000 Model 3's per week by late Q1.
In Tesla's third-quarter earnings call, Tesla CEO Elon Musk said the company's weekly Model 3 unit production will be "in the thousands by the end of the year," so investors should look for Model 3 production by the end of Q4 to be somewhere between 1,000 and 2,000 units per week.
Given the exponential curve of the Model 3 production ramp and the significant uncertainty surrounding where Tesla will fall on this curve at the end of the quarter, investors should expect a wide range of possible outcomes for Model 3 deliveries during the period. I'll be looking for Tesla to deliver anywhere between about 1,000 and 4,000 Model 3 units during the electric-car maker's fourth quarter. This would bring total vehicle deliveries for the quarter to about 28,000 to 31,000 units.
Tesla announces its quarterly vehicle deliveries within the first three calendar days of each quarter's end. Look for Tesla to report fourth-quarter vehicle deliveries sometime between Jan. 1 and Jan. 3.