Tesla Surges on Q4 Beat

NEW YORK (TheStreet) -- Shares of Tesla Motors (TSLA) surged 13.1% to $219 following fourth-quarter results that beat expectations, as the company noted its gross margins surpassed 25%.

The Palo Alto, Calif.-based firm earned 33 cents a share on $761 million in revenue during the quarter. Tesla delivered 6,892 Model S units, and had a 25.2% non-GAAP gross margin for the quarter.

Analysts surveyed by Thomson Reuters were expecting Tesla to earn 21 cents a share on a non-GAAP basis, generating $677.36 million in revenue.

Last month, at the Detroit Auto Show, Tesla said it delivered 6,900 Model S units during the fourth quarter.

The company believes it has room to expand gross margins even further, as economies of scale and volumes continue to increase. "We think an automotive gross margin of 28%, excluding potential ZEV credit sales, is a reasonable target for Q4 2014, even if a lower option take rate is assumed," the company said in a letter to shareholders, released on Wednesday. "Please note that Tesla is not trying to achieve the absolute highest possible gross margin, as this would require following the industry practice of charging excessive prices to customers in certain markets, which we believe is inconsistent with building long term loyalty."

Tesla said it expects to deliver 35,000 Model S units in 2014, up 55% year over year, as production "is expected to increase from 600 cars/week presently to about 1,000 cars/week by end of the year as we expand our factory capacity and address supplier bottlenecks." The company noted that battery cell supply will continue to be a constraint in the first half of 2014, but that will "improve significantly in the second half of 2014."

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