Tesla (TSLA) delivered a record 95,200 vehicles in the second quarter of 2019. The companys Q2 deliveries beat the previous record set in the fourth quarter of 2018. However, TSLAs deliveries tapered down in the first quarter of 2019.

We see an uncanny similarity between Teslas record deliveries in Q4 2018 and Q2 2019, as both quarters coincided with the gradual withdrawal of the federal tax credit. Tesla cars were eligible for a $7,500 tax credit last year, which fell to $3,750 on January 1, 2019. On July 1, the tax credit decreased further to $1,875.

Starting in 2020, Tesla cars wont be eligible for the tax credit. The record deliveries in Q4 2018 and Q2 2019 were boosted by the carry forward demand by Tesla car buyers taking advantage of the higher tax credit.

After its record Q2 deliveries, the company sounded optimistic over third-quarter deliveries as well. The companys July 2 statement noted that it is well positioned to continue growing total production and deliveries in Q3.

TSLAs second-quarter earnings call echoed these views, and it ruled out much of an impact from the lower federal tax credit. The company maintained its 2019 delivery guidance of 360,000400,000 vehicles.

In our viewand even TSLA bulls would agreethe company has often been a bit too optimistic with its projections. We believe that achieving its Q3 and 2019 delivery guidance could be a tough task. Lets take a closer look.

Last month, TSLA brought back free unlimited supercharging for new Model S and Model X cars. This was a limited period offer, which the markets considered in conjunction with the companys falling Model S/X sales.

While the companys consolidated deliveries rose sharply in the second quarter, its Model S/X sales fell year-over-year. During the companys second-quarter earnings call, Tesla CEO Elon Musk admitted to some cannibalization on the Model S/X from its Model 3 sales.

However, the positive aspect of Teslas Q2 delivery report was the surge in its Model 3 sales. TSLA sees the Model 3 and the upcoming Model Y as its growth drivers in the long term.

Tesla might also consider adding free supercharging to spice up its Model 3 sales. Electrek reported that Tesla has authorized its sales staff to offer two years of free Supercharging for new Model 3 orders that get delivered by the end of the month.

Although Tesla often says that it is demand-constrained, the free supercharging offer for Model 3 cars doesnt corroborate that position.

Earlier this month, InsideEVs reported that according to its estimates, Tesla delivered 13,150 Model 3 cars in the United States in August. In comparison, it delivered 13,450 cars in July and 21,225 cars in June.

As we previously noted, Teslas US deliveries spiked in June as customers jumped in to take advantage of the higher tax credit. Looking at the Model 3 sales estimates and Teslas free supercharging offers, it wouldnt be an unfair assessment that TSLA might be facing difficulty in achieving its ambitious delivery targets.

While TSLA has struggled to make sustainable profits, bulls have pointed to the companys strong top-line growth and the growing popularity of its vehicleseven its rivalsappreciate its achievements.

However, if demand for the Model 3 has plateaued in the United States, that isnt good news for Tesla bulls. While Tesla is expanding into several international markets, and Chinas Gigafactory should also be operational by the end of this year, the US market is still crucial for the company.

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Why Tesla Seems to Be Struggling with Q3 Deliveries - Market Realist