Tesla, Inc. Posts Record Vehicle Deliveries -- What Investors Should Know

By Daniel Sparks Markets Fool.com

With electric-car maker Tesla's (NASDAQ: TSLA) higher-volume, lower-cost Model 3 on the horizon, investors likely expect the company to show that it can at least meet its smaller, near-term targets for its Model S and Model X deliveries. With Tesla's delivery figures for the quarter just released, Tesla looks like it is on track.

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For its first quarter of 2017, Tesla said this weekend that it delivered just over 25,000 vehicles during the quarter, up 69% year over year compared to its deliveries in the year-ago quarter.

Model S (left) and Model X (right). Image source: author.

Living up to guidance

With 25,000 vehicle deliveries in Tesla's first quarter, the company is well positioned to meet its guidance, which management opted to provide for the first half of the year instead of the first quarter specifically. In the company's fourth-quarter update, management said it expected to deliver 47,000 to 50,000 Model S and Model X units during the first half of 2017 -- a range that is up 61% to 71% from vehicles in the first half of 2016. After delivering 25,000 vehicles in Q1, Tesla only needs to deliver between 22,000 units in its second quarter to hit its guidance for the first half of the year.

Of these deliveries, Tesla said about 13,450 units were Model S and 11,550 were Model X. While both figures were up year over year and sequentially, Tesla's 11,550 Model X deliveries were a bright spot, highlighting the company's ongoing rapid ramp-up of production and deliveries of the late-2015 introduced all-electric SUV. Tesla's record quarterly Model X deliveries were up 381% year over year and 21% sequentially.

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Deliveries

Q1 2017

Q1 2016

Change

Model S

13,450

12,420

8%

Model X

11,550

2,400

381%

Data sources: Tesla's quarterly SEC filings and quarterly vehicle delivery updates. Table by author.

Tesla also notably said it produced 25,418 vehicles during the quarter, also a record for Tesla.

Going into its second quarter, Tesla ended Q1 with about 4,650 vehicles in transit to customers for a second-quarter delivery. This figure was down from the approximately 6,450 vehicles Tesla had in transit to customers at the end of its fourth quarter.

Viewed from a different angle

While Tesla's year-over-year growth for vehicle deliveries during its first quarter is impressive, growth doesn't look as hot when viewed over the last three quarters.

Data sources: Tesla's quarterly SEC filings and quarterly vehicle delivery updates. Chart by author.

After hitting 24,821 deliveries in the third quarter of 2016, Tesla's total Model S and Model X deliveries seem to have leveled off. Of course, this is an impressive level of deliveries for Tesla to sustain; Model S is already outselling comparably priced large luxury sedans in North America and some other key markets, and Model X is among top sellers in its category. But with deliveries seeming to level off, growth may not be coming as easy for Tesla -- at least not until the company introduces a lower-priced electric vehicle. This isn't particularly surprising, since Model S and Model X have steep starting prices of $68,000 and $73,000, respectively. The market for vehicles at this price point is limited.

With a starting price of $35,000, Tesla's Model 3 is expected to be the company's next key growth driver. The vehicle is slated to begin production in July. Management expects Model 3 will help Tesla's vehicle production increase from a rate of about 100,000 units per year today to around 500,000 units next year.

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Daniel Sparks owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.