Tesla stock soars after Elon Musk pledges 100,000 cars a year

Tesla stock was up five per cent on Friday after CEO Elon Musk said the electric-car company would deliver 100,000 vehicles next year.

Its earnings report released Thursday shows Tesla continues to operate at a loss as it spends on engineering and setting up an assembly line for its Model X SUV, which is scheduled to go into production early next year.

But investors were cheered by the news that the company would deliver 100,000 vehicles next year, up from 22,000 in 2013 and a projected 35,000 this year.

Tesla shares soared as high as $2.37 before ending the day up five per cent at $233.37. The stock has risen 65 per cent in the last 12 months.

Tesla's Model S sedan has won approval from automotive enthusiasts, though it was dogged by reports of fires including one caught on video.

Musk addressed the problems with the Model S in an interview with analysts late Thursday.

"I think we had some quality control issues in the beginning, in the early days of the car, but the vast majority have been addressed. We're getting better at diagnosing what is wrong," he said.

He said Tesla plans to revolutionize service, as well as the way people drive.

"We can pick up your car, fix it and get it back to you before you even miss it," he said.

The company delivered 7,579 Model S electric cars in the second quarter and built 50 charging stations, where customers can power up their cars for free when they are away from home. There now about 156 charging stations in Canada and the U.S.

Tesla loss widens

Tesla reported a loss of $61.9 million, or 50 cents per share in its second quarter, compared with a loss of $30.5 million, or 26 cents per share, in the same quarter a year ago.

Revenue nearly doubled to $769.3 million, missing Wall Street's forecast of $801.9 million, but expenses were also up as Tesla prepares some ambitious projects. Earnings, adjusted for stock option expenses and lease accounting, came to 11 cents per share.

But Tesla's spending was also up, with $93 million in the quarter on research and development alone. Musk said that number will increase by 20 per cent in the third quarter. While the Model X is in development, the longer-term plan is for a cheaper, mass-market car, the Model 3, to be launched in 2017.

Tesla's Fremont, Calif., plant currently produces 800 cars a week, but it has invested in a new assembly line that will increase production to more than 1,000 cars a week. The line could begin operations as soon as next week.

The Model S is already winning over drivers in China and the U.K., as well as Canada and the U.S. Tesla will launch in Australia and Japan later this year and plans further expansion into Europe. In Canada, it has opened a charging facility in B.C. and plans more dealerships across the country.

Battery plant plan

The biggest investment Tesla will make is in its large lithium-ion production plant, to be built at an as-yet-unnamed U.S. location. On Wednesday, it announced a $5-billion partnership with Panasonic to develop the plant, which will supply batteries for the Model 3, its mass-market car.

Musk said Tesla is working with Panasonic to improve the range and power of batteries.

"There are improvements to the chemistry. We expect to see an energy output improvement and a significant cost improvement," he said.

Musk said the company expects to be marginally profitable in the third quarter, but as it begins work on the battery plant it has boosted investment spending for the year to between $750 million and $950 million.

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