Please ensure Javascript is enabled for purposes of website accessibility

How Many Vehicles Will Tesla Motors, Inc. Deliver This Quarter?

By Daniel Sparks - Feb 4, 2016 at 4:55PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Will the Model X finally start benefitting Tesla's sales during the current quarter?

Next week, electric-car maker Tesla Motors (TSLA 1.39%) will report fourth-quarter results. With deliveries for the company's fourth quarter already reported, investors will likely turn to management's guidance for the current quarter to gauge where the company is at on its growth plan, and to see if the Model X is finally expected to begin benefiting sales.

Model X. Image source: Tesla Motors.

How many vehicles can investors expect Tesla management to say it expects for the current quarter?

Investor expectations are probably high
Ahead of Tesla's fourth-quarter report, one thing is clear: The company has big expectations for the full year. Management said in the company's third-quarter shareholder letter that Tesla was "highly confident" it could achieve average weekly unit production and deliveries in the range of 1,600 to 1,800 during the year -- and management specifically noted this metric represents an average across every week of the year, including holidays, factory tooling, etc. Weekly deliveries at this level amount to expected deliveries of about 83,200 to 93,200 units during 2016, or 65% to 85% year-over-year growth.

For the first quarter specifically, however, it's not quite as clear whether or not Tesla expects growth to be very robust. But whatever Tesla is expecting, investors' expectations for the guidance figure management will provide for the current quarter is likely high.

Not only do Tesla's expectations for a big year, overall, heighten expectations for the first quarter, but the Street may also be hoping to see the recently launched Model X to begin benefiting deliveries. With Tesla beginning deliveries of its Model X on Sept 29, the company will have had six full months to ramp-up production by the time the first quarter closes.

Accounting for uncertainty
Here's my take: While it's likely Tesla will guide for record deliveries in Q1, the guidance will probably take the form of a very wide range -- and the low-end of this range will likely only represent modest growth.

Why could Tesla's sales only grow modestly between Q4 and Q1?

First, Tesla's fourth quarter marked huge growth for the company. Deliveries were up 50% sequentially -- and the prior quarter was the company's previous record for quarterly deliveries.

While it's definitely possible that Tesla grows sales sequentially yet again after this big quarter of growth -- particularly with the help of the Model X -- it may be difficult to achieve anything more than modest, single-digit growth. Indeed, Tesla was in a similar situation going into its first quarter of both 2014 and 2015; after big prior quarters, the company's deliveries declined 6% sequentially in Q1 2014, and increased just 2% in Q1 2015.

Model S production at Tesla's Fremont factory. Image source: Tesla Motors.

Second, Tesla could be hitting the top of its current Model S production capacity -- and this would leave growth in deliveries for the quarter dependent on Model X production, which faces an uncertain ramp-up. On the other hand, a successful ramp-up of Model X could have a significant impact on deliveries toward the end of the quarter.

I'll be looking for Tesla to guide for about 18,000 to 21,000 vehicles in Q1, representing about a 4% to 21% sequential increase in deliveries. The company reports quarterly results on Wednesday, February 10, after market close.

Daniel Sparks owns shares of Tesla Motors. The Motley Fool owns shares of and recommends Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
$861.77 (1.39%) $11.78

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/10/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.