Tesla (TSLA) reported second quarter deliveries below estimates on Monday. Deliveries for the first half of 2017 came in at 47,100, the low end of 47-50K guidance.
Second quarter production totaled 25,708 vehicles, bringing first half 2017 production to 51,126. The major factor affecting Tesla's Q2 deliveries was a severe production shortfall of 100 kWh battery packs, which are made using new technologies on new production lines. The technology challenge grows exponentially with energy density. Until early June, production averaged about 40% below demand. Once this was resolved, June orders and deliveries were strong, ranking as one of the best in Tesla history.
Provided global economic conditions do not worsen considerably, Tesla is confident that combined deliveries of Model S and Model X in the second half of 2017 will likely exceed deliveries in the first half of 2017. Tesla did not disclose Model S + X orders with its first quarter report, indicating that confusion around the Model 3 may have been impacting demand.
The Model 3 is a cheaper mainstream version of the Model S, not the next iteration. Elon Musk said the company was clearing up this confusion and that demand would support a 100K production plan for the Model S and Model X in 2017.
A guide-down on capacity constraints is nothing new for Tesla investors.
Perhaps more importantly, the first certified production Model 3 that meets all regulatory requirements will be completed this week, with a handover of ~30 customer cars at the company's Fremont factory on July 28. Elon Musk tweeted this news on Sunday evening.
Tesla will report second quarter earnings in late July or early August.
The stock broken below its 50-day moving averages (and support at $340) for the first time since March in response to the weak second quarter deliveries and a cautious note from Goldman Sachs.
After a huge run (+58% year-to-date), some investors may be expecting a sell-the-news reaction to a successful Model 3 launch in the back half of this year.