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Tesla Model 3 Deliveries May Double This Year

By Daniel Sparks - Dec 14, 2019 at 8:41AM

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Annualized deliveries of Tesla's most affordable vehicle are approaching 300,000.

Tesla's (TSLA 7.33%) Model 3 looked like a hit from the beginning. Lines with hundreds of customers were forming at Tesla stores around the world on the day of the vehicle's unveiling in March 2016 -- a prototype was shown for the first time later that evening. And about a month and a half after Tesla took the wraps off the vehicle, 373,000 people had made deposit-backed reservations for it.

While it was clear that initial demand was strong, doubts lingered about how sustainable this demand was and whether Tesla could actually build a vehicle in such high volumes. After all, Tesla was only delivering about 55,000 vehicles annually at the time of the Model 3's unveiling.

Fast-forward more than three years later and Tesla is now shipping hundreds of thousands of Model 3 units a year -- and demand continues to grow.

A red Tesla Model 3

Model 3. Image source: Tesla.

How Many Model 3 vehicles will Tesla deliver in 2019?

Based on Tesla's trend of steadily rising Model 3 deliveries on a sequential basis throughout 2019 and management's guidance for total fourth-quarter deliveries to be higher than they were in Q3, the automaker will likely deliver around 289,000 Model 3 units or more in 2019 -- nearly double the 146,000 it delivered in 2018.

To get to 289,000 Model 3 deliveries in 2019, Tesla would need to have nearly 81,000 units delivered in Q4 -- up from about 80,000 in Q3 and 63,000 in the fourth quarter of 2018.

This is a reasonable forecast considering the company's growing production volumes and increasing demand throughout the year. In Tesla's third-quarter earnings call, CFO Zach Kirkhorn commented on demand trends for its vehicles:

Our global order rate remains strong and continues to increase. Despite increases to production levels, our order backlog has been growing, and quarter to date orders are significantly higher than at this point in last quarter. In the immediate term, we're focused on increasing production of Model 3 and Model S and Model X as quickly as we can.

For the full year, Tesla is aiming to deliver 360,000 or more total vehicles, implying 45% year-over-year growth.

Tesla believes this is just the tip of the iceberg

While the success of Model 3 has been impressive, CEO Elon Musk believes there is plenty of upside left for Model 3 and for the electric-car maker's total vehicle sales volume.

Musk told investors in an earnings call in July that he believes annualized demand for the Model 3 will rise to around 750,000 units per year. The Model Y crossover, which is slated for a 2020 launch and will be priced below the Model X SUV, could see demand in the order of 1.25 million units a year, he forecasts. 

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