Sometime this week -- probably on Thursday or Friday -- Tesla (NASDAQ:TSLA) will report its deliveries for its fourth quarter. If things go as planned. The company will set another quarterly record, fueled by increasing Model 3 production and deliveries.
So far, 2019 has proved to be a year of impressive execution for the electric-car maker, with deliveries rising throughout the year to a point that the company's full-year guidance range is within reach. Furthermore, the company broke ground on its factory in China and began producing cars in the same factory in just an 11-month timeframe.
As the year closes out, investors will be looking to Tesla's fourth-quarter delivery numbers for one last confirmation that the electric-car maker continued to execute well in the final quarter of 2019. Can Tesla hit its target of about 104,500 vehicle deliveries during the quarter?
What to expect from fourth-quarter deliveries
While Tesla didn't provide specific guidance for its fourth-quarter deliveries, management did say in its third-quarter update that it was on track to exceed the low end of its full-year outlook for deliveries. "We are confident in exceeding 360,000 deliveries this year," Tesla said.
To exceed this figure in Q4, Tesla would need to deliver at least 104,440 vehicles during the period, translating to 7% and 15% sequential and year-over-year growth, respectively.
Growth during the quarter will be driven by Model 3. Quarterly Model 3 production has been steadily rising, with production and deliveries of the vehicle hitting a record high in Q3 -- and management indicated this trend will continue in Q4.
But Model S and X deliveries could rise sequentially as well. Tesla CFO Zachary Kirkhorn noted in the company's third-quarter earnings call that delivery numbers of the two vehicles during the period "understated the interest in the product for that quarter." The Model 3's production ramp has consumed much of the company's attention in 2019, Kirkhorn noted. Now that Model 3's production has stabilized at a high volume, Tesla is "increasing production on our S and X lines for [Q4] in response to increasing demand," the CFO explained.
A year of rapid growth
If Tesla does exceed 360,000 deliveries in 2019, it will mark an impressive year of growth for Tesla. This would put total deliveries during the year up 47% year over year -- a notable achievement considering total deliveries soared 138% in 2018.
More importantly, by hitting this target, it would help investors take Tesla's annual targets more seriously. After taking longer than expected to ramp up its Model 3 deliveries following the vehicle's launch in the second half of 2017, the company's ambitious targets started to look more like lofty aspirations instead of achievable milestones. But if Tesla can exceed 360,000 deliveries in 2019, the company would reaffirm its ability to follow through on forecasts.
Tesla typically reports its quarterly deliveries within three days of a quarter's end. Investors, therefore, should expect an update on Tesla's fourth-quarter vehicle production and deliveries sometime between Jan. 1 and Jan. 3.