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What to Watch for in Tesla’s Earnings

A month after revealing its mass market electric car and snagging 400,000 reservations for it, Tesla Motors will publish first quarter earnings results on Wednesday afternoon.

It’s that time of the year again when we get to see the inner workings and financials behind the buzzy events, rosy blog posts, and bullish tweets from master media manipulator Tesla CEO Elon Musk.

We already know there will be some bad news.

Tesla said right after its Model 3 launch event that it had missed its car delivery targets for the first quarter as of the beginning of April. That’s because Tesla has been slow at producing the Model X, a crossover electric SUV that has swooping doors and fancy seats. Musk has said several times that the company had shown “hubris” by trying to cram too many high end features in the first run of the car.

Tesla Motors Inc. Model X SUV Reveal
The Tesla Motors Model X sport utility vehicle. Photograph by David Paul Morris — Bloomberg via Getty Images
Photograph by David Paul Morris — Bloomberg via Getty Images

As a result of the Model X delays, Tesla (TSLA) had shipped 14,820 vehicles during the first quarter as of April 4. Only 2,400 of those were of the Model X. The company had actually been wanting to ship 16,000 cars total for the quarter.

On Wednesday, we’ll likely get an update on official shipments during the first quarter and if the company was able to boost the rate of its Model X car production even more over the last month. Will the Model X delays roll over into the second quarter? Tesla has previously said that despite the slow Model X ramp up, it’s still on track to deliver 80,000 to 90,000 cars to customers by the end of 2016.

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However, there have also been some quality issues with the first Model X cars that Tesla has been able to deliver. Consumer Reports reported last month that some of the earliest Model X cars have experienced problems with things like closing and opening the doors.

Those Model X customers have had to send those cars back to Tesla to be serviced. Tesla also recently issued a recall for all the Model X cars made before March 26 because of a faulty latch on a seat back. That recall meant that 2,700 Model X cars had to be fixed (at the expense of the latch and seat back supplier) within the past month.

While recalls are pretty commonplace in the auto industry, the Model X issues just take up the company’s time and money. Tesla customers—at this point in the company’s life cycle—are actually somewhat forgiving of these types of early adopter problems.

Now onto the Model 3, for which Tesla has received an overwhelming response: 400,000 reservations over the month, with customers waiting over night and many hours for the first reservations. That’s for a car that won’t be shipped until the end of 2017—and likely customers won’t get for many years. Of course, that’s great news for Tesla.

For more on Tesla fans and the Model 3, watch:

But the huge demand means that Tesla will likely have to change how it plans to produce the car. How it will tweak manufacturing plans are still unclear, and those plans are likely undecided upon by Tesla at this point.

This week, Silicon Valley Business Journal reported that Tesla had signed a lease for two large warehouse spaces—collectively giving Tesla another one million square feet—in Livermore, Calif., roughly 30 minutes from its Fremont factory. This could be part of Tesla’s new production strategy.

Perhaps Tesla will give us some insight into its future Model 3 productions plans—and this new space—during the Wednesday call.

The Tesla Model 3 front face.Photo courtesy of Katie Fehrenbacher/Fortune
Photo courtesy of Katie Fehrenbacher/Fortune

In addition to its car updates, expect Tesla to give us the latest news on the Gigafactory, its massive battery factory under construction outside of Reno, Nevada. The company has been showing off the part of the factory already completed to visitors, including Nevada legislators. We’re thinking Tesla will have a Gigafactory launch party sometime this summer.

Will anything be newly revealed on Tesla’s grid battery business on Wednesday? Tesla doesn’t only sell electric cars, but it packages up its batteries into stationary battery packs that can be connected to a building, a house, a solar panel or wind farm, or the power grid. These batteries can store energy, produce power when its needed, and help utilities better manage the power grid.

Tesla is far more focused on its electric car business, but perhaps the company will provide more details on Wednesday as to how many grid batteries already shipped.

Beyond all these moving parts, Tesla watchers should pay close attention to how much money Tesla is spending overall on its myriad of plans. Is the company still in line with its capital spending? Does it look like Tesla will need to raise more money, or draw down on more credit, to execute on everything? Potentially.

Tesla’s stock is down a little over 3% on Tuesday in advance of its earnings release. The company’s shares have sunk over the past several months as investors have grown worried about the Model X delays, among other things. If that’s an indicator of how Wall Street feels about Tesla right now, there could be a drop coming on Wednesday after Tesla’s predicted underwhelming car shipments.