With Tesla (NASDAQ:TSLA) set to report its first-quarter deliveries sometime between April 1 and April 3, investors will be watching the update closely. Not only will it give investors insight into how the company's important Model 3 production-ramp up and global expansion initiatives are faring, but the automaker sometimes uses the update to reveal other views into its business. For instance, in the past, Tesla has talked about demand, vehicle order trends, and even forecasts for order trends. 

Going into Tesla's first-quarter vehicle delivery update, investors should look not just for the number of vehicles delivered, but also for an update on order trends for the Model 3. Is demand on the upswing after the launch of Tesla's long-awaited $35,000 Model 3?

A red Tesla Model 3

Model 3. Image source: Tesla.

Whether or not the release of Tesla's most affordable vehicle helped demand or not may be the most important thing to look for in electric-car maker's update.

Why it matters

Ever since Tesla garnered around 400,000 reservations for the Model 3 within a few months of its initial unveiling, the company has had high expectations for the vehicle's sales potential. Management's big expectations are best summed up in comments from CEO Elon Musk in the company's most recent earnings call: "[M]y best guess for demand of Model 3 worldwide is something -- in a strong economy, it's something on the order of 700,000 or 800,000 units a year. ... But I think even in a recession, worldwide demand is still something in the order of 500,000 for Model 3."

Tesla's recent quarterly delivery volumes bode well for the Model 3's potential. The company averaged about 60,000 quarterly Model 3 deliveries in its last two quarters. This was notably before introducing the lower-cost $35,000 version of the Model 3 and before expanding to Europe and Asia.

But Tesla still hasn't proved it can generate annual demand for Model 3 at volumes above 500,000 per year.

Investors, therefore, should look for Tesla to explain how the introduction of the $35,000 Model 3 and the company's expansion to new markets has impacted demand for the important vehicle. If Tesla says that the launch of the lower-cost Model 3 and its global expansion are driving a significant increase in order volumes, then Musk's optimistic outlook for Model 3's demand potential will be more believable.

Check out the latest earnings call transcript for Tesla.

Reasons to worry

The electric-car maker has given investors some reasons to doubt whether demand for the vehicle is living up to management's expectations. For instance, before the standard-battery $35,000 Model 3 was launched, pricier versions of the vehicle were hit with several price cuts. Further, Tesla recently brought back a revised version of its referral program.

Of course, it's always possible that Tesla has simply been able to ramp-up Model 3 production at a faster rate than expected, prompting the company to pull a few demand levers.

Hopefully, we'll have a better idea next week whether investors should worry about demand.