• by Thom Forbes  @tforbes, April 3, 2017

Tesla bested analysts’ expectations for its first quarter in style, it announced Sunday, with a 69% increase in deliveries over Q1 2016. More than 25,000 vehicles wound up in the grip of customers — 13,450 of its top-of-the-line Model S and about 11,550 Model Xs, it said, a new record for quarterly. The Q1 production totaled 25,418 vehicles, also a new quarterly record.

“The results should help fuel further investor confidence in CEO Elon Musk as he works to bring out later this year a $35,000 sedan called the Model 3. Tesla shares have risen about 30% this year, pushing the company’s market value to almost as much as 113-year-old Ford Motor Co., the second-largest U.S. automaker by market capitalization,” observes Tim Higgins for the Wall Street Journal.

“Tesla said it expects to deliver about 50,000 cars in the first half of 2017, and today’s stats suggest it will be on track to meet that goal. The company is also planning on starting limited production of its Model 3 sedan in July with a goal of producing 5,000 of them a week toward the end of 2017. To feed those cars with energy, Tesla is also planning to open three more of its enormous battery-producing Gigafactories,” writes T.C. Sottek for The Verge.

“It’s all about the Model 3 right now, but this is very good news,” Ben Kallo, an analyst at Robert W. Baird & Co., tellsBloomberg Markets’ Dana Hull. “25,000 units is the best we could have thought, and people are looking at Model 3 for growth.”

The Model 3 will be Palo Alto, Calif.-based “Tesla’s first widely affordable electric car…,” writes Alan Ohnsman for Forbes. “Ramping up production of that new sedan, which has a waiting list of about 400,000 people who paid a $1,000 reservation fee, poses a considerable engineering challenge for the young company. Equity analysts generally have mixed views on whether Model 3 will launch on schedule in the third quarter of 2017 and the likelihood of Tesla achieving an overall production rate of 500,000 vehicles per year in 2018 and 1 million annually in 2020.”

Ramping down expectations may be another challenge.

“Am noticing that many people think Model 3 is the ‘next version’ of a Tesla, like iPhone 2 vs 3. This is not true,” Musk tweeted last week, the WSJ’s Higgins points out. “The Model 3 ‘is just a smaller, more affordable version of Model S’ with less range and power and fewer features, he said,” divulging that he’d be driving the S himself, thank you.

With Tesla often chided and on the defensive for not meeting deadlines or production numbers, yesterday’s announcement was a bolt of good news for investors.

“In the fourth quarter, deliveries had fallen 9.4% due to short-term production hurdles from the transition to a new autopilot hardware. Tesla had said production challenges, which started at the end of October and lasted through early December, shifted vehicle production towards the end of the fourth quarter, resulting in delayed deliveries,” reports Reuters’ Devika Krishna Kumar.

“Ultimately, about 2,750 vehicles were missed being counted as deliveries in the fourth quarter either due to last-minute delays in transport or because the customer was unable to physically take delivery,” Kumar continues.

Not that this spurt will necessarily prove profitable for the quarter (as the third quarter of 2016 — quite notably — was). 

“Analysts are braced for losses when Tesla reports its first-quarter earnings next month. Analysts expect the company to report losses of $125 million, after adjustments for one-off expenses, according to a survey from S&P Capital IQ, compared with losses of $121 million in the fourth quarter of last year,” reports Leslie Hook for Financial Times.

“In Tesla’s previous earnings call in February, Mr. Musk said he was considering raising more money from investors to shore up Tesla’s balance sheet,” Hook continues. Tencent, the Chinese company that owns WeChat, last week said it had bought a 5% stake in the company. 

“Tencent's strategy was not immediately clear,” Nathan Bomey wrote at the time in USA Today, while pointing out that the company is “a conglomerate with broad assets in gaming, social media and online entertainment.”

But, presumably, it has a very good understanding of the prospects for, say, an ecologically sound, prestige automobile in a country that claims it’s poised to take over as the “global climate leader” and to “lead the world economy.”