Bill Alpert

The growth reported last week by Tesla Motors was impressive for a car company, let alone an American car maker still in its first year of volume production.

Tesla (ticker: TSLA) delivered 5,500 units of its sleek, all-electric Model S in the September quarter, producing revenues of $431 million—more than eight laps ahead of the $50 million achieved a year ago. The Palo Alto, Calif.-based company reported profits of $16 million, or 12 cents a share (if you set aside 40 cents worth of non-cash charges and lease accounting required by generally-accepted accounting principles).

Still, some investors had more extravagant expectations for the electric car maker run by celebrated entrepreneur Elon Musk. Most analysts had predicted deliveries for the quarter ending in September of near 6,000 cars; some, over 7,000. Then a Model S caught fire Wednesday after its battery got punctured by road debris. The driver escaped unharmed, but it was the second such incident in six weeks. From Tuesday to Friday, the car maker’s shares skidded 23% to $137.95.


Musk also expressed confidence that Tesla could improve the cost efficiency of its power cells in the couple of years’ time required for the third-generation car to go into production. Meanwhile, Tesla is talking to potential partners about building a battery factory in North America.

“It is going to be a really giant facility,” Musk said. “We are talking about something that’s comparable to all the lithium-ion production in the world, in one factory. That’s big.”