Yesterday, the Wall Street Journal published an article titled “Tesla Offers Slight Glimpse Into Model 3’s Status”. The article is based on yesterday’s filings with the SEC about Tesla’s upcoming shareholders meeting. The only new information we have about the Model 3 from these documents is that Tesla didn’t complete the alpha prototype of the Model 3 in the last 4 months. I don’t think this is the best way to look at this information.

In their last 10K filing published February 26th,  Tesla estimated the completion of the Model 3 alpha prototype as “probable of achievement”. The completion of the prototype is a milestone for Elon Musk’s CEO stock compensation plan and Tesla needs to disclose the probability of achieving the milestones in order for shareholders to estimate potential stock compensation expenses.

Here are the changes in milestones “probable of achievement” from September 30, 2014 to December 31, 2014:

As of September 2014 – disclosed in November 2014:

  • Successful completion of the Model X Beta Prototype
  • Completion of the first Model X Production Vehicle
  • Successful completion of the Model 3 Alpha Prototype

As of December 2014 – disclosed in February 2015:

  • Completion of the first Model X Production Vehicle
  • Successful completion of the Model 3 Alpha Prototype
  • Aggregate vehicle production of 100,000 vehicles

Side note: The use of the words “successful completion” vs “completion” doesn’t seem to be a factor considering Tesla seems to always use “completion” when talking about production vehicles and “successful completion” when talking about prototypes.

These changes give us a very good idea of when Tesla will complete the Model 3 prototype. Tesla expects to deliver the first production Model X this summer according to their last letter to shareholders and they should produce their 100,000th vehicle by the end of the year according to past production history and this year’s expectation of 55,000 deliveries.

If Tesla is including the completion of the Model 3 alpha prototype in the same group of milestones “probable of achievement” as 2 other milestones expected to be achieved by the end of the year, then it is safe to assume that the Model 3 alpha prototype is also expected to be completed by the end of the year.

This doesn’t mean that Tesla will unveil the prototype by the end of the year, but it is a strong indicator that it will be completed by the end of the year. Tesla might want to focus on the Model X launch instead of diverting consumers’ attention to a future model that probably won’t be available until 2017 and this could result in a Model 3 unveiling in 2016. Although Tesla has been known to accept deposits on vehicles years before their launch. The Model S was available for reservation in 2009 and started delivery in 2012. While the Model X was available for reservation in 2011 and should be in the hands of customers by summer 2015.

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