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Tesla Shares Spike on Lower Costs

Shares in Tesla Motors Inc. jumped 12.3% to $217.44 in trading on Wednesday, after the electric car maker posted impressive fourth-quarter results and predicted double sales this year.

Fourth-quarter results for Tesla came in better than expected, and the company said it expected to deliver more than 35,000 Model S sedans in 2014, which represents a 55% increase over last year.

Tesla posted a loss of $16.3 million, or 13 cents per share, during the fourth quarter, but this is far better than the previous year, in which the company reported a loss of $89.9 million, or 79 cents per share.

The better fourth quarter results were possible due to lower costs.  

Led by billionaire entrepreneur Elon Musk, Tesla also saw its stocks shoot up on Tuesday to an all-time high when Musk met with Apple Inc’s head of mergers and acquisitions in 2013.

Related Article: Tesla Completes Coast-to-Coast Section of Free Supercharger Network

The market is also looking closely at Tesla’s plans to build a lithium-ion battery plant because in the past there have been problems with demand outstripping supply, and this has been a key investor focus. The new plant could cut battery costs and allow for the creation of a more affordable electric car in 2017.

For now, Tesla’s sales are based on a single vehicle—the Model S sedan—which starts at $70,000 and run 300 miles on a battery charge.

Musk told analysts on Wednesday that Tesla was building a new final assembly line that could lead to an increase in production from 600 vehicles per week to 1,000 per week. The new final assembly line is slated to come on line during the fourth quarter of this year.

“We’ll be able to ramp our production rate quite a bit with a very small increase in hiring,” Musk said. “Our labor efficiency essentially is likely to improve a lot over the course of this year.”

By Charles Kennedy of Oilprice.com


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