(Updates with target price changes in sixth paragraph.)
Feb. 20 (Bloomberg) -- Tesla Motors Inc., posting fourth- quarter results that beat analyst estimates, is gearing up for further growth with plans to raise Model S sedan production 56 percent this year and to build a massive battery plant.
The shares rose as much as 11 percent after Tesla said yesterday that Model S deliveries will grow to 35,000 as sales to China begin, from about 22,450 last year. The electric-car maker said it earned 33 cents a share excluding some items in the quarter, exceeding the 26-cents-a-share average of analyst estimates compiled by Bloomberg. The company posted a loss of 65 cents a share a year earlier.
The results capped the biggest year yet for the youngest publicly traded U.S. automaker. While Tesla’s electric Model S, priced from $71,000, won accolades from Consumer Reports and posted higher-than-expected sales, the company is contending with setbacks that include a U.S. safety review of the car’s battery pack and a delay in Model X sport-utility vehicle sales.
“Tesla continues to improve in the key metrics used to measure a young automaker,” said Karl Brauer, an analyst at industry researcher Kelley Blue Book. “The potential for increased demand in foreign markets should keep things moving in the right direction, but Tesla ultimately remains constrained by limited production capacity and a pricing structure that’s out of reach for 90-plus percent of the market.”
The shares jumped 8.5 percent to $210.10 at 10:23 a.m. in New York, after trading as high as $215.21. The stock closed above $200 for the first time this week. The carmaker led by Elon Musk had a market value of $23.7 billion at the close yesterday, more than one third of General Motors Co.’s $57 billion.
Andrea James, an analyst with Dougherty & Co. in Minneapolis who rates Tesla a buy, boosted her target price on the shares to $325 today from $200. Robert W. Baird & Co. analyst Ben Kallo, who rates the Palo Alto, California-based company outperform, raised his target price to $245 from $215. Both analysts cited Tesla’s forecast for vehicle deliveries.
Tesla sold 6,892 Model S cars in the quarter, just below a 6,900 figure it gave in January. While first-quarter output will jump to 7,400 vehicles, deliveries will be 6,400, owing to longer shipping times to overseas markets, the company said.
The first-quarter delivery goal is below a consensus expectation of 6,927 vehicles, Brian Johnson, a Barclays Plc equity analyst, said in a research note yesterday. He rates Tesla equal weight.
The net loss for the quarter was $16.3 million, compared with an $89.9 million net loss a year earlier. That was bigger than the $933,000 loss that was the average of analyst estimates compiled by Bloomberg.
Quarterly revenue jumped to $761.3 million from $306.3 million a year earlier. That beat a consensus estimate for sales of $712.7 million, on a non-GAAP basis.
Tesla’s annual net loss narrowed to $74 million, from $396.2 million in 2012.
Tesla’s 35,000-car delivery goal for this year is much better than anticipated, Kallo said yesterday. He’d expected the company to set a target of as many as 32,000 deliveries this year, and had forecast about 29,000.
“That’s a very strong number,” Kallo said in a phone interview.
Musk, 42, has said his focus is on accelerating Model S production at Tesla’s Fremont, California, plant as sales of the car are set to begin next month in China. His new target is 1,000 cars a week by the end of the year, up from about 600 a week now, Musk said in the letter to shareholders.
“We’ll be able to ramp up our production rate quite a bit, with a fairly small increase in hiring,” Musk said on a conference call yesterday.
Even with the planned increases, the company is going to have difficulty satisfying Model S demand in China, Musk said on the call.
The plant that was previously a joint-venture for Toyota Motor Corp., a Tesla investor, and the former General Motors Corp., is big enough to produce 500,000 vehicles annually. Musk repeated yesterday that he intends to use all of that capacity.
The carmaker named for inventor Nikola Tesla said it needs a much greater supply of batteries for its next line of vehicles: a smaller electric sedan and a crossover that would be priced from the mid-$30,000 range. Musk plans a “gigafactory” to supply those batteries.
“The gigafactory is more of a long-term development over the next three years,” Musk said yesterday in a Bloomberg TV interview. “We will do that call and answer questions in as much detail as we can next week.”
The battery plant would be built with partners, and “there’s a likelihood Panasonic would be part of it,” Musk told Bloomberg. Panasonic Corp. is both a Tesla investor and its main supplier of lithium-ion cells. Panasonic’s participation is “not 100 percent confirmed,” he said.
Should Tesla proceed with plans to build the plant within three years, additional funds would have to be raised, Musk said in the interview, without elaborating.
“We could pay for the gigafactory from our retained earnings if we allow the time frame to go beyond three years,” he said.
Tesla’s next model, the battery-powered Model X sport- utility vehicle, won’t enter mass production until early next year, the company said. Musk previously said initial deliveries would begin by the end of this year.
Prototype versions of the Model X will be on the road by the end of year and mass deliveries will begin in early 2015, the company said.
Musk told Bloomberg TV he’s to blame for the delay.
“With respect to the X, I am somewhat of a perfectionist when it comes to product design,” he said. “It is hard to make an SUV that is beautiful and functional at the same time.”
The version that comes out next year will be better than the prototype first shown in 2012, he said, without elaborating.
The delay in timing of the Model X program “is probably the biggest negative,” Kallo said in a phone interview. “Given how much they beat in other areas, people are probably willing to overlook that.”
--With assistance from Betty Liu in New York. Editors: Niamh Ring, John Lear