How many Model S and X vehicles will Tesla deliver in the third quarter? – The fool

Led in the electric car manufacturer You're here& # 39; s (NASDAQ: TSLA) third quarter update on vehicle production and deliveries next week, the big question is: how many models 3 will the company deliver during the important period? After all, Tesla said a significant acceleration of Model 3 production and deliveries during the quarter could help the builder achieve profitability and positive cash flow – a significant step after a negative free cash flow $ 1.8 billion.

But investors should not underestimate the importance of sales of Tesla for its older and more expensive models: the S and X models. With average selling prices higher than those of Model 3, the two vehicles continue to represent a large profit share.

That being said, how many Model S and X vehicles can investors expect from Tesla in the third quarter? Could management focus on its aggressive Model 3 production ramp, which could negatively impact the production and sales of the S and X models?

A temporary setback – hopefully

In the first and second quarters of 2018, shipments of Model S and Model X fell sharply compared to levels seen in the second half of 2017. Model S and X combined deliveries in the second half of 2017 exceeded 54,000 units, but deliveries of the two vehicles in the first half of 2018, there were just over 44,000 units.

At first glance, this may sound like a red flag, but Tesla said the decision to smooth its delivery pace from one quarter to the next had a negative impact on deliveries of the S and X models in the first half. In response to this explanation, Tesla stated in its letter from August 1 to the second quarter that it expected the S and X model deliveries for the year to be approximately 100,000 copies, compared to only 44,000 S models and X during the first semester. Tesla explained that deliveries will be accelerated as the company's delivery model improves.

A forecast of 100,000 model S and X deliveries leaves about 56,000 S and X models to be delivered to Tesla in the second half, an unprecedented volume for both vehicles.

Of course, the configuration of the missed objectives of Tesla means that deliveries at this level are far from guaranteed, but since management has released its most recent forecasts for Model S deliveries and X guidance. A slight increase in S and X model shipments in the third quarter is therefore likely.

What about the request?

A natural concern for some Tesla investors is whether fast-growing Model 3 production and deliveries are cannibalizing demand for the company's most expensive S and X models. Case.

"Demand for Model S and Model X vehicles remains strong, with the second quarter of 2018 being the highest ever recorded for Model S and Model X orders," said Tesla in its second quarter update.

Based on all this information, investors can expect third-quarter S and X model shipments to be slightly higher than the 22,319 Tesla and S models delivered in the second quarter. A forecast of 23,000 to 27,000 combined S and X model shipments over the period seems reasonable.

Of course, a surprise downward or upward is always possible.

With Tesla's third quarter ending on Sunday, the automaker is likely to announce third-quarter vehicle deliveries by Wednesday next week.