Tesla surges as Wall St bets on Model 3

Tesla Inc has jumped 6 per cent as its quarterly report fuelled bets that its new Model 3 sedan will propel the luxury electric car-maker into the mainstream.

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Chief executive Elon Musk is counting on the Model 3, Tesla’s least pricey car to date, to make the company profitable and establish it as the leading electric car-maker ahead of BMW, General Motors and other long-established players.

Tesla’s stock is up 63 per cent in 2017, underscoring Wall Street’s confidence in Musk.

The company late on Wednesday reported quarterly results that beat average analyst estimates, and it said it received more than 1,800 reservations per day for the Model 3 since its launch last week.

Tesla had $US3 billion ($A3.8 billion) in cash on hand at the end of the June quarter, reassuring investors who were worried after Musk warned on Friday that the automaker would face six months of “manufacturing hell” in ramping up production of the Model 3.

Musk said investors should have “zero concern” that Tesla would fail to reach its production target of 10,000 vehicles each week by the end of 2018.

Sceptics believe Tesla’s aggressive production targets are unrealistic and that the company’s electric cars will be overtaken by larger automakers.

At least two brokerages raised their price targets following Tesla’s report. RBC Capital Markets raised its target price by $US31 to $US345, pushing it well ahead of the median price target of $US322, according to Thomson Reuters data.

“While we don’t have meaningful reason to doubt that Tesla can eventually achieve its targets, doing so in a timely manner without some growing pains could prove challenging,” RBC Capital Markets analyst Joseph Spak wrote in a research note.

The $US35,000 base-price Model 3 is Tesla’s least expensive car. It is designed and priced to compete with high-volume luxury sedans like the Audi A4, BMW 3-series or Mercedes C-Class. Those typically sell for between $US40,000 and $US50,000, or about half the price of Tesla’s previously launched cars, the Model S or Model X.

Also on Thursday, Consumer Reports said GM’s Chevrolet Bolt electric car, priced at $US37,495, reached 250 miles (402km) on a single charge, beating out Tesla’s 2016 Model S 75D and 2016 Model X 90D.

“A new Tesla Model S or X 100D would probably beat the Bolt’s range, but you’d have to pay $US100,000 or more for one of those cars,” Consumer Reports said.