The Model 3 will be a critical component that moves Tesla stock up or down once Q3 earnings results come out in a couple of months, but several analysts as well as media reports suggest that Tesla is on track to meeting its Model 3 production goal of 50,000 to 55,000 cars for the quarter. In addition, delivery goals are expected to exceed production numbers for the quarter, according to Seeking Alpha (SA) author Jonathan Cooper.
Let’s look at how the quarter unfolded.
As Tesla overcame production bottlenecks exiting the second quarter, production in July and August went up by a significant number. As of August 31, Model 3 production numbers were estimated at 34,700 units.
Analysts at Oppenheimer based their reiteration of Tesla’s outperform rating on “strong third party August sales estimates,” per CNBC. Cooper in his SA article titled Tesla Is On Track To Meet Targets For The Model 3, bases his estimates (below) on similar sources.
Oppenheimer’s Colin Rosch thinks that, based on the Q2 outcome, Tesla only needs to produce 4,300 Model 3s per week to meet the high end of its guidance, which is 55,000 cars. The table from Cooper’s article above shows that sales will actually exceed production over the third quarter.
Per Bloomberg’s tracker, Tesla is currently just under 4,700 cars a week production level for Model 3. That’s a slight drop from last week’s 4,838 estimate – both charts below:
If Rosch is right and producing 4,300 cars a week will take the total to 55,000 units for the quarter, then an additional 400 to 500 cars over the current week and next three weeks of the month could put them very close to 57,000 units. If they consistently hit 5,000 cars a week for the four weeks in September, it could even put them very close to or above the 60,000 level for Q3.
And since deliveries are now closely tracking production, that means record delivery numbers for the month as well. It also means the Model 3 could finally breach the elite group of Top 4 best-selling cars in the United States for September, a trophy jointly held by Toyota and Honda right now.
“It’s quite possible that if production volume increases in September (over August and July), Model 3 sales figures will break into the Top 4 in the U.S.” – 1redDrop.com
Assuming Tesla hits the 15% margin on the Model 3 along with beating its own guidance, it will be a breakout quarter for the Palo Alto car maker. Oppenheimer has already reiterated a price target of $385 over the next 12 to 18 months, and the Q3 earnings call could contribute heavily to that if these goals are met and/or exceeded.
