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Tesla Rises After Model S Sales in 2013 Exceed Forecast

Tesla Motors Model S
Attendees look at a Tesla Motors Inc. Model S electric vehicle on display at the 43rd Tokyo Motor Show 2013, on Nov. 21, 2013. Photographer: Kiyoshi Ota/Bloomberg

Tesla Motors Inc., the maker of high-end electric cars, rose after saying it delivered 6,900 Model S sedans in the fourth quarter, pushing full-year sales beyond a company target.

Tesla gained 1.8 percent to $164.13 at the close in New York, after the automaker gave its forecast yesterday. The shares have added 9.1 percent this month.

The quarterly figure is “about 20 percent above our previous guidance,” Jerome Guillen, Tesla’s head of global sales, said at the North American International Auto Show in Detroit. More than 25,000 Model S cars are now on the road, he said, including those sold in Europe.

Sales of the battery-powered vehicle, priced from about $70,000, totaled at least 22,450 last year, based on figures previously released by Palo Alto, California-based Tesla. The company had said it aimed to sell 21,500. Revenue for the fourth quarter will exceed forecasts by 20 percent, Tesla said separately in a statement.

The carmaker, led by billionaire entrepreneur Elon Musk, posted its first profit in the first quarter of 2013, aided by sales of environmental credits to other automakers. That triggered a surge in Tesla shares last year, increasing the company’s market value more than fourfold.

‘Tough Hill’

Beating last year’s forecast for the Model S means Tesla achieved Musk’s initial target of delivering 25,000 vehicles in 2012 and 2013, even after falling short of a 5,000-car goal in 2012.

Making up the shortfall from a year earlier “was a tough hill to climb,” Musk said in an e-mail. He didn’t attend the company’s Detroit briefing.

“With 6,900 deliveries in the quarter it’s still a niche vehicle, though you could say they are legitimately established in the marketplace,” Kevin Tynan, an auto analyst for Bloomberg Industries, said in an interview. “You are now looking at enough volume in the market domestically that hybrids and plug-ins, or a combination of the two, are now a legitimate technology option for other carmakers as well.”

Ben Kallo, an equity analyst at Robert W. Baird & Co., raised his rating on Tesla to outperform, or buy, from neutral after the company gave the delivery figures.

NHTSA Review

The quarterly sales announcement follows the National Highway Traffic Safety Administration review of Tesla’s battery pack. NHTSA is probing two Model S fires in the U.S. that resulted from lithium-ion batteries being punctured by road debris.

Musk also told Bloomberg News on Jan. 10 that the company would replace adapters in the Model S after at least a half-dozen reports appeared on a website for Tesla owners saying wall plugs had heated, at some point to smoking or melting, as the cars were being recharged in garages.

While Tesla filed an official recall notice with NHTSA on Jan. 13, Musk and Guillen took issue with the adapter replacement and a related software update in December being labeled a recall, as owners aren’t being summoned to showrooms for repairs.

“A recall, of course, is necessary when there’s a mechanical problem with the car, and that requires the car to be brought in,” Musk said on CNBC. “That’s simply not the case here.”

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