Hitting 91k deliveries is not as crazy as some people think.

Last night at the annual Tesla Shareholders Meeting, CEO Elon Musk did not forget to highlight the company's huge success with the Model 3. While production has not quite reached the automaker's ultimate production goals, it is certainly living up to its reputation as the go-to electric car for the masses. 

According to Musk, the Model 3 is "the highest revenue car in the U.S. and best in class performance. And it's actually the best selling car by revenue, including high volume cars like the Toyota Camry and Honda Accord." Last month, Toyota moved 36,208 examples of the Camry while InsideEVs estimates Tesla delivered 13,950 of the Model 3. But of course, Accord and Camry have a much lower starting MSRPs. 

Model-3-revenue-best-selling

The Tesla CEO also addressed critics that claimed demand for the Model 3 was softening in 2019. "So, we get this question a lot. And I want to clear it up. There is not a demand problem." Elon says with a chuckle as the investors applaud. 

Last quarter, roughly 29,900 Teslas were sold in the United States with 63,000 being delivered across all markets. The U.S. number was down from Q4, leading many unfamiliar with the plug-in market to speculate that demand was softening in North America. But Q1 was an outlier for multiple reasons.

  • Low EV sales at the beginning of the year is a long and cherished tradition. Buyers rush to purchase by year's end to more quickly take advantage of the EV tax credit. 
  • Compounding this was the fact that beginning January 1st, the available tax credit for Tesla purchases dropped from $7,500 to $3,750. 
  • This was the first quarter for scheduled deliveries outside of the United States and Tesla ended the quarter with a larger than anticipated 10,600 vehicles in transit. 

Looking forward, Musk demonstrated optimism. "Sales have far exceeded production and production has been pretty good." Tesla also says that ~90% of Model 3 orders this quarter are coming from non-reservation holders. This implies that current deliveries are not simply satisfying pent up demand. "So we're actually doing well and we have a decent shot at a record quarter on every level. If not, it's going to be very close."

What would it take for Tesla deliveries to hit a record quarter in Q2?

Tesla rang in the new year delivering a record 90,700 vehicles in Q4 of 2018. This was up ~8% from the previous record set in Q3. This end of year tally included a whopping 63,150 Model 3 sales.

tesla model 3 in motion

Setting a new record would certainly be a tall order, but it is achievable. We estimate that Model S, X and 3 deliveries in the U.S. alone have totaled 28,275 between April and May. It is too soon for us to estimate June deliveries in the states, but they are currently tracking to well exceed May's numbers. 

In order to hit that record, U.S. deliveries in June will need to nearly double the current quarterly tally. If June sales can exceed last November's combined total of ~24,600 in the U.S., then Tesla stands a pretty solid chance of at least breaching 85,000. Such a number would have been ludicrous a few years ago. But it does not sound so crazy after Tesla's Q3 and Q4 2018 sales results.

In fact, Tesla has frequently doubled their American deliveries in the final month of each quarter. This can be seen in InsideEVs estimates for the Model S and Model X. For instance, Tesla sold an estimated 1,325 in July, 2,750 in August and 3,975 in September of the Model X. This doubling is the rule (not the exception) for domestic Model S and Model X deliveries. 

Now that the Model 3 has entered the global market, U.S. deliveries should begin to reflect this familiar pattern: but on a much larger scale. The first month of of each quarter, production will focus on international sales. A build up of U.S. inventories from the previous quarter should keep sales moving while new production heads overseas. Then late quarter production will be entirely for North America as the automaker works to deliver as many vehicles as possible.

America can't go it alone - global markets will need to step up their game. 

But even if Tesla pulls off its usual end of quarter magic in the U.S., global sales will still need to increase from Q1's ~33,000 units. In April, 3,738 Model 3's were placed into European driver's hands. This was up quarter over quarter, but the automaker did not begin Model 3 deliveries in Europe until February.

Tesla Annual Shareholders Meeting - Tesla demand

European numbers are still coming in for May, but April and May's combined tally for S/X/3 will absolutely exceed the combined January and February results. Tesla is not expected to beat March's remarkable European result of nearly 16,000 this month. However, June should more than beat April and May combined. 

InsideEVs does not estimate Canadian deliveries. But those that do have indicated this will be one of the country's better performances to date for Tesla. 

Just like last quarter, the wild card is China. The country underperformed in Q1 due primarily to delivery delays. A significant portion of the 10,600 in transit vehicles from last quarter were bound for China. But Q1's loss is Q2's gain. These cars (plus any additional China-bound production) will play a big part in Tesla's final numbers this quarter. 

Only time will tell if Tesla will meet Elon's lofty goal. We would consider a delivery total in the mid-80k range to be a very successful quarter. But the path to 91k is there and not insurmountable. We will not be surprised if they pull it off.