Tesla Officially Confirms Production Of Over 300,000 Vehicles
Tesla surpasses 300,000 vehicles produced, which leaves only one of the original 10 operational milestones unsatisfied.
Though Tesla may be the most well-known electric car maker, it still falls short in terms of production. However, this stands to change in the near future, especially as Model 3 production begins to ramp up substantially.
The Silicon Valley automaker has inadvertently confirmed that it surpassed a production milestone of 300,000 vehicles. As shown below, this is one of several milestones that were put in place back in 2012 to accelerate growth.
At the end of 2017, Tesla had delivered ~289,000 vehicles (212,821 Model S, 71,927 Model X, 1,772 Model 3, and ~2,450 Roadsters). So, the automaker only needed to produce about 11,000 more to surpass the milestone (keep in mind that there were surely many vehicles produced by the end of December that had yet to be delivered). However, Tesla doesn’t report those numbers until the end of the next quarter.
Nonetheless, being that there is a milestone for “Aggregate vehicle production of 300,000 vehicles,” and the recent report for shareholders confirms that only one milestone was not met (and it was a different one, as specified below), we know that the automaker has surpassed the threshold.
Below is the related snippet from the recent, lengthy Tesla proxy statement for shareholders:
The 2012 Performance Award consisted of 10 equal vesting tranches, with a vesting schedule based entirely on the attainment of both operational and market capitalization milestones, as further detailed below. The 2012 Performance Award was designed to be an incentive for future performance that would take many years to achieve, if at all, and was a 100% at-risk performance award. Mr. Musk and the Board viewed the milestones as very challenging at the time the Board granted the 2012 Performance Award.
Under the 2012 Performance Award, each of the 10 vesting tranches requires that Tesla meet a combination of (i) an operational milestone achievement and (ii) a $4 billion increase in Tesla’s market capitalization. Consequently, the 2012 Performance Award would fully vest only if Tesla achieved a sustained market capitalization increase from $3.2 billion to $43.2 billion, and all 10 operational milestones described were achieved. Market capitalization for purposes of milestone achievement was determined based on a rolling six month historic average (based on trading days only). The market capitalization for a particular trading day is equal to the closing price multiplied by the outstanding shares of common stock as of the end of such trading day.
The 10 operational milestones for the 2012 Performance Award are:
Successful completion of the Model X Alpha Prototype;
Successful completion of the Model X Beta Prototype;
Completion of the first Model X Production Vehicle;
Successful completion of the Model 3 Alpha Prototype;
Successful completion of the Model 3 Beta Prototype;
Completion of the first Model 3 Production Vehicle;
Gross margin of 30% or more for four consecutive quarters;
Aggregate vehicle production of 100,000 vehicles;
Aggregate vehicle production of 200,000 vehicles; and
Aggregate vehicle production of 300,000 vehicles.
The report points out that the only operational milestone that has yet to be achieved is the “gross margin of 30% or more for four consecutive quarters.” In terms of the market cap conditions, all 10 have been satisfied.
If you’re interested in poring over the entire report, follow the link below.