Electric-car company Tesla (NASDAQ:TSLA) reported its first-quarter deliveries and production Tuesday morning. Highlighting Tesla's progress, vehicle production climbed 40% sequentially. This surge was fueled by exponential growth in Model 3 production. It was "by far the most productive quarter in Tesla history," according to the company. 

But the update went beyond stating vehicle production and delivery figures for the quarter. The press release also included some important details surrounding the current production rate of Model 3, management's rundown of what to expect from the important vehicle over the next three months, and expectations for "strong positive operating cash flow." Here's what investors should know.

Model 3 interior and 15-inch center console display

Image source: Tesla.

Production and deliveries

Though Tesla's vehicle production soared 40% since the previous quarter, rising from 24,565 vehicles produced in Q4 to 34,494 in Q1, the automaker still fell short of its target to end the quarter with a Model 3 production run rate of 2,500 units per week. Instead, Tesla said that in the seven days leading up to April 3 (Tesla's first quarter ended on March 31) it produced 2,020 Model 3 vehicles. This was up from the production run rate of 1,000 Model 3s per week Tesla achieved three months ago.

Though Tesla missed its target run rate for Model 3 production, it's difficult to discount how impressive the sharp rise in Model 3 deliveries and production was during the quarter. Tesla produced 9,766 Model 3 vehicles during the period and delivered 8,180. This is up from 2,425 Model 3 units produced and 1,550 units delivered in Q4.

"It is a testament to the ability of the Tesla production team that Model 3 volume now exceeds Model S and Model X combined," Tesla said about the quarter's Model 3 production. "What took our team five years for S/X, took only nine months for Model 3."

While total production jumped, total deliveries were actually flat sequentially as Model S and X deliveries pulled back from over 28,000 to just under 22,000 units. The difference in the trajectories for production and deliveries during the quarter is partly explained by 6,120 vehicles Tesla had in transit to customers when it ended the quarter versus the 3,380 units that were in transit at the end of Q4.

Tesla Model X vehicle production

Tesla factory. Image source: author.

Looking ahead

Tesla shared some forecasts for the coming quarters, but investors should take these predictions with a grain of salt as the automaker continues to lag its production targets for Model 3.

  • Tesla is impressively aiming to achieve a production run rate for Model 3 of 5,000 units per week in "about three months." But this wording allows more wiggle room than a previous target for ending its second quarter with this Model 3 production run rate.
  • Despite lower Model S and X deliveries during the quarter, Tesla still expects to meet its full-year guidance for 100,000 Model S and X deliveries this year.
  • Demand for Model S, Model X, or Model 3 shouldn't be a problem as net orders for Model S and X were at an all-time first-quarter high, and the hundreds of thousands of Model 3 reservations Tesla has garnered "remained stable through Q1."
  • Thanks to its rapidly rising Model 3 deliveries, Tesla says it will not need to raise capital through equity or debt this year, at least, "apart from standard credit lines."

Though Tesla's initial Model 3 production ramp-up has been more difficult than the automaker expected, Model 3 production and deliveries are finally starting to look like they are gaining some meaningful momentum.

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.