Check out the latest Tesla earnings call transcript.

When 2018 began, there was significant uncertainty surrounding Tesla's (TSLA 0.29%) ability to ramp up production of its newest vehicle, the Model 3. The company kicked off 2018 on a disappointing note, announcing it had delivered fewer than 2,000 Model 3s in its fourth quarter of 2017. But Model 3 production and deliveries have since soared, culminating in a record fourth quarter.

Here's a look at some of the key takeaways from Tesla's fourth-quarter update on production and deliveries.

A woman unlocks her Model 3 with a Tesla app on her smartphone

Model 3. Image source: Tesla.

Tesla's record quarter

For its fourth quarter, Tesla produced 86,555 vehicles. Highlighting how soaring Model 3 production has quickly morphed Tesla into a mass-market automaker, this figure was up 252% year over year. In addition, this gives Tesla an annualized production run rate of 346,000 -- an impressive figure considering Tesla was producing vehicles at an annualized rate of about 100,000 units per year just one year earlier.

Deliveries for the quarter came in at a record high of 90,700, up 204% year over year and 8% sequentially.

Of these deliveries, 63,150 were Model 3s. This represents an enormous increase over the 1,542 units Tesla delivered in the year-ago quarter. Model 3 deliveries were also up meaningfully sequentially, rising 13% sequentially. Deliveries were easily in line with management's guidance for Model 3 deliveries to be higher in Q4 than they were in Q3. 

Combined Model S and X deliveries for the quarter were 27,550 -- slightly below 28,320 deliveries in the same quarter last year. The quarter's combined Model S and X deliveries put full-year deliveries for the vehicles at about 99,400. Tesla had expected to deliver about 100,000 combined Model S and X vehicles in 2018.

Tesla's record fourth quarter put full-year deliveries at 245,240 vehicles, up from 103,080 in 2017.

All eyes on Model 3

With such a huge increase in Model 3 deliveries recently, the new vehicle has become critical to Tesla's growth story and its financial results. For instance, Model 3 accounted for 70% of Tesla's total deliveries in Q4, up from just 5% of deliveries in the year-ago quarter. Further, Model S and X have already maximized sales in key international markets; Model 3, on the other hand, has currently only been delivered in the U.S. This means there's significant room for more Model 3 deliveries as Tesla expands internationally.

A bar chart showing Tesla's vehicle deliveries by quarter

Data source: Tesla quarterly shareholder letters and vehicle delivery updates.

Importantly, Tesla's approximately 56,000 Model 3 deliveries in Q3 helped the company swing to a profit. With Model 3 deliveries even higher in Q4 than they were in Q3, another quarter of profitability is likely. Management believes its higher Model 3 production and deliveries will help the company become sustainably profitable over the long haul. 

2019 will be a significant year for Model 3. Management expects deliveries in Europe and China -- two major markets for Tesla -- to start in February 2019. Later in the year, Tesla plans to begin delivering Model 3 in even more markets. Management also expects Model 3 demand to be helped when the company begins offering leasing options and lower-priced variants of the vehicle.