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Tesla Motors, Inc. Reports Deliveries Next Week: Will It Beat Its Guidance?

By Daniel Sparks – Mar 29, 2016 at 5:12PM

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The company expects quarterly sales to jump 60% from the year-ago quarter.

One of Tesla Motors' (TSLA 0.08%) most closely watched metrics every quarter is its vehicle deliveries. As rapidly as the company is growing, investors like to check in to see if Tesla is keeping up with its growth goals. This quarter in particular will be interesting; it's the first quarter anticipated to include a meaningful number of Model X deliveries.

So, how many cars could Tesla have delivered during Q1?

Model X.

What to expect
Management said when it reported fourth-quarter results earlier this year that it expected to sell 16,000 vehicles -- up 60% from the year-ago quarter, but down 8% sequentially.

Management's expectations for a sequential decline for Q1 isn't surprising. Q1 follows a quarter in which the company grew sales an incredible 51% sequentially. So, Tesla is likely still working out bottlenecks and inefficiencies at a higher volume. Further, challenges may arise as it attempts to integrate Model X build into production and assembly.

Can Tesla live up to its own expectations for the quarter? Chances are, management baked meaningful conservatism into its projection, making it likely that the company delivers at least 16,000 vehicles. Historically, this has been the case; Tesla has only missed its quarterly guidance in one of the last 12 quarters. Further, Tesla CEO Elon Musk emphasized in its second-quarter earnings call in 2015 that the company wanted to be more conservative with projections going forward.

"Winning needs to feel like winning," Musk said (via a Reuters transcript).

During Q4, the company delivered about 17,500 vehicles. While most units were Model S, a few hundred were its September-launched Model X.

For the current quarter, which ends on March 31, the Model X deliveries specifically will almost certainly be higher than during Q1. A growing number of customer YouTube videos of Model X, as well as reports of Model X deliveries in forums for Tesla owners, suggest the company has ramped up production of the SUV during Q1.

The rest of the year will need to be huge
For Tesla to meet its guidance for full-year deliveries, it will need to deliver a higher number of vehicles during the remaining three quarters. Tesla said in its fourth-quarter shareholder letter that it expected to sell 80,000 to 90,000 vehicles during 2016 -- up about 68% from 2015 deliveries.

Tesla's factory in Fremont, California. Image source: Tesla Motors.

If Tesla's first-quarter deliveries are in line with its guidance for the quarter, the company will need to average about 23,000 deliveries in each of the remaining quarters to deliver 85,000 vehicles this year.

Tesla is anticipating its vehicle delivery growth during the year will come from Model X. Musk has said he anticipates the SUV's deliveries will rival Model S's deliveries after the company ramps up production.

Tesla's key bottleneck to growing vehicle sales continues to be production. Overall demand -- at least for Model X -- remains ahead of supply. When the company reported fourth-quarter results earlier this year, deposit-backed reservations for its Model X SUV had reached 35,000 -- up 75% from reservations one year earlier. And these reservations increased without any display of Model X in stores or any advertisements for the vehicle.

The company has committed to reporting quarterly vehicle sales within three days of the quarter's end, so Tesla should announce quarterly vehicle sales by Sunday, April 3.

Daniel Sparks owns shares of Tesla Motors. The Motley Fool owns shares of and recommends Tesla Motors. 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.

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