Shares of electric-car maker Tesla (NASDAQ:TSLA) have soared this year. While this has been great for shareholders, it means expectations are high. This is particularly true for the automaker's third-quarter deliveries, which Tesla will likely report in the next few days. Can the automaker live up to the market's high hopes?
Investors will look for Tesla's quarterly deliveries to return to meaningful year-over-year growth in Q3 after a sluggish second quarter. Though Tesla's second-quarter deliveries were much better than analysts were expecting, they were still down 5% year over year. The electric-car company's factory in Fremont was shut down for nearly half of the quarter, weighing on total deliveries during the period.
How many vehicles could Tesla have delivered?
In the third quarter of 2019, the automaker delivered about 97,000 vehicles. This figure was up 16% year over year. To report year-over-year growth in the third quarter of 2020, Tesla will need a meaningful sequential uptick from suppressed Q2 delivery volume. In the second quarter of 2020, Tesla delivered about 91,000 vehicles. There are several reasons, however, that Tesla will likely return to year-over-year growth in Q3.
First, if Tesla was able to deliver 91,000 vehicles in Q2 with its main factory shut down for more than half the quarter, achieving more than 97,000 deliveries in Q3 should be quite easy.
Second, Tesla has another vehicle in its lineup this year. In March, Tesla started shipping its new Model Y SUV. The Model Y's contribution to delivery volume in Q3 was likely significant, as Tesla said it exited its second quarter with Model Y production operating at the Model Y production line's full capacity. While Tesla hasn't said exactly what the installed production capacity of its Model Y production line is, the automaker did note in its second-quarter update that the combined Model 3 and Model Y production capacity at Tesla's factory in Fremont, California is 400,000 units per year.
What does all of this mean for Tesla's potential deliveries during the quarter? Record quarterly deliveries -- even in excess of the company's all-time high quarterly deliveries of about 112,000 in the fourth quarter of 2019 -- seems within reach in Q3.
The bigger picture
For the full year, Tesla is targeting 500,000 total deliveries, up from about 368,000 last year. With about 179,000 vehicles delivered in the first half of the year, Tesla will need a very strong finish to 2020 to hit this guidance.
If Tesla's third-quarter deliveries are impressive enough to make the automaker's 500,000-unit target for 2020 begin looking feasible, the company may be able to live up to investors' high expectations after all. Highlighting how ambitious this target is (particularly in a year in which the coronavirus has proved to be a major setback), a half-million deliveries in 2020 implies 36% year-over-year growth.
Tesla typically reports its quarterly deliveries within three days of each quarter's end. Therefore, management will likely report the automaker's third-quarter deliveries no later than Oct. 3.