Tesla Q4 Preview: Model S And X Will Drive Sales As Tesla Irons Out Model 3 Production Issues

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Tesla (NYSE:TSLA) is expected to publish its fourth-quarter results on Wednesday, February 7. Below, we take a look at some of the key factors to watch when the company publishes its results. We have created an interactive dashboard that details the company’s expected full-year 2017 performance. You can modify volumes, average selling prices and margins for 2017 ( the graphs with blue dots) to see how it impacts the company’s EPS for the year.

Model S And X Sales Will Drive Results 

Tesla has already provided its production figures for the quarter, indicating that it delivered 15,200 Model S sedans and 13,120 Model X SUV, implying that combined deliveries of the Model X and S rose by 27% over Q4 2016. Tesla has been benefiting from better economies of scale and lower battery costs, and it’s possible that this could aid margins for the company’s premium products. However, production of these two models declined to roughly 22,000 units, as the company reallocated some of its workforces towards Model 3 assembly. We will be looking for updates on how this could trend in Q1.

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Model 3 Ramp Will Remain Sluggish, Looking For Updates

Tesla said that it had delivered just 1,550 units of the Model 3 over Q4, with the production of the mass-market sedan standing at 2,425 units, which was well below Wall Street estimates. Tesla also backtracked on its production targets earlier this month, indicating that it only expects to achieve a weekly production rate of about 2,500 Model 3 vehicles by the end of Q1, with a 5k production run rate expected by the end of Q2. We will be looking for further updates on the production ramp of this sedan.

Will Solar Business See Improvement? 

We will also be looking for updates on Tesla’s solar business, which has been underperforming somewhat since its acquisition of SolarCity. Revenues from the company’s energy generation and storage business stood at $818 million over the first nine months of this year, accounting for less than 10% of total revenues. However, Tesla has been looking to restructure SolarCity’s operations, transforming its sales and marketing model, while introducing new products and focusing on more lucrative sectors of the solar market.

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