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."
Carter 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."
The company says 13,200 customers have reserved a Model S, up from 11,500 at the end of the second quarter. Up to 20 percent of reservations are coming from Europe, which is Tesla's largest market for the Model S beyond the United States.
From 10 to 15 percent of reservation holders cancel their reservations before locking in options like trim color, Musk said, adding that very few people cancel after that point.
In September, Tesla unveiled plans for a nationwide network of "Superchargers," which are free to Model S drivers who buy the vehicle with the longer-range 85-kilowatt battery; customers who order the 60-kilowatt version can have the Supercharger hardware added for an additional cost of a few thousand dollars. Tesla is not planning to add it to the 40 kilowatt version. The goal of the charging network is to allow Model S drivers to quickly charge their vehicles at no charge while on long drives.
Musk said he recently drove from Los Angeles to San Francisco with all five of his children and experienced no hitches.
"When we had stopped for a meal or the restroom, by the time we came back, the car was ready to go," Musk said. "I am really excited about it and I think as people use it, it's really going to open their eye as to what an electric car could be like, and just not having to go to a gas station, and invest in fumes and pay how much money for gas. Tesla's free long distance (travel), powered by sunlight, I think is quite a revolution."
Contact Dana Hull at 408-920-2706. Follow her at Twitter.com/danahull.
Tesla Motors originally vowed to make 5,000 Model S sedans by the end of 2012. In September, it revised that projection downward to 2,750 to 3,250 cars by the end of the year due to delays by suppliers and the need to continue to train employees. Here are Tesla's latest numbers and projections for the Model S, according to a letter to shareholders released Monday:
Source: Tesla Motors