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Tesla Motors Inc (TSLA) Just Solved Its Biggest Model X Problem

Tesla Motors Inc (TSLA) Model X

Tesla Motors Inc has been under a huge amount of pressure to perform in the wake of its underwhelming Model X event. It’s been clear for weeks, and perhaps months, that the firm is struggling to build the EV SUV. Those worries should begin to recede today. Elon Musk managed to deliver the first Signature Model X on Friday night.

Tesla Motors Inc Model X
Model X parked outside Tesla Motors’ Fremont plant.

The person who received Signature Model X #1 posted on the Tesla Motors Club forums about their experience. The post means that recent info about bookers receiving calls about their Model X were about right. “Mid-December” was indeed the date at which the Model X shipments started.

Tesla Motors Inc solves a major problem

Tesla Motors Club forum user adelman reported on Friday night that Signature Model X number one was delivered in Fremont on December 18. He added that the firm planned to deliver even more units of the EV SUV on Friday night and later in the thread supplied pictures of the first Signature Model X being delivered.

adelman has held the Signature Model X booking for more than three years and has patiently waited for Elon Musk and his team to put the car together and get it out the door. That long wait, and $40,000 loan to Tesla Motors Inc , likely feels worth it today, but we’ll have to wait some time before we get an unbiased review of the car.

Bonnie Norman, and angel investor who holds the second Signature Model X booking, told the Tesla Motors Club forum, and Twitter, that she would be picking up her Model X on Sunday. That doesn’t speak to the speed at which the firm is shipping the cars, however, it simply appears to be the first date of availability for both parties.

For now we can be sure that Tesla Motors biggest problem, a stunning lack of shipments of its prized Model X, is over. What we don’t know is how the firm will manage to grow its fleet from here on out.

How many 2015 Model X shipments will there be?

Tesla Motors is sure to get a big group of Model X shipments to their buyers this week, but nobody can be sure how many the firm will actually get out before the end of the year. For those with shares this question is of prime importance, not because it will really impact full year numbers, but because it give some insight  what stage the firm’s production line is at.

Those backing Tesla Motors Inc want to see the Model X, and the firm as a whole, ready for the prime time sooner rather than later. Earlier this year Elon Musk said the firm could likely produce an average of 1,600-1,800 cars in the two lines at its Fremont factory.

Tesla Motors will release shipment numbers for the fourth quarter some time around the first week of January. In its third quarter release, the firm didn’t break out its shipments into Model S and Model X numbers. Back then only six or so units of the EV SUV had left the Fremont factory, however.

We know that Tesla Motors is going to fall well short of the shipment numbers Wall Street put forth earlier on this year. That has been clear, however, since the firm officially downgraded its forecast for full year shipments.

We’ll have to wait and see how Tesla Motors counts the Model X on its fourth quarter shipment numbers. If the firm doesn’t offer a glimpse into the success of the car by then, we’ll be waiting until the start of February, and the release of the firm’s full results for the fourth quarter, to get a picture of its success in the period.

No time to celebrate at Tesla Motors

Model X shipments will do a lot for the confidence of those with shares in Tesla Motors over the coming weeks, assuming that the car lives up to the Tesla quality mark. That’s a good thing for Elon Musk’s firm, but it’s far from the only problem that’s weighing on its shares right now.

The biggest issue for shareholders is total shipment numbers in the fourth quarter. That’s not a problem unless Tesla Motors Inc falls short. Dan Galves of Credit Suisse reckons that Tesla Motors will hit its target of 17,000 shipments in the three months through December and have a much cleaner 2016 as a result.

The biggest issue facing Tesla Motors Inc in the coming year will be much the same as 2015’s troubles. The firm will release its targets for the full year alongside an earnings report at the start of February. As soon as it does people will begin to question whether the firm can really hit the announced targets.

As well as that, just like 2015, Tesla Motors is loaded up with debt and it’s still burning cash. The fourth quarter of 2015 is likely to see record breaking sales, and if Tesla Motors edged back on its spending we might even see positive cash flow for the quarter. For the full year, however, the picture is very clear.

Tesla Motors is going to burn cash for a significant period ahead, and it may have to head back to the capital markets in search of support. With Wall Street just absorbing the impact of a higher Fed target rate, that may not be as easy as it was in the past.

Tesla Motors had its celebration for the Model X, at least in the eyes of the public, on September 29. There’s little time for the firm to mark the occasion this time around. Elon Musk and the rest of the EV-making team will be focused on getting as many cars as possible out of the Fremont factor before the new year strikes.

Once that date hits the pressure will remain, however. Tesla Motors has made big claims about its place in the world, and Wall Street has backed those claims by sending the price of the firm’s shares through the roof. Shares were priced at just over$230 at close on Friday afternoon, given Tesla Motors Inc a market cap of $30B or so.

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