Model 3. Since the handover event of the first Model 3s last week, Tesla has been averaging 1,800 net Model 3 reservations per day. The Model 3 configurator is now open to its employees with reservations so they can begin ordering their vehicles. Soon, non-employee customers will begin receiving invitations to order their cars in small groups based on when they placed their reservations, with existing Tesla owners receiving first priority. Deliveries to non-employees will begin in Q4.

The first Model 3 production vehicles are pre-configured with rear-wheel drive, a long-range battery starting at $44,000, with premium upgrades for an additional $5,000. This vehicle will offer a range of 310 miles and a 0-60 mph time of 5.1 seconds.

The standard Model 3, starting at $35,000 with 220 miles of range and a 0-60 mph time of 5.6 seconds, should be available in the US in November, Tesla said. Dual Motor All-Wheel Drive configurations will be available in the US early next year. International Model 3 deliveries will begin in late 2018, contingent upon regulatory approvals, starting with left-hand drive markets, followed by right-hand drive markets in 2019.

As an example of timing, for a reservation made on 6 April 2016, the Model 3 delivery estimate, per Tesla’s customer site, is Feb - Apr 2018 for the $49,000 version; Apr - Jun 2018 for the $35,000 version; and Oct-Dec 2018 for the dual motor AWD version.

Tesla designed Model 3 to improve manufacturability. Early Model 3 builds will have fewer than 100 permutations due to standardized content and packaged options as compared to more than 1,500 permutations for Model S. This significantly reduces manufacturing complexity and streamlines the purchasing process.

The new Model 3 body welding line and multi-level general assembly line at the Fremont factory are highly dense and automated. This densification sets the stage for the production of more than 500,000 Model 3 vehicles annually, Tesla said. Model 3 drive units as well as battery packs made with its proprietary 2170 form factor cells are being built on new lines at Gigafactory 1. Tesla said that it is fine-tuning these manufacturing lines to significantly increase the production rate.

Tesla projected that it will be able to produce just over 1,500 vehicles in Q3, and achieve a run rate of 5,000 vehicles per week by the end of 2017. It also plans on increasing Model 3 production to 10,000 vehicles per week at some point in 2018.

Model S and Model X. Tesla produced 25,708 vehicles in Q2, 40% more than in the same period a year ago, despite a production shortfall of 100 kWh battery packs through early June. Tesla delivered 22,026 Model S and Model X vehicles in Q2, for a total of 47,077 in the first half of the year. Model S and Model X combined deliveries in Q2 grew almost 53% globally versus the prior year, even though the luxury vehicle market was essentially flat. The combined Model S and Model X market share grew in the US premium luxury vehicle market during Q2 2017.

Tesla expects Model S and Model X deliveries to increase in the second half of 2017, as compared to the first half of the year.

While delivering the first Model 3 cars was a major company milestone, we are now focused on the critical steps to ramp Model 3 production. We remain confident in our plans and look forward to the upcoming unveiling of the next exciting addition to our portfolio of electric vehicles – Semi Truck.

—Shareholder update