Can Tesla Inc. Meet Its Aggressive Model 3 Delivery Target?

Tesla (NASDAQ: TSLA) has been under the spotlight lately. A drawn-out period of negative press has included CEO Elon Musk's short-lived consideration of taking the company private, a few controversial tweets from Musk, and some high-profile executive turnover. But the electric-car maker is about to get a chance to put a positive twist on the narrative surrounding the company.

On Sunday, Tesla's all-important third quarter will come to a close. This will not only mark the end of a period in which Tesla expects to deliver a record number of Model 3s, but also achieve profitability while it's at it. However, after Tesla fell about six months behind its initial Model 3 production timeline, it's easy to doubt the automaker's ability to hit the big target for Model 3 deliveries that management set for itself for the quarter.

The pressure is on, to say the least.

Can Tesla deliver?

In Tesla's second-quarter shareholder letter, management said it expected to produce 50,000 to 55,000 Model 3 vehicles during Q3, with deliveries exceeding this level. In other words, Tesla forecast about 55,000 or more Model 3 deliveries during the quarter.

Though the guidance came after a quarter in which Tesla delivered just 18,449 Model 3s, Tesla said in its Aug. 1 shareholder letter that it wrapped up the quarter with a production rate of 5,000 Model 3 cars per week. In addition, management even said it achieved this weekly production rate multiple times during the first month of July, which is the first month of Q3.

But as Tesla's third quarter nears its end, Tesla is running into some major issues when it comes to getting new Model 3 vehicles to customers. An unprecedented level of deliveries for the company has management facing new logistics challenges.

The first issue to come to light was a reference from CEO Elon Musk in a Sept. 21 tweet, citing an "incredibly intense" week for Model 3 deliveries. In the tweet, Musk invited Tesla owners to help educate new customers about their new Model 3s. "If any current Tesla owners who'd like to help educate new owners could head to Tesla delivery centers during midday on Sat/Sun & morning/evening on weekdays," Musk tweeted, "that would be super appreciated!" Based on media coverage and social media coverage of what followed, the response from owners was overwhelmingly positive.

But even this didn't solve all of Tesla's logistic issues with deliveries. In a Sept. 24 tweet, Musk said the company was "running into an extreme shortage of car carrier trailers." To remedy the problem, Musk said the company was building its own car carriers over the weekend "to alleviate load."

Expect sales to soar

With Tesla apparently facing major logistics headwinds at the end of the quarter, it's tough to say whether or not the electric-car company can meet its aggressive guidance.

Nevertheless, vehicle deliveries are set to soar. Even if Model 3 deliveries came in at 45,000 during the quarter, total vehicle sales when including Model S and Model X will likely be around 68,000 to 71,000 units -- crushing Tesla's previous quarterly record of nearly 41,000 units.

Of course, the big question is whether or not Model 3 deliveries will be high enough for Tesla to achieve the scale it needs to become profitable.

Stay tuned. Tesla typically shares quarterly updates on vehicle deliveries and production within three days of each quarter's end.

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