Tesla says Model 3 on track as quarterly loss narrows

SAN FRANCISCO Tesla Inc. posted a narrower quarterly loss than estimated and said the much-anticipated Model 3 electric sedan is on schedule, as chief executive Elon Musk closes in on his pursuit of more mainstream car buyers.

The electric-car maker expects to deliver as many as 50,000 vehicles in the first half of the year and still sees Model 3 production starting in July, according to a letter to shareholders Wednesday. The Palo Alto, Calif.-based company lost US69 cents a share, without onetime items, during the final three months of last year, a slimmer deficit than analysts projected.

The confirmation for the car Tesla plans to sell for close to US$35,000 before incentives adds credence to Musk’s ability to deliver for investors who have bid up the 14-year-old company’s market value to rival those of automakers that have been around more than a century and sell millions of cars a year. Tesla’s shares were more overvalued than before as it approached its first quarterly earnings report since the acquisition of money-losing SolarCity Corp.

“The recent run-up in Tesla stock has less to do, in our view, with anything around the nearterm financials, and more to do with the nearly superhero status of Elon Musk,” Brian Johnson, an analyst with Barclays Plc, wrote in a note to clients Wednesday before results. “Since Tesla is already valued as if it’s the next Nissan, Ford, or Honda, it implies that much of the future growth is more than already reflected in the stock price.”

The fourth-quarter loss, excluding some items, was narrower than the US$1.14 a share average estimate among analysts surveyed by Bloomberg.

Model 3 output should exceed 5,000 vehicles a week at some point in the fourth quarter and 10,000 vehicles a week by sometime in 2018, according to the letter.

The car will rely on the so-called gigafactory east of Reno, Nev., that began producing battery cells earlier this year in partnership with Japan’s Panasonic Corp. The two have said they’ll start jointly making solar cells and panels this summer at a factory in Buffalo, N.Y.

“It is all about the Model 3, and Tesla says the suppliers are on time, which historically has been a thorn in Tesla’s side,” said Ben Kallo, an analyst at Robert W. Baird & Co. “SolarCity is not the drag that people thought it would be ...”