Tesla gives strong 2014 outlook, shares jump 12%

Better-than-expected earnings

The Palo Alto, California-based company, which was founded in 2003, earned $46 million or 33 cents per share, excluding one-time items, during the fourth quarter. The average analyst estimate called for a per-share profit of 21 cents, according to Thomson Reuters I/B/E/S.

Including items, its fourth-quarter net loss narrowed to $16.2 million, or 13 cents a share, from $90 million, or 79 cents a share, a year ago.

The Model S is priced at $70,000 and up. Tesla expects to deliver more than 35,000 Model S vehicles in 2014, an increase of more than 55 percent from the 22,477 delivered last year. It will deliver about 6,400 of those cars in the first quarter.

Tesla attempts to steer China toward awarding it incentives

Model S deliveries to China will begin this spring. Tesla said it will make "substantial investments" in China this year, and that the Model S will be the same price there as in the United States.

"We are taking a risk with this strategy, because it is counter to prevailing auto industry practices," Tesla said.

The company expects its automotive gross margin to rise to about 28 percent in the fourth quarter of this year. In the fourth quarter of last year, adjusted automotive gross margin was 25.2 percent.

Tesla said operating expenses and capital spending will increase significantly this year as it expands production capacity for both the Model S and Model X crossover vehicle, invests in stores and Supercharger infrastructure, and finishes development of the Model X. It is also starting early design work on its third-generation vehicle.

Tesla expects to have Model X prototypes on the road by the end of the year, and will begin deliveries to customers in the spring of next year.

Tesla unveils growth plan for China

Tesla unveils Model S pricing in China