Tesla's (TSLA +0.91%) vehicle sales in 2020 certainly impressed. Despite enduring pauses in its production during the pandemic, the electric-car maker still managed to grow its deliveries 36% year over year -- and that was against a tough comparison in 2019, when vehicle deliveries surged 50% year over year. Yet somehow, Tesla expects deliveries to grow even faster in 2021 than they did in both 2020 and 2019.
After the company crushed analyst estimates last quarter, management's rosy outlook for 2021 is starting to look believable. But it may take another exceptional quarter before skeptics are convinced that Tesla's growth rate will accelerate this year.
The interior of Tesla's refreshed Model S. Image source: Tesla.
What to expect from Q2
Tesla announced a 109% year-over-year increase in vehicle deliveries in Q1, so expectations are high for the automaker's second quarter. Of course, high expectations are also due to management's recent comments. In the company's first-quarter update, the company reiterated guidance for full-year deliveries to increase more than 50% from 2020 levels.
For Tesla to be on track to hit this guidance, the automaker will likely have to more than double its second-quarter deliveries on a year-over-year basis. But this shouldn't be too hard -- if Tesla simply maintained its first-quarter 2021 vehicle deliveries of about 185,000, this would translate to a year-over-year growth rate of 104%. Further, Tesla essentially paused production of its Model S and X last quarter as it refreshed the models. With these two vehicles resuming production in Q2, this should help increase total deliveries.
Finally, demand notably doesn't seem to be an issue. Tesla CEO Elon Musk said in the company's first-quarter earnings release that "demand is the best we've ever seen." In fact, the company's quarterly vehicle orders increased from Q4 to Q1 -- a time frame in which seasonality usually leads to a sequential reduction in orders.
Potential challenges
There are potential curveballs, however, that could negatively impact Tesla's deliveries in Q2. First, there have been global challenges with supply shortages. Even Tesla's chief financial officer Zachary Kirkhorn said in the company's first-quarter earnings call that there's "instability" in the global supply chain, "particularly around semiconductors." He also noted capacity constraints at logistics and shipping ports.
Second, since some of Tesla's vehicle growth this year is dependent on continued production-line expansion at the automaker's vehicle factories, it's always possible that the company runs into unforeseen challenges as it brings new-vehicle production tooling online.
Overall, however, Tesla's commentary alongside its first-quarter results suggested that management has a high degree of confidence in its forecast for delivering 750,000 or more vehicles this year. With this in mind, Tesla's second-quarter vehicle deliveries will likely be greater than the record 185,000 vehicles it delivered in Q1.
