With sales growth of Tesla's (NASDAQ: TSLA) Model S sedan essentially coming to a halt since last year, there is growing interest in the automaker's next catalysts. Sure, the Model 3 is expected to help Tesla's vehicle sales soar -- but that won't happen until Tesla ramps up production of the new vehicle. In the near term, this is putting the spotlight on the electric-car maker's SUV -- the Model X -- as Tesla's growth driver.
So, can the Model X help Tesla's sales grow in Q4? Here's a look at what to expect from Model X deliveries during the quarter.
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Model X deliveries
Tesla's sales growth in Model X since the vehicle was launched in September of 2015 has been staggering. Unit deliveries hit a record high in Tesla's most recent quarter and have increased sequentially every quarter since its launch except one. Or here's the best way to put recent growth in Model X deliveries in perspective: Trailing-12-month Model X sales of just under 43,000 units are 168% higher than the 16,000 units delivered in the year-ago period.
While Model X sales are still on the rise, they've slowed meaningfully in the past few quarters. Model X unit sales in Tesla's third quarter, for instance, were up 19% sequentially and 35% year over year. Even more, Model X deliveries were up just 4.3% compared with Tesla's previous quarterly record for Model X deliveries set in the first quarter of 2017.
What to expect
With Model X sales growth slowing substantially in the last few quarters, investors shouldn't expect the SUV to contribute much growth to overall sales. On the other hand, investors also shouldn't expect Model X sales growth to stall yet, either.
In Tesla's third-quarter shareholder letter, management said it saw record net orders for Models S and X in its third quarter. In addition, management guided for a record 27,000 combined Model S and X deliveries -- a level that would probably be difficult to achieve without sequential growth in Model X deliveries.
Management is particularly bullish on Model X. In July, Tesla said that it wasn't until this summer that its stores were equipped with a sufficient number of Model X display and test-drive units. Its stores "had been operating with far short of what was needed and, in some cases, none at all," Tesla said in its second-quarter update on vehicle deliveries. But with Tesla finally prioritizing demand generation for Model X to the same degree it was pushing Model S sales, management was optimistic about sales potential for the SUV, saying, "There appears to be substantial untapped sales potential for Model X."
With this background in mind, Tesla's Model X sales are likely to hit record levels in Q4, but sequential growth will probably be slower than in recent quarters. I'm expecting about 12,500 Model X deliveries or more in Q4, up 5% sequentially and 31% year over year. This would bring year-over-year growth in trailing-12-month Model X deliveries to 81%.
Assuming the Model S can account for the rest of Tesla's expected 27,000 combined Model S and X deliveries, vehicle deliveries excluding any Model 3 deliveries would be up 3% sequentially and 21% year over year.
Tesla reports its quarterly vehicle deliveries within three days of the quarter's end. So expect to find out exactly how many Model X units were delivered during the quarter by Jan. 3.
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