Tesla stock jumped Thursday, a day after the company said it is pausing production at its Fremont, California, factory to begin development of its Model 3 sedan.
The move is a clear sign that the company is on track with development on the much-anticipated car, which is scheduled to go into volume production later this year.
The stock was up roughly 2.5 percent during midday trading.
In a statement sent to CNBC, Tesla representatives said the pause had been planned, and that they intend "add capacity to the existing paint shop so that it is ready for Model 3, and perform general maintenance on other factory equipment. This will allow Tesla to begin Model 3 production later this year as planned and enable us to start the ramp towards 500,000 vehicles annually in 2018."