Updated: 10 a.m. ET.

Shares of Tesla Motors (TSLA), the builder of high-end electric cars, dropped nearly 10% Thursday after the company reported a larger-than-expected​ fourth-quarter loss.

The decline came as Tesla said late Wednesday it was on track to produce 20,000 vehicles a year and expected to post a small profit in the first quarter.

The company also produced fewer cars than projected in the fourth quarter. Tesla expects a round of cost cutting to meet 2013 profit targets.

The stock price appeared to fall because of higher-than-expects costs during the quarter and a concern over the rate of cancellations from original reservations for vehicles.

The fourth-quarter net loss widened to $89.9 million, from $81.5 million a year ago, the company said. Excluding some items, the loss was 65 cents a share, compared with 69 cents a year ago. Analysts had expected a loss of 53 cents.Customers placed orders for some 6,000 Model S cars in the fourth quarter, Telsa said, up from about 2,900 orders in the third quarter.

Net of cancellations, Tesla said it has "reservations" for about 15,000 Model S cars, up from 13,000 as of Sept. 30. Investors are closely watching the pace of new orders and cancellations, in part because Tesla has to refund deposits from customers who decide not to take cars.

Tesla takes reservations that require a payment -- $5,000 for a Model S and $40,000 for the new Model X SUV that's coming. It often gets cancellations when its asks a customer how to configure his vehicle and sign a purchase agreement -- and make a substantial deposit for the vehicle.

If the buyer chooses not to do so, he gets his reservation payment back. In the fourth quarter, Tesla had 1,500 cancellations, meaning refunds of $7.5 million.

In November, the company projected that it would be "approximately halfway to the 25% gross margin target" by year-end.

However, the company also said Wednesday that its fourth-quarter gross margin was 8% of sales. Higher costs for parts and high costs in the company's Fremont, Calif., factory weighed on margins.

Tesla said now that Model S production has stabilized, it has "shifted our focus to cost reduction" and says it expects to achieve a 25% gross margin by the end of this year. It also expects to start marketing in Europe and Asia.

Tesla plans to start deliveries of the Model X SUV in 2014. The seven-seat vehicle is expected to cost about as much as its Model S sedan. That means $67,400 for a version with a battery capable of driving 210 miles before recharging. The price would jump to $77,400 for a model that can go 270-miles before recharging.

The stock was up 18.6% in 2012 and is up 13.8% this year. The share are up 61.3% since the company went public in June 2010.

Tesla was co-founded by entrepreneur Elon Musk, who co-founded PayPal, now part of eBay (EBAY), and Space Exploration Technologies, or Space X, which makes rockets for commercial markets.

Its Model S became a national story when New York Times reporter John Broder drove a model from the Washington, D.C. area to Connecticut, and the vehicle ran out of power. Musk accused the subsequent report of being faked and that Broder had deliberately caused the car to fail.

In a blog post, The Times' public editor, Margaret Sullivan, conceded Broder made some errors but said the story was done "in good faith."

Late Wednesday, Musk in a twitter post said, "Appreciate thoughtful @Sulliview article. Faith in @nytimes restored."