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Tesla Motors, Inc. Announces Record Sales, Yet Focus Shifts to Q4

Up until electric-car maker Tesla Motors ' third quarter, most of the company's deliveries were about on pace for it to achieve its ambitious outlook for full-year deliveries. After all, the company was planning for the first half of the year's deliveries to lag behind the second half's.

But now, with Q3 in the rearview mirror, it will take a massive fourth quarter for the company to achieve its recently downwardly revised targets.

Data sources: Respective quarterly SEC filings for quarters shown. Chart by author.

In order for Tesla to hit the low end of its full-year guidance, the company will need to deliver a whopping 17,000 vehicles during Q4, representing 47% growth sequentially and 73% year over year.

Can Tesla really pull off a quarter this good?

Tesla vehicle sales by model. Data source: Quarterly SEC filings and quarterly sales releases. Quarter marked by asterisk indicates deliveries needed for Tesla to achieve the low end of its target guidance range of 50,000 to 55,000 vehicles. Breakdown of Model X units shipped versus Model S units shipped is an author estimate.

Given that this range of 50,000 to 55,000 vehicle deliveries for the full year was laid out in the same quarterly letter in which Tesla provided Q3 guidance for about 11,500 vehicles, apparently a huge fourth quarter is a part of the company's plan.

But with a shared general assembly line for the Model S and X and the overall complexities of ramping production of a new vehicle, the uncertainty regarding Tesla's fourth-quarter vehicles is high. The company explained its uncertain fourth quarter in its second-quarter letter to shareholders:

While our equipment installation and final testing of Model X is going well, there are many dependencies that could influence our Q4 production and deliveries. We are still testing the ability of many suppliers to deliver high quality production parts in quantities sufficient to meet our planned production ramp. Since production ramps rapidly late in Q4, a one-week push out of this ramp due to an issue at even a single supplier could reduce Model X production by approximately 800 units for the quarter. Furthermore, since Model S and Model X are produced on the same general assembly line, Model X production challenges could slow Model S production.

Central assembly point of Tesla's "production line 2." Image source: Tesla Motors.

Fortunately, during Q4, Tesla will have its second production line up and running to help it achieve its new delivery targets. Even so, there's clearly significant risk to Tesla's outlook for full-year deliveries.

Investors will get considerable insight into whether or not Tesla is still confident in its ambitious fourth-quarter target when it reports third-quarter results and provides specific guidance for Q4. Given that Tesla usually reports quarterly results more than a month into the next quarter, this guidance will provide a window into the quarter's progress. Last year, Tesla shared third-quarter results on November 5. So, look for Tesla to announce a third-quarter earnings date around this timeframe.

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The article Tesla Motors, Inc. Announces Record Sales, Yet Focus Shifts to Q4 originally appeared on Fool.com.

Daniel Sparks owns shares of Tesla Motors. The Motley Fool owns shares of and recommends Tesla Motors. Try any of our Foolish newsletter services free for 30 days . 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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