On Wednesday afternoon, Tesla motors released a very strong fourth quarter earnings report that sent $TSLA shares up 11.76 percent (as of this writing) in after-hours trading. The electric vehicle company, which lost $35 million in a rocky Q3, reported that it sold a record 6,892 Model S vehicles in the fourth quarter. That push helped Tesla just barely beat the ambitious 25 percent automotive gross margin that it had predicted for Q4 at the end of Q3.

Tesla reported this quarter's earnings in both GAAP and non-GAAP terms (GAAP stands for Generally Accepted Accounting Principles). By non-GAAP measures, Tesla made $46 million in profit this quarter, but following GAAP principles, it sustained a loss of $16 million. We saw this split before in August 2013 when Tesla both made a profit of $26.2 million by the looser non-GAAP rules and also sustained a loss of $30.5 million by the more stringent GAAP rules.

“It is important to note that the differences between GAAP and non-GAAP are primarily due to lease accounting for our resale value guarantee (RVG) and employee stock based compensation as a result of the increase in our stock price last year,” wrote Tesla in its Wednesday report. “If current trends continue, the average price of a used Model S should be meaningfully above our resale value guarantee.”

Also assuaging any doubts that might have been had from that GAAP loss was Tesla's report that it's sitting on $40 million in positive free flow of cash from Q4, and that it expects to increase vehicle delivery growth by 55 percent in 2014. “Production is expected to increase from 600 cars/week presently to about 1,000 cars/week by end of the year as we expand our factory capacity and address supplier bottlenecks,” Tesla wrote in its financial statement.

Expansion in China has also sent Tesla into a good position, especially given news earlier this month that the Chinese government would give Model S buyers a larger-than-expected subsidy, in efforts to improve air quality in that country. In the conference call this afternoon, CEO Elon Musk told investors and reporters that the Chinese market will be good to Tesla when the company starts shipping its cars this spring. “It will be unlikely that we will be able to satisfy demand in China this year," Musk said.

The one damper on the news today was that the consumer-delivery timeline for the next-generation Tesla Model X will be pushed back from the end of 2014 to Spring 2015. And, due to a ramp up in Model X production, Tesla expects its operating expenses to increase by 15 percent in Q1 2014.

Musk also addressed news from last fall involving three vehicle fires that Tesla's Model S' had sustained. “At first we saw a significant drop in demand, and then as consumers came to understand this was a media driven thing, and not a real danger with the car, and since then our sales have increased steadily.” A federal safety investigation opened an inquiry into the Model S' lithium-ion battery pack in November, but Musk said he's not worried about what the investigators would find.

Finally, Tesla predicts that it's Q1 revenue growth will be relatively small compared to the next three quarters of 2014. “Our actual revenue number for Q1...will be lower than it might otherwise be,” although Tesla still expects to turn a profit.