Franz von Holzhausen, chief designer, Tesla Motors, with the Model X.
Photograph by Paul Sancya — AP
By Katie Fehrenbacher
August 5, 2015

Electric car maker Tesla might not ship quite as many cars this year as it originally planned.

Tesla assured customers and shareholders that it will deliver its Model X car — the company’s much delayed cross-over SUV — on time in the late third quarter, or September, of this year, according to the company’s second quarter shareholder letter.

But at the same time the company lowered its guidance for the amount of cars it would ship for the full year from 55,000, to “between 50,000 and 55,000.” The reduced shipments could come from supplier and production complexities with making the Model X.

Tesla has spent the second quarter of this year getting its factory in Fremont, Calif. ready to start producing the Model X. The company has been making Model X test vehicles on its production line and has been finalizing deals with parts suppliers.

Tesla even shut down its factory for a week to make changes and install new equipment to produce and assemble its cars. The Model X will be made on the same assembly line as Tesla’s current car the Model S.

However, Tesla said that there could be potential delays working with car parts suppliers. If suppliers were unable to deliver parts the company needs for even a week, as it’s trying to ramp up new Model X production, that would reduce Tesla’s annual shipments by 800 cars, said the company in its letter. Tesla has faced supplier delays throughout its lifetime, first when ramping up its initial car the Roadster and later for the Model S.

An attendee views the Tesla Motors Inc. Model X vehicle with Panasonic Corp. battery during the 2015 Consumer Electronics Show (CES) in Las Vegas, Nevada on January 6, 2015.
Photograph by Patrick T. Fallon — Bloomberg via Getty Images

Because its two cars will be made on the same lines, any challenges with the Model X, could also lower production of the Model S.

Tesla’s letter says:

“Simply put, in a choice between a great product or hitting quarterly numbers, we will take the former.”

Tesla has been shipping record numbers of its Model S cars this year. As expected the company delivered 11,532 vehicles and also produced 12,807 vehicles in the quarter.

The company expects to make 12,000 cars in the third quarter of this year, including “a small number of Model X deliveries.”

Thanks to these shipments in the second quarter, Tesla generated $1.20 billion in non-GAAP revenue for the second quarter. Analysts were expecting $1.17 billion.

Tesla lost an adjusted $61 million for the quarter or 48 cents per share. Analysts were expecting a loss of $117 million and 59 cents per share.

Tesla’s stock dropped 3.71% in after hours trading due to the lowered guidance.

Tesla says it now has cash of $1.15 billion, down $359 million, due to $405 million of capital expenditures. That spending came from building the gigafactory — its huge battery factory outside of Reno — the Model X tooling, and its newer all-wheel drive vehicles.

Tesla has also been trying to ramp up its sales in China, after a difficult start in that country. Tesla said it will now build 5 retail stores in China, beyond the one it has.

In addition to ramping up Model X production in the fourth quarter of this year, Tesla also plans to scale up production and deliver of its grid batteries. The company has already started making the grid batteries in its Fremont factory, and will move production to the gigafactory in the first quarter of 2016.

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