Tesla reported that it delivered 25,418 vehicles in the first quarter of this year, marking a 69 percent increase compared to Q1 2016. However, the automaker still has considerable distance to cover to meet CEO Elon Musk’s production targets for 2018.
The numbers provided by Tesla are preliminary and may be revised when the company releases its quarterly earnings next month. While this figure shows significant growth from the 15,510 cars delivered in the first quarter of 2016, the increase from the previous quarter was less substantial, as Tesla produced 22,252 vehicles in Q4 of last year.
During the first quarter, Tesla delivered 13,450 Model S sedans and 11,550 Model X SUVs, indicating that the sales gap between these two models is narrowing. Tesla mentioned experiencing parts shortages for the Model X in the first two months of 2017, suggesting that deliveries could have been higher if circumstances were different. Given the general popularity of SUVs, it isn’t surprising that the Model X is gaining on the Model S.
Nonetheless, a potentially record-setting quarter for Tesla reveals that demand for both the Model S and Model X remains robust, even with the much-anticipated, more affordable Model 3 set to launch soon. Tesla aims to commence Model 3 production this summer and achieve full production capabilities by the end of the year.
Next year, Elon Musk is aiming for Tesla to reach an annual production rate of 500,000 vehicles. Last year, the company delivered only 76,230 cars, and despite this quarter’s strong performance, it still falls short of that target. Musk is relying on the Model 3’s full-scale production to boost sales significantly, as it is priced at a base cost of $35,000—about half the starting price of Tesla’s other models.
For this strategy to succeed, Tesla must achieve a seamless ramp-up in Model 3 production, which has eluded the company during previous product launches. Any delay in beginning Model 3 production could jeopardize Musk’s ambitious goal for 2018.
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