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Tesla CEO says company ‘past the point of high risk’ despite larger losses

PALO ALTO — Tesla Motors (TSLA) posted a wider quarterly loss Monday but assured Wall Street it remains on track to deliver 2,500 to 3,000 all-electric Model S sedans in the fourth quarter and maintained its 2012 revenue outlook of between $400 and $440 million.

Tesla posted a third-quarter loss of $110.8 million, or $1.05 a share, compared with a loss of $105.6 million and $1 a share in the second quarter.

Investors cheered the news of the higher production rate, sending shares up more than 8 percent to close at $31.50.

In a letter to shareholders published on the company’s website, Tesla said it has successfully made the transition to a mass-production car company and will be turning out 400 cars a week at its Fremont factory a month from now. That compares to making 200 cars a week in October and just 100 per week in September.

“Overall, I feel Tesla was really kind of past the point of high risk,” said CEO Elon Musk in an early-morning conference call with analysts. “Several months ago, I said I thought that the coming several months would be really the test for Tesla. And it’s the classic phrase of “going through the Valley of Death” — and I feel as that we are through that valley at this point.”

Driscoll, an analyst at CapStone investments, isn’t so sure. He has a “sell” rating on the stock and remains concerned about research and development expenses. He says many people simply assume that Tesla will meet their new targets.

“No one is really scrutinizing this company. They do a good job of glossing over deficiencies,” said Driscoll. “I see too many holes. It’s an overvalued stock. Until they get cash flow to break even, it’s going to be a hurdle for me.”

Although production of the Model S got off to a slow start, Musk said Tesla is on track to make at least 20,000 cars in 2013.

“If we see something that’s even a minor aesthetic issue, we want to correct that,” he said. “We’re seeing a rapid decline in the number of correct issues that needs to be corrected as vehicles come up in the line. So it’s getting better very quickly. So right now, I feel very optimistic about with the way things are. And I’m not aware of any issues in front of us getting to the 20,000 units to our annualized production volume.”


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