Tesla Misses Q2 Delivery Target, Focuses On Raising Output

Tesla Motors, Inc. (NASDAQ:TSLA) delivered 9,745 Model S and 4,625 Model X vehicles in the second quarter of 2016. The total of 14,370 vehicles delivered during the quarter is significantly lower than its projection of 17,000 vehicle deliveries as well as 14,810 units delivered in the first quarter of 2016.

The shortfall in deliveries resulted from low production levels at the beginning of the second quarter. Tesla is striving to increase its production capacity. The automaker produced 18,345 vehicles in the second quarter, which represents a 20% increase over the first quarter.

Production volume had increased to almost 2,000 vehicles per week by the end of the second quarter. However, many of these vehicles could not be delivered during the quarter. Nearly 5,150 vehicles were in transit to customers at quarter end. These vehicles will be delivered in the third quarter.

Tesla plans to increase its production capacity to 2,200 vehicles per week in the third quarter and 2,400 vehicles per week in the fourth quarter. As a result, the company expects to produce nearly 50,000 vehicles in the second half of 2016.

We note that this is the second quarter in which Tesla missed its deliveries guidance. The electric carmaker delivered 14,810 cars in the first quarter of 2016, significantly lower than its projection of 16,000 vehicle deliveries.

Meanwhile, Tesla stated that there might be a marginal revision (less than 1%) in the first-quarter delivery figure as it counts a delivery only after the vehicle is handed over to the end customer and the paperwork is accurate. The company further clarified that its quarterly financial results do not depend solely on vehicle deliveries, but also on other factors such as cost of sales, foreign exchange movements and mix of directly leased vehicles.

Tesla started reporting its quarterly vehicle delivery data from the first quarter of 2015 in order to dispel incorrect estimates usually made using erroneous information sources. The electric carmaker now reports its vehicle delivery volume within three days of every quarter end.

Tesla currently carries a Zacks Rank #4 (Sell). Some better-ranked automobile stocks include Commercial Vehicle Group Inc. (NASDAQ:CVGI) , Spartan Motors Inc. (NASDAQ:SPAR) , and Visteon Corporation (NYSE:VC) , all sporting a Zacks Rank #1 (Strong Buy).