Electric carmaker Tesla Motors Inc. said it would accelerate production to meet strong demand for its upcoming Model 3 mass-market sedan, but higher spending will make it harder to reach promises of profitability this year.
Tesla shares rose more than 5 percent to US$234.70 in after-hours trade on Wednesday after the company said it was on track to deliver 80,000 to 90,000 electric vehicles this year and vowed to reach an annual production target of 500,000 cars in 2018, two years faster than expected.
The firm reported a wider first-quarter net loss, although results broadly beat Wall Street targets, Reuters reported.
But a 50 percent rise to US$2.25 billion for 2016 capital expenditures and a suggestion the company might need to tap the capital markets underscored cash hurdles for the Silicon Valley company led by Elon Musk.
“Increasing production fivefold over the next two years will be challenging and likely require some additional capital, but this is our goal,” Tesla said in a statement.
Tigress Financial Partners analyst Ivan Feinseth, who rates Tesla shares “neutral”, said growing pains were to be expected while Tesla ramps up, but the company’s cars were “close to perfect”.
The Model 3 sedan, set to go into production in late 2017, has generated massive interest since its unveiling on March 31.
But some analysts have questioned whether Tesla could smoothly and quickly transition to higher-volume production, given the rocky start for the company’s Model X sport utility vehicle.
That technology-heavy crossover faced problems including parts shortages and quality issues, such as non-fastening doors.
Tesla said Wednesday that two top manufacturing executives were leaving the company.
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