After giving poor performance in first quarter, all eyes are set whether the company will be able to outperform it Q2 guidance or not..
In the first quarter, Tesla Motors delivery rate has been the worst. The automaker fell far below the expectations. Therefore, now, the investors will be closely eyeing automaker’s current quarter’s electric-car deliveries. Tesla’s second quarter report is expected to be made public sometime around July 1 and July 3 and the analysts and investors will get an idea about the company’s state of production.
Several analysts have projected that the Palo Alto, Calif. firm will be able to put forward year over year growth of 50%. Many investors are anticipating that a huge production constraint of first quarter will be made up by the company in the second quarter which will provide a coherent basis for the company to ramp up its production in the second half of the year.
With regards to its below expected performance earlier, several analysts are skeptical about the auto-tech giant’s capability to accelerate its production. In the first quarter, Tesla deliveries went up by 48% YOY but still it was lower than the company’s guidance.
To top that, the company didn’t give plausible reasons in its press release for such performance. It said: "The root causes of the parts shortages were: Tesla's hubris in adding far too much new technology to the Model X in version 1, insufficient supplier capability validation, and Tesla not having broad enough internal capability to manufacture the parts in-house. The parts in question were only half a dozen out of more than 8,000 unique parts, nonetheless missing even one part means a car cannot be delivered."
But, despite having worse-than-expected first-quarter deliveries, the Californian auto-tech giant is certain about accelerating its production. The optimism of the company can be backed by the fact that by the end of the year, the company is opting for to maintain its full-year guidance for 80,000 to 90,000. This guidance has a significant shift from the company’s prior 50,600 deliveries in 2015.
The grave question is that up to what level investors and analysts can expect the company regarding its production and deliveries in second quarter. According to statement given back in April by the management, the production "is now on plan." In the second quarter, the luxury electric car maker is expected to deliver close to 17,000 vehicles. The figure consequently represents a growth of 50% when compared with last year’s same period along with a 15% sequential increase.
The electric car pioneer has been expecting a major shift in production. Tesla is guiding to supply twenty thousand electric cars however some of them are going to be delivered in third quarter as an outsized variety of vehicles are expected to be in transit to Europe and Asia at the top of the quarter. This production level represents a 56% growth year over year.
The company has had a traditional guidance for the second quarter. It is however probable that the company may exceed management’s expectations as its Model S demand is still on a rise while all the obstacles in the path of Model X have been eradicated. Similarly, it can be assumed that in four out of five quarters the electric car manufacturer will surpassed its own guidance. Then, it will be quite usual for the automaker to stand up to its own expectations and reach its target for about 17,000 units.
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