Tesla Motors saw sales jump 22% in the last quarter, but its losses nearly doubled compared to a year ago. Still, plans to step up production of its electric cars continue to drive interest and growth in its share price.

TESLA MOTORS (symbol TSLA on Nasdaq; www.teslamotors.com) develops and builds fully electric vehicles. The company operates its own sales and service network in North America, Europe and Asia.

Tesla currently makes two models, the Model S sedan and the Model X sport utility vehicle (SUV). Tesla started deliveries of the Model S in June 2012. In the first quarter of 2016, it produced 12,851 of those sedans. Model X deliveries started in the third quarter of 2015. The company produced 2,659 of those SUVs in the first quarter of 2016.

To support its expanding fleet of vehicles, Tesla operates 615 Supercharger stations in North America, Europe, and Asia. It also works with a wide variety of hospitality locations, including hotels and popular destinations, to offer an additional charging option for its customers. There are now over 2,200 of these locations around the world.

The company’s sales keep growing, but its losses continue to rise as well. In the three months ended March 31, 2016, Tesla’s sales rose 22.0%, to $1.1 billion from $939.9 million. The company lost $282.3 million, or $2.13 a share, in the latest quarter, compared to a loss of $154.2 million, or $1.22 a share, a year earlier.

Growth stocks: 325,00 orders for Model 3

Tesla recently unveiled its long-awaited Model 3. This vehicle continues to get a lot of media attention. That’s because the sedan’s projected base price of $35,000 U.S (before government incentives and subsidies) should significantly broaden Tesla’s market. Even though the Model 3 is still in the prototype stage, and is not yet in production, the company has received more than 325,000 reservations for the Model 3(at $1,000 per deposit).

Initial shipments of the Model 3 are expected late next year. However, there is considerable uncertainty over how the company will fund such an ambitious project. Tesla has also announced that it’s looking to manufacture a total of 500,000 cars in 2018, two years earlier than its original target. But that will require huge amounts of capital—and a lot of engineering and manufacturing hurdles to overcome.

Tesla is also investing considerable amounts to become a major electric-vehicle battery maker. Construction at the company’s $5 billion Gigafactory battery plant is ahead of schedule. The Nevada facility began producing battery packs in October, beating its January 2017 target. The Gigafactory is targeting full capacity by 2020, after which it could produce more lithium ion batteries than the current worldwide output.

Tesla’s long-term operational success depends on its ability to maintain production on its growing fleet of vehicles, continue to build its international network of charging sites, and successfully profit in the fickle and continually evolving battery market.

So far, the company has lost money. It could lose as much as $5.50 a share this year, and $2.85 a share in 2017. Costs related to the company’s growth (its expanded sales team, higher production expenses and so on) will likely continue to generate losses for some time.

The market for electric cars may never move beyond a niche segment where buyers are willing to overlook cost and performance limitations. This already small pool of buyers could shrink if government support for plug-in cars is reduced or removed altogether. Tesla may move higher as short-term traders buy the widely followed stock on the latest upswing. But the shares are overvalued at today’s price, and its $29.2-billion market cap discounts considerable future success.

TSI Network Recommendation: SELL.

For our advice on making sound decisions on growth stocks, read How to keep hot growth stocks from burning your portfolio.

For our recent report on a Canadian growth stock in the automotive industry that we rate as a buy, read Aluminum car parts boost Linamar sales, earnings.