Tesla Motors Inc (NASDAQ:TSLA) posted robust third quarter financial results that were above expectations, but not as much as “seems to have been needed,” says a report from Wedbush by analysts Craig Irwin and Min Xu. Total units delivered were more than guidance and consensus, but less than analysts’ ‘bullish’ estimates.

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Tesla’s Solid 3Q numbers

For the third quarter, Tesla Motors Inc (NASDAQ:TSLA) posted revenue and adjusted-EPS of $602.6 million and $0.12, compared to analysts’ estimate of $583.2 million and $0.11, and the consensus of $534.6 million and $0.11.

Non-GAAP gross margins for the third quarter came in at 22.3% compared to Wedbush analysts’ estimate of 20.5%, consensus of 22.4% and company guidance in the low 20s. Total shipment of 5,500 units of Model S cars for the third quarter was slightly above the guidance of 5,000 units, street account consensus of 5,360, but was below the analyst’s estimate of 5,850 units.

Tesla Motors Inc (NASDAQ:TSLA) posted solid revenue and earnings per share fueled by strong margins and favorable mix shift with the third quarter average selling price rising to $103K from $90K in the second quarter of 2013.

Gross margin target looks achievable

Gross margin of Tesla Motors Inc (NASDAQ:TSLA) vehicles jumped substantially over second quarter levels. In the third quarter, the company posted margins (less ZEV credits) of 21% compared to 13% in the second quarter of 2013, and 5% in the first quarter of 2013, owing to improved efficiencies in the factory and improved parts pricing with suppliers. From the current trend, the target of reaching 25% vehicle margin looks achievable, believe analysts.

Analysts note that Tesla Motors Inc (NASDAQ:TSLA) will successfully achieve its lower cost battery target and the Gen–III vehicle target costs.  According to analysts, “Tesla’s multi-year lead over credible competition suggests the company is well positioned to deliver an aggressive volume ramp.”

PT lowered for Tesla

For the fourth quarter, analyst estimates are in line with Tesla Motors Inc (NASDAQ:TSLA)’s guidance, and the company is boosting its research and development (R&D) and SG&A spending more aggressively. Tesla expects to deliver 6000 units in the last quarter of 2013, and raised its 2013 guidance to 21,500 from 21,000. The electronic vehicle maker expects R&D and SG&A expenses to increase 25% and 20% sequentially for the last quarter of 2013.

Analysts have lowered their short-term EPS estimates from $0.26 previously to $0.12, primarily due to increase in SG&A and Research and Development expenses. Also, the price target has been lowered to $205 from the previous target of $240 while maintaining an Outperform rating on the stock.