It's a big week in earnings season. After banks kicked us off last week, more reports from financials are bleeding into this week. We'll even move into reports from some popular consumer stocks like Netflix and Johnson & Johnson. But perhaps one of this week's most closely watched earnings reports will be electric-car maker Tesla (TSLA -4.02%). With shares up more than 50% year to date, you can bet both shareholders and investors on the sidelines will be watching the quarterly update closely. Will Tesla's report live up to the growth stock's pricey valuation?

Interestingly, it may not be reported revenue or vehicle deliveries that will be the main thing investors will be watching when Tesla reports first-quarter results on Wednesday. Instead, the most important item in the report may be management's guidance.

How is demand faring?

Tesla has cut prices on its vehicles several times this year, leading to concerns about whether demand for its vehicles is deteriorating. Fortunately, we're not completely in the dark about how 2023 has fared. Tesla management did say in its fourth-quarter earnings call in late January that demand far exceeded production at the time. But those comments came shortly after price cuts, so it wasn't clear how sustainable the demand levels at the time of the call were. Nevertheless, Tesla CEO Elon Musk did emphasize during the call that it had seen "the strongest orders year-to-date than ever in our history." Indeed, orders were coming in at "twice the rate of production," Musk explained.

With Tesla rolling out another round of price cuts for its vehicles more recently, it seems like management will do whatever it takes to ensure that demand remains robust. But the company will still likely have to field questions from analysts about demand on Wednesday because prices can only come down so far before profitability takes a significant hit.

In general, investors are worried rising interest rates are reducing vehicle affordability and ultimately weighing on demand. While this is almost certainly occurring across the auto industry, investors are likely hoping that rising interest in Tesla's electric vehicles will largely offset the negative impact of some consumers no longer being able to afford new vehicles in Tesla's price range.

Will Tesla maintain its full-year guidance?

While Tesla will likely provide some insight into vehicle order trends during its earnings call, the company's outlook for full-year vehicle production may help inform investors about demand as well. After all, if management is confident in the demand trajectory for its vehicles, it will likely maintain its full-year guidance for production volume. But if it's less certain about demand now than it was earlier this year, Tesla may reduce its production plans.

In Tesla's most recent quarterly update, management said it expected to build 1.8 million vehicles this year, up 31% over the company's production volume in 2022. Clearly, management had a rosy view for demand trends at the time of this update.

When Tesla reports results on Wednesday, investors should look to see if this guidance for production volume has changed. If it has changed, investors should look for an explanation for the revised outlook.

Tesla reports first-quarter results after market close on Wednesday, April 19.