Tesla Motors Inc (NASDAQ:TSLA) Needs to Repeat Model X Triumph 4700 Times

Tesla Motors Inc (TSLA) Model X Founders Edition Presentation

Tesla Motors Inc promised it would ship the first Model X before the end of the third quarter, and the firm did even better than that, if only marginally. As far as we know Elon Musk’s firm has gotten six units of the EV SUV to early buyers. The problem is, and it’s a good kind of problem, that bookings for the falcon-winged EV keep rising.

Tesla Motors Inc (TSLA) Model X Founders Edition Presentation

A new report from the Model X tracker, an unofficial gauge of the number of units of the SUV booked, says that 32,538 people have put $5,000 or more down in order to secure their Model S. Quite a few of those people have cancelled, but we don’t’ really know to what extent Mr. Musk’s presentation of the SUV drove people away just yet.

Tesla Motors sees lull in Model X bookings

Model X bookings were strong in the month of September, according to the Model X tracker, but not quite as strong as they were in the month of August. The reason for that might simply be people waiting for the Model X event before pulling the trigger on a $100,000 car purchase.

The tracker says that 1,343 people booked a new Model X in September. That’s down from the more than 1,700 that were booked during the month of August. September still, however, stands far above most other months in the long history of Model X bookings.

The Model X had a pretty high profile, for an unreleased car at the very least, heading into the event at which it was launched. Elon Musk didn’t disappoint, and the early reaction to the next great EV has been very positive, though some were underwhelmed by the display. It looks as though people as a whole really like the Model X. Now all they have to do is wait until it’s actually being made to get their hands on it.

Model X show drives people away

It makes sense that the Model X show on Tuesday last would have driven people away, while at the same time boosting bookings. Many people with an early booking will have seen the Model X in all its glory for the first time last week and decided it just wasn’t for them.

That’s the sort of decision they’d need to wait for the big reveal to make. The Model X tracker estimates cancellations since bookings began at 4,323. The way that the tracker gets to this number is, however, a little hard to swallow.

The estimate relies on a number from December 2014, and adds a cancellation figure of 20 per month onto that. There’s no way of knowing, at least until Tesla Motors shares some info with us, how far off this number is, but it is likely that there was a spike in cancellations after the big event on Tuesday.

A couple of people over at the Tesla Motors Club forums made just that decision in the wake of Mr. Musk’s reveal of the Model X last week.

User AlMc said that ” The X is a safe, fast, people mover. It appears to be a great vehicle. However, it can not replace the utility of the RR [Range Rover], or many other SUVs on the market, without having an option of second row folding seats.” AlMc announced in a popular thread on the forum that they were dropping their booking for the Model X.

NigelM, another user that cancelled their booking agreed saying “we have more flexibility with our Model S for the things we need. I’d love to have had it for towing the horses but we do that just once a month and it doesn’t make sense for us to trade that once a month benefit for the loss of flat folding seats we have in our S.”

There is another reason that may have induced people to drop their Model X booking or switch it over to a booking for the Model S.

Tesla Motors needs to build the Model X

Taking the estimate of 28,215 bookings that the Model X tracker comes out with, Tesla Motors needs to repeat its output for the Model X event, a grand total of six cars, more than 4,700 times before it gets rid of the backlog it’s currently faced with.

It’s likely, and necessary, that the firm will massively boost its production numbers in the coming months. As we’ve seen since the Model X was first shown off in 2012, it may be easier to say you’re going to up production numbers than it is to actually get there. With an apparent six cars shipped by the end of the third quarter, Tesla Motors has a long way to go before it can really start to make the Model X.

Much of Wall Street remains bullish on Tesla Motors, however, despite the problems in getting to the 50,000-55,000 sales target that Elon Musk forecast for the full year. In a report published on Tuesday morning Morgan Stanley’s Adam Jonas, who likes Tesla for other reasons, said that shipments for the full year 2016 would fall short by 5-10K. He’s now looking for just 20K Model X units to arrive before the end of next year.

He dropped his price target on Tesla Motors from $465 to $450, and said the “Model X SUV is an impressive proof of concept for design, performance, and utility.” He seems to regard the Model X shown on Tuesday as a proof of concept rather than a production car, and his shipment numbers have been changed to match that idea.

If Elon Musk can ramp up production in December, Tesla Motors will be making between 800-900 Model X units every single week. If things go well a Model X booked at the end of September, assuming again that the number from the tracker is right, it’s going to take until June of next year to get through the backlog. That’s the best possible outcome right now.

People are coming to terms with the fact that if they book a Model X today they won’t see it, or hear much about it, for another six months at the very least. That’s a long time to wait to get your hands on a car.

It seems that Tesla Motors only managed to get six cars out the door by the end of the third quarter, despite a long long time to prepare. That suggests that there may be further delays in the production of the Model X.

We won’t know anything for sure until we get the Tesla Motors earnings report for the third quarter. Even after that arrives, given Mr. Musk’s propensity to confuse, we may not know much about the future of the EV SUV.

It’s almost a miracle that Tesla Motors managed to get six cars ready to ship last week. It’s going to take 4,700 deliveries just like that one, inside a six month period, in order to make sure the firm keeps the 28,000 people on its booking list happy.

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