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Tesla shares gain momentum, hit new all-time high

Tom Krisher, AP Auto Writer

DETROIT (AP) -- Shares of electric car maker Tesla Motors Inc. spiked Tuesday on momentum from last week's stock-and-note offering that raised nearly $1 billion, general market increases, and the prospect of the company announcing a wider network of car charging stations.

THE SPARK: Tesla Motors, which makes a highly acclaimed $70,000 electric car, last week sold stock and notes that grossed $968 million. It used some of the proceeds to pay off a $465 million startup loan from the Department of Energy nine years early. The Palo Alto, Calif., company, led by PayPal billionaire and SpaceX founder Elon Musk, also plans to announce this week that it's adding to a network of electric car charging stations.

THE BIG PICTURE: On Friday, Goldman Sachs analyst Patrick Archambault wrote in a note to investors that Tesla is well positioned to hit a production target of 21,000 cars this year, and that it still has significant cost efficiencies left. That should help the company get to its gross margin target of 25 percent, he wrote. Gross margin is the percentage of revenue that the company actually keeps. The company's gross margin for the first quarter was 17 percent.

Currently Tesla sells only the Model S sedan, but it has plans for an SUV and another car in three or four years that will be half the price of the Model S. Archambault, who toured Tesla's Fremont, Calif., factory, wrote that he was "encouraged by management commentary that points to improving U.S. demand trends for the Model S, as well as a significant growth opportunity in Europe and Asia."

Archambault wrote that the company expects global demand for the Model S could exceed initial expectations of 40,000 to 50,000 per year. Longer term, the company envisions selling as many as 500,000 vehicles per year once the less-expensive "Gen 3" car is in production, Archambault wrote.

SHARE ACTION: Shares of Tesla leaped to a new high of $110.75 late Tuesday afternoon, settling back only slightly to close up $13.25, or 13.7 percent, at $110.33. Tesla shares are trading at more than three times the Jan. 2 opening price of $35.