Currently, a theoretical understanding of thermodynamics and kinetics of the oxidative polymerization of poly(3,4-ethylenedioxythiophene) (best known as PEDOT) is missing. In the present study, step-by-step density functional theory calculations of the radical polymerization of PEDOT with tosylate counterions (PEDOT:TOS) using Fe3+(TOS-)(3) as oxidant and dopant are performed. We calculate the Gibbs free energy for the conventional mechanism that consists of the polymerization of neutral PEDOT oligomers first, followed by their oxidation (doping). We also propose an alternative mechanism of polymerization, in which the already oxidized oligomers are used as reactants, leading to doped (oxidized) oligomers as products during polymerization. Our calculations indicate that the alternative mechanism is more efficient for longer PEDOT oligomers (chain length N > 6). We find that the oxidation of the EDOT monomer is the rate-limiting step for both mechanisms. Another focus of our study is the understanding of the maximum oxidation level that can be achieved during polymerization. Our calculations provide a theoretical explanation of "the magic number" of 33% for the oxidation level typically reported for the pristine (i.e., as-polymerized) materials and relate it to the change of the character of the bonds in the oligomers (aromatic to quinoid) that occurs at this oxidation level.