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Tesla Profits Surprise Wall Street Leading To Stock Surge

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DETROIT (Reuters) - Electric-car maker Tesla Motors Inc surprised Wall Street with better-than-expected earnings on Wednesday, and investors pushed the stock up as much as 14 percent in after-hours trade.

As Tesla has ramped up production of its Model S sedan - the best-selling U.S. electric car despite a starting price of more than $70,000 - the company's stock price has more than quadrupled in the past year.

Tesla said on Wednesday it had sold 10,500 Model S sedans in the first six months and expects to reach an annualized rate of 40,000 by late 2014, as it expands sales to Europe and Asia.

After the market closed, the company reported a second-quarter non-GAAP profit of 20 cents a share versus an expected non-GAAP loss of 17 cents. In after-hours trade, the stock hit a high of $153 a share, up from its Wednesday close at $134.

Tesla raised more than $1 billion in equity and debt in May and paid off a $440-million government loan balance. It closed the quarter with $746 million in cash and said it expects its gross margin to climb to 25 percent by year-end.

Revenues in the quarter were $405 million, down from $562 million in the first quarter, reflecting an accounting requirement that defers some revenue on vehicles financed through Tesla and its financial partners. On a non-GAAP (Generally Accepted Accounting Principles) basis, revenues rose to $551 million.

The company said it lost $30.5 million, compared with a first-quarter profit of $11.1 million. On a non-GAAP basis, however, it reported net income of $26 million, excluding lease accounting, non-cash items and one-time charges associated with its early payoff of a U.S. Department of Energy loan.

"The entire sell side was looking for a loss," said Theodore O'Neill, managing director of Litchfield Hills Research, in a client briefing late Wednesday.

Morgan Stanley, in a briefing note to clients late Wednesday, said Tesla's second-quarter results surpassed "already high" expectations "that continue to rise nearly as fast as the share price."

The company plans to begin selling a companion crossover model, the Model X, late next year, with volume production to begin in 2015.

Tesla founder and chief executive Elon Musk, in an earnings call with analysts, said a third model, a compact electric sedan known internally as Gen 3 that is due in 2016, will have a 200-mile range per charge.

Musk confirmed the new sedan, which he described as "our high-volume affordable car," will be priced from around $35,000 before any federal or state tax credits are applied.

(Reporting by Paul Lienert in Detroit; Editing by Ken Wills)

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