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What Puts Tesla Motors Inc (TSLA) Ahead of Other Automakers?

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The future of electric cars is still not certain. However, the future of one electric car manufacturer is, and that is Tesla Motors Inc (NASDAQ:TSLA). The company has improved its financial situation over the past and is ahead of the competition. Let’s see what puts Tesla Motors Inc (NASDAQ:TSLA) ahead of other automaker giants.

Tesla Motors Inc (NASDAQ:TSLA)

The company

Tesla Motors Inc (NASDAQ:TSLA) is a specialty electric car and component manufacturer. The manufacturer of electric cars is built for both sports and mass-markets. To own Tesla’s cars, the company also offers an international financing option.

Improving financials

Tesla Motors Inc (NASDAQ:TSLA) reported a net profit at the end of the first quarter, after accumulating losses for years. First quarter net income came in at $11.3 million, compared to a net loss of around $90 million at the end of the linked quarter. The first quarter adjusted EPS of 12 cents beat estimates of 4 cents. Much of the improvement in the latest financials was due to the highest ratings received by the Model S from Consumer Reports.

These improvements are a milestone for a company that has been at the center of the heated discussions over the future of electric cars.

Catalysts on the horizon

While Tesla Motors Inc (NASDAQ:TSLA) has shown some improvement in its otherwise weak financials, presence of catalysts drives the future performance, and I believe Tesla Motors Inc (NASDAQ:TSLA) is blessed with a few of them.

I believe the recent equity injection will increase the probability of crossing the chasm to the third generation car with an over 200 mile range. Given the equity raise and the resultant reduced financial risk, there is a higher probability that Tesla might move away from a luxury niche (Model S/X) to become a mass affluent third generation manufacturer. Additionally, the improved financial condition at the end of the first quarter is likely to further boost demand as greater international visibility emerges and consumer confidence in vehicle warranties increases. These two factors lead me to believe that Tesla’s financials will continue to improve in the coming quarters.

Besides, Tesla collected $1 billion from debt and equity during the month of May this year after it upsized its previously announced plan of raising $830 million. These upsized funds will help Tesla continue development of the Model X and the future of the third generation product.

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