Tesla pops 4% on results, production outlook

Tesla Q2 production expected to be 17,000
Tesla Q2 production expected to be 17,000
Three analyst views on Tesla
Three analyst views on Tesla
Two Tesla top production execs out
Two Tesla top production execs out

Tesla Motors on Wednesday posted quarterly results that met Wall Street's expectations and gave a bullish outlook for vehicle production on the strength of demand for its upcoming Model 3.

CEO Elon Musk also said on Tesla's earnings conference call late Wednesday that 1 million in annual production by 2020 would be his "best guess."

The electric automaker reported a first-quarter loss of 57 cents per share on $1.6 billion in revenue. The shortfall was wider than the 36 cents per share reported a year earlier, while sales climbed 45 percent from the prior-year period.

Analysts expected Tesla to report a loss of 58 cents per share on $1.6 billion in revenue, according to a Thomson Reuters consensus estimate. The company's shares rose as much as 8 percent in after-hours trading before retreating slightly.

The stock was up about 4.5 percent before the bell on Thursday. (Get the latest quote here.)

Despite recent capacity concerns, Tesla said it is "on track" for production and delivery of its Model 3 mass-market car in late 2017. The company moved its 500,000 total unit annual build target up two years to 2018, citing demand for the Model 3. It previously blew away expectations with more than 325,000 reservations for the car.

"The overwhelming demand for Model 3 confirms that compelling all-electric vehicles have mass-market appeal," Tesla said in its shareholder letter.

Tesla reported first-quarter deliveries of 14,810 vehicles, nearly in line with the figure announced in April. It expects second-quarter deliveries of about 17,000 vehicles, below analysts' forecasts for nearly 19,500, according to StreetAccount.

Still, Tesla affirmed its previous guidance for 80,000 to 90,000 deliveries for the full year.

Elon Musk
Tesla is a hot mess—there is no path to profitability
An attendee looks over the Telsa Model X, all electric vehicle, at the Panasonic booth at the 2015 International CES at the Las Vegas Convention Center on January 6, 2015 in Las Vegas, Nevada.
Tesla's VP of production, VP of manufacturing to leave company

Musk also said he expects production of 100,000 to 200,000 Model 3 vehicles in the second half of next year.

But it remains to be seen if Tesla can pay for and complete its bullish production projections for the coming years. In its letter, Tesla said increasing production "will be challenging and will likely require some additional capital."

Stifel analyst James Albertine told CNBC's "Closing Bell" on Wednesday that Tesla has yet to resolve the "execution risk" presented by boosting production.

The plans were further complicated earlier Wednesday as Tesla confirmed Greg Reichow, its vice president of production, will take a leave of absence after it finds a successor. Tesla's vice president of manufacturing, Josh Ensign, is also expected to depart.

Colin Rusch, senior research analyst at Oppenheimer, said Thursday he believes Tesla is seeking to bring on additional talent as it aims to increase its manufacturing volume.

"They're I think going to make some impressive hires, and they can do that because they're offering some interesting challenges for folks at a career level," he told CNBC's "Squawk Box."

Still, the departure fueled more questions around Tesla as it ramps up production for its flagship Model S, Model X sport utility vehicle and the Model 3. Musk seemed confident about Tesla's manufacturing capabilities despite the personnel losses.

In the call, Musk touted Tesla's "excellent production team." He said the company's Gigafactory allows it to "exceed anybody else in the world at scale economies."

Here's what's really at stake for Tesla...
Here's what's really at stake for Tesla...

Rusch said Tesla can demonstrate "significant" operating leverage by leaning on its existing infrastructure to roll out the Model 3.

"As they ramp sales they've set up enough infrastructure that they're going to see, we think, 15 percent incremental operating margins as they ramp the Model 3," he said. "They're going to have to continue to invest in the sales and services organization, but not at the same rate they've had to to date."

But Vilas Capital's John Thompson, who is short Tesla, told CNBC's "Closing Bell" on Wednesday it will "cost a tremendous amount of money to build plant capacity" to meet those production goals.

For the first quarter, Tesla reported operating expenses of $417 million, versus estimates of about $434 million, according to StreetAccount. The metric fell 3 percent from the previous quarter.

Its non-GAAP gross margin came in at 21.7 percent in the quarter, beating expectations for 20.6 percent.

Tesla added it is on track to make the first battery cells at its Gigafactory in the fourth quarter and is "adjusting (its) plans there to accommodate (its) revised build plan."

— CNBC's Tom DiChristopher contributed to this story.