Tesla's Model X sport utility vehicle.
Courtesy of Tesla Motors
By Kirsten Korosec
May 8, 2015

It was more than three years ago when Elon Musk, the CEO and largest shareholder of Tesla Motors, revealed an early prototype of the Model X. Since then, at least 20,000 people have plunked down $5,000 to secure a reservation for the crossover sport utility vehicle with falcon-winged rear doors and seating for seven.

The term “highly anticipated” for these Tesla fans is a bit of an understatement. At the GPU Technology Conference in San Jose, Calif. this spring, one Nvidia executive seemed barely able to contain himself—eyes gleaming, feet tapping—as he talked about the day when it would finally arrive.

After numerous delays, Tesla (TSLA) appears to be sticking to its third-quarter delivery date—to the joy of customers and investors. Now, CEO Elon Musk is giving future Model X customers another moment to chew on: configuration day.

Customers will be asked to configure—a fancy term for going online and picking out the interior and exterior colors and other features for the car—in July, according to Musk.

While “configuring” the Model X is an important milestone, investors and Tesla customers really want to know when deliveries will begin.

Here’s where the Model X stands today.

At the factory

At its Fremont, Calif., factory, Tesla will have two body lines, the first dedicated to the Model S and the second for the Model X. Once the cars go through their respective body lines, they’ll merge and head off to paint. Once complete, they’ll go to general assembly where the both cars will be built on the same line.

When I visited the factory in late March, the second body line was not yet not fully operational, but the factory was buzzing along in preparation for the new SUV.

As of today, the Model X body line is still not up and running, although there’s a lot of activity on the factory floor with daily changes, a Tesla spokesperson said.

Anticipated production numbers

Model X production will ramp up heavily in the fourth quarter, Musk said. Barring any problems with suppliers or technical issues, total vehicle production volume (that includes the Model S) will double in the fourth quarter, Musk said.

Tesla is spending a lot on the Model X

Tesla’s capital expenditures in the first quarter were $426 million with the majority of those funds used for the capacity expansion and tooling for the Model X, according to Tesla CFO Deepak Ahuja.

The remaining funds were used (in descending order) on its new paint shop, which will be ready in the third quarter, the gigafactory, and finally, its sales and service network, Ahuja said.

Karl Brauer, senior analyst at Kelley Blue Book, is heartened by the progress on the Model X. Still he warned that the Model X won’t be enough to replace Tesla’s fast-depleting cash reserves.

“Despite the Model X’s relatively strong market potential it remains a niche vehicle, with volume and production capacity in the 10,000 to 20,000 range for 2015 and perhaps twice that next year,” Brauer said in his post-earnings note. “For perspective, Lexus sold 107,000 RX crossovers in 2014, and Acura sold 65,000 MDXs. To create genuine high-volume sales, and revenue, Tesla needs the $35,000 Model 3, which is at least two years away.”

Timing

Tesla is building and testing release candidate prototypes of the Model X and says it’s on track for deliveries to start late in the third quarter. Some might view this as a slight delay since previous updates from the company had initial deliveries beginning in August, not later in the quarter.

The more important nugget is how long it will take Tesla to go ramp up from the first few Model X deliveries to full-scale production. It took about six months (from the first deliveries) for Tesla to begin producing significant numbers of the Model S. This time, Tesla wants to cut that down to two or three months.

“We’re going to go from just one of our cars to a thousand a week pretty fast,” Musk said.

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