There are a lot of unknowns concerning electric-car company Tesla's (NASDAQ:TSLA) second quarter. Ramping up vehicle production at an exponential rate simply leaves investors with a lot of guesswork since predicting how deliveries, revenue, and costs are impacted by such rapid change is extremely difficult.

"It's just fundamentally impossible to predict the exponential part of the manufacturing S-curve," Tesla CEO Elon Musk explained in the company's second-quarter shareholder letter last year. "It's crazy hard." Furthermore, even the S-curve analogy of a vehicle production ramp-up is an oversimplification in and of itself, Musk explained. "[The production ramp-up is] really running through a series of constraints ... and so it's like a really jagged sort of upward growth."

Nevertheless, there's one thing investors can know for certain that Tesla will achieve during its second-quarter: skyrocketing year-over-year growth in vehicle deliveries.

Tesla vehicle production at the company's factory in Fremont, California.

Tesla vehicle production. Image source: Author.

Model 3 production is soaring

The primary catalyst for Tesla's growth in vehicle deliveries in Q2 will be the company's rapidly increasing Model 3 production. Investors can know Model 3 deliveries will be significantly higher in Q2 compared to previous quarters for several reasons, including:

  • Shortly after Tesla wrapped up its first quarter, it achieved a weekly Model 3 production rate of more than 2,000 units per week. This doubled the weekly rate from the fourth quarter of last year. 
  • Tesla maintained a production rate of over 2,000 Model 3 units per week for three weeks straight in April before production was paused for a planned 10-day shutdown to address bottlenecks and increase production, management said in its first-quarter update. 
  • Tesla simultaneously produced more than 2,000 combined Model S and X vehicles in the last of those three weeks, proving the automaker can maintain its Model S and X production while ramping up Model 3 production.
  • More recently, each of the Model 3 production systems demonstrated a production capability of 3,500 units per week, Musk said during the June annual shareholder meeting earlier this month. 
  • Musk also said during the shareholder meeting that Tesla is "quite likely" to achieve a Model 3 production rate of 5,000 vehicles per week by the end of June.

But how will this impact Tesla's second-quarter vehicle deliveries?

Forecasting Tesla's vehicle deliveries

Even with all this information about Model 3 production, it's hard to forecast Model 3 deliveries during the quarter. Not only is the time gap between vehicle completion and vehicle delivery quite variable, but it's difficult to forecast the impact of factory shutdowns, periods where production may have temporarily declined, and the likely higher production rates in the second half of the quarter. For instance, if Tesla doesn't exceed a Model 3 production rate of more than 2,500 units on a sustainable basis until the last few weeks of the quarter, it's possible none of the vehicles produced at rates above 2,500 units per week will be delivered during Q2.

But it's probably safe to say Tesla delivered at least around 20,000 Model 3 vehicles during Q2. Considering Tesla's forecast for combined second-quarter Model S and X deliveries to be similar to the nearly 22,000 units it delivered in Q1, this would put total Tesla vehicle deliveries to about 42,000 -- up 90% year over year and 40% sequentially. A more aggressive achievement of 25,000 Model 3 deliveries during the quarter would push Tesla's total vehicle deliveries up 113% year over year.

Why this matters

Though there's little value in trying to pinpoint exactly where Tesla's vehicle deliveries will fall in Q2, this exercise highlights why Musk believes the company can go from its biggest quarterly loss ever to becoming profitable in the second half of the year. Exponential growth in its vehicle production and deliveries at this scale could have a dramatic impact on its business.

Unfortunately, Tesla still expects to endure more losses in its second quarter, but if vehicle sales rise this sharply, maybe investors can begin taking Tesla's forecasts for profitability in the second half of the year more seriously.

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