Tesla Is Surging After Announcing A Massive Expansion

Tesla shares were up as much as 4% in early Friday trading after reporting adjusted earnings and revenue that beat expectations Wednesday afternoon.

The big news was that they now envision delivering 100,000 vehicles next year. This year their goal is 35,000, and last year they only delivered 22,000. So this is a huge leap. But in a note Barclays says its feasible:

While guiding to a below-consensus 3Q'14 on deliveries and earnings, Tesla gave bullish guidance for 2014 and 2015 that should support the shares - guiding to a 4Q delivery rate of over 13,000 units and an exit rate of 100k units in 2015. The guidance provides us some insight into Tesla's expectations for a quite steep delivery ramp-up over the coming years and into the Model 3 era.

Tesla reported non-GAAP earnings per share of $0.11 against a consensus estimate of $0.04. Revenue hit $858 million versus consensus $811 million.

Shares were trading at $232.

Elon Musk also said the company would fund 40 percent to 50 percent of the estimated $4 billion to $5 billion cost of building a new "gigafactory" to produce cheaper and more efficient battery packs for its future electric cars, including the $35,000 Model 3 range that is due in 2017.

The automaker has accelerated the expansion of the Fremont plant, which builds the $70,000-plus Model S sedan and will add a companion crossover, the Model X, next spring. Musk said the plant now can build up to 1,000 cars a week and will double that by the end of next year.

Tesla expects to deliver about 35,000 Model S sedans this year.

In the year-ago quarter, Tesla lost $30.5 million, or 26 cents a share, on revenue of $405.1 million.

Earlier on Thursday, the automaker announced a partnership with Japanese electronics giant Panasonic Corp to open the giant battery factory in the United States in 2017.

Musk confirmed that Tesla had broken ground near Reno, Nevada, for a possible factory, but said the company was still in negotiations with several states before a final site selection would be made later this year.

He told analysts that Panasonic would fund about 30 to 40 percent of the factory, and other smaller suppliers about 10 to 20 percent. He said the initial cost to get the factory up and running would be less than $4 billion, with the total cost rising to $5 billion by full production around 2020.

Tesla built a record 8,763 Model S sedans in the quarter, and delivered a record 7,579 cars to customers, while being "unable to keep pace with increased demand" in North America and Europe.

The company plans to deliver about 7,800 cars in the third quarter. With the plant expansion, it projects fourth-quarter deliveries will nearly double to more than 13,000.

Tesla said it expected to invest up to $950 million this year as it "slightly" accelerates spending on more production capacity and the battery factory. That's about $100 million than previously announced.

(Editing by Bernard Orr)