On Wednesday, Tesla Inc posted the second quarterly profit in a row on record vehicle deliveries and said it would deliver more than 500,000 units this year, leading the electric carmaker's shares to surge to new highs.
Shares rose 13 percent to 654 U.S. dollars after hours, reaching an all-time high and for the first time cracking the 600 U.S. dollars mark.
Tesla on Wednesday said the manufacturing process at its new Shanghai factory was running as expected and said it would increase production of its mass-market Model 3 due to strong demand in China.
The company also said it has started production of its new Model Y, an electric crossover utility vehicle, at its Fremont, California plant this month and plans to deliver the first models by the end of March, ahead of schedule.
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Read more: Tesla delivers China-made Model 3 sedans to public, launches Model Y production
Investors overall are betting that Tesla has overcome its production, legal and management struggles and is leading the industry on technological innovation for the next generation of cars.
The investor appetite is also a boon to Tesla CEO Elon Musk, whose mercurial behavior forced him to step down as chairman after a series of scandals and investor doubts about Tesla's ability to withstand competition from larger, better capitalized global rivals.
Tesla super chargers are shown in Mojave, California, U.S., July 10, 2019. /Reuters Photo
Tesla said it "should comfortably exceed" 500,000 vehicle deliveries in 2020, up from 367,500 last year.
Cost efficiencies and high production volumes should allow it to ultimately reach an industry-leading operating margin, the company said. It reported a 4.9 percent operating margin in the fourth quarter.
"The point Tesla is already starting Model Y production in Fremont was the most notable item in the release. For a company that has always been late, this is a big improvement. First, they were looking at a late 2020 Model Y ramp, then pulled forward to summer time, and now we have production in 1Q20," Roth Capital Partners analyst Craig Irwin wrote in a note.
The company's cost efficiencies become apparent when comparing revenue and profit on a per-vehicle-basis. A review of Tesla's results showed that even though revenue per unit delivered rose by only three percent on a quarterly basis in the fourth quarter, operating profits per vehicle rose by roughly 19 percent in the same time.
Tesla's stock has more than doubled in value since the company posted a third-quarter profit, beat estimates for 2019 vehicle deliveries and ramped up production at its gigafactory in China.
As China tries to contain a rapidly spreading coronavirus, Tesla expects a delay of one and a half weeks in the ramp up of the Shanghai-built Model 3 due to a government-required temporary factory shutdown.
(With input from Reuters)