Tesla expects to become profitable in 2016, shares surge more than 10pc

One assumption is Tesla does not run out of federal tax eligibility before the Model 3 is for sale or very many are sold, which is possible by 2018 unless an extension is granted.

With that out of the way, there’s also some fresh news on the Model III front, which is Tesla’s upcoming entry-level electric vehicle. When Tesla details its fourth-quarter performance on Wednesday, investors will be keeping a close eye on the outlook for Model X sales in 2016.

Tesla shares rose 9 percent in after-hours trading to $157. The Model 3 won’t go into production until 2017, and if it’s delayed, the incentives that lower the price might not be available.

“There’s was some hubris with the Model X, Musk said. In retrospect, it would have been a better decision to do fewer things with the first version of the Model X and then roll in capabilities, and features, and new technologies over time, in subsequent years”, Musk said.

Following the opening of its design studio in September, Model X was named one of the fastest sports utility vehicles (SUVs) in the world.

Tesla said in a statement that the new lease price amounts to $607 per month, after “factoring in fuel savings – not to mention the priceless time you get back not having to wait in gas station lines”. Tesla reported an adjusted loss of 87 cents per share in the fourth quarter, while analysts expected a profit of 10 cents a share, according to Thomson Reuters I/B/E/S.

Tesla said its long-promised moderately priced vehicle, the Model 3, would be unveiled on March 31. Shares of Solar City, the residential power company he founded, tanked as much as 28% Wednesday after the company missed on earnings.

Galves acknowledges the quality issues faced by the company in the early production stage of the Model X, but confirms that the issues seem to have been resolved now. When configuring an 85 kWh dual-motor vehicle, Tesla gave customers an option to purchase a range upgrade for $3,000, which essentially upgraded the Model S to a 90 kWh model. The rear-wheel drive 90kWh model has also been phased out in the UK. Company’s annual sales growth for the past five year was 95.50%. If Musk wants to turn the Tesla Model 3 into a commercial success story, the Model 3 has to mirror its biggest bragging right – the price – with its range. Production of Tesla Energy products was relocated to the Gigafactory previous year, while construction continues at the facility.

The Model X will provide the additional cash flow to develop and produce the Model 3, which Tesla says will cost $35,000.