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Tesla’s projections of quarterly sales are turning out to be quite reliable. After very slightly outperforming its own Q1 guidance, the company duplicated that result in Q2. For the quarter, Tesla produced 8,763 Model S cars and delivered 7,579. It had estimated between 8,500 and 9,000 vehicles built and 7,500 delivered.
As told in a letter to shareholders, the Palo Alto upstart is still claiming it will deliver 35,000 vehicles by the end of the year, which seems like a lot considering it only delivered 14,036 in the first half of 2014. It especially seems like a lot considering Tesla only expects to deliver 7,800 vehicles in Q3 largely due to a two-week scheduled plant shutdown.
Obviously, if Tesla stays true to its third quarter projection (and history says they will) that leaves a highly unprecedented 13,164 vehicles to be delivered in the fourth quarter of this year.
Can it be done?
Yes, thanks to the two-week retooling of the Fremont factory that will conclude this weekend. Tesla indicated that it was producing about 800 Model S sedans per week prior to the shutdown, and the renovations will allow it to roll out 1,000 vehicles per week by the end of the year.
As the company expected, constraints on battery cell supply from Panasonic began to ease earlier this summer, allowing increased production rates.
Demand is also evidently not an issue, especially as enthusiasm continues to grow in China. The company stated in its letter to investors that “average global delivery wait times increased because our production growth was unable to keep pace with increased demand.”
European demand continues to be sluggish, but may be given a boost by the introduction of the right-hand drive version to the U.K. Tesla would only state that “In both North America and Europe, Q2 Model S orders increased sequentially at a much faster rate than for the rest of the automotive industry. Accordingly, we believe these markets remain under-penetrated.”
Given the modest growth rate of the rest of the industry, this isn’t saying much. But the company is holding firm to that 35,000 number, and there is no reason to expect they won’t achieve it.
Looking forward to 2015
The company also boasted that “provided that we execute well and there are no serious macroeconomic shocks, Tesla’s annualized delivery rate should exceed 100,000 units by the end of next year.”
We will clarify that this does not mean Tesla will deliver 100,000 copies of Models S and X next year, but rather that by the end of the year they will be delivering vehicles at a 100,000-per-year clip.
This translates to 2,000 vehicles per week out of the Fremont assembly plant, allowing two off weeks for another possible re-tooling shutdown. Certainly feasible, but not an easy task to pull off for a fledgling automaker.
Tesla offered no firm dates for the introduction of Model X, but indicated that Alpha prototypes are nearly ready and Beta prototypes will arrive later in the year. The SUV is still targeting an arrival in spring 2015.
On the whole, the news out of Tesla’s camp remains as it has been all year: steady and positive. Possible delays with the Gigafactory and lagging Model S demand in certain markets remain concerns, but not huge ones. Expect Tesla to match its 35,000 vehicle projection for the year, and don’t hold your breath expecting a Gigafactory location announcement.
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