Back to top

Analyst Blog

The recent launch of BMW’s new i3 battery electric car in New York, London and Beijing does not seem to endanger the popularity of Tesla Motors Inc. and its Model S electric car.

Shares of Tesla rose to the 52-week high of $135.37 and closed at $134.62 yesterday, up 4.0%, despite the i3 launch, which proves that the Palo Alto, Calif.-based automaker still reigns the electric car market.

Although BMW i3 is launched with a lower price tag ($41,000) compared with Model S, it lags behind Tesla’s car in terms of driving range. The i3 delivers 100 miles per battery charge, which is less than half of Model S.

According to Environmental Protection Agency (EPA), Model S can travel up to 265 miles on a single charge of its 85-kilowatt-hour (kWh) battery pack. It is for this reason and other factors the car has received the highest rating from the popular Consumer Reports magazine.

Shares of TSLA more than tripled this year. The stock debuted in the NASDAQ-100 Index and the NASDAQ-100 Equal Weighted Index on Jul 15, replacing technology giant Oracle Corporation .

Tesla Motors, named after the renowned physicist and inventor Nikola Tesla, posted its first-ever quarterly profit of $15.4 million, or 12 cents per share, on an adjusted basis, in the first quarter of 2013. This indicated a whopping positive earnings surprise of 271.4% given the Zacks Consensus Estimate of a loss of 7 cents for the quarter.

Revenues jumped manifold to $561.8 million from $30.2 million in the first quarter of 2012, thanks to the impressive 5,000 units of Model S electric car sales during the quarter. For full year 2013, the company expects to deliver 21,000 Model S cars globally, up 5% from its prior guidance of 20,000 units.

In May, TSLA also paid off the remaining $465 million U.S. Department of Energy (DOE) loan much earlier than expected. The electric carmaker received the loan in Jan 2010 and agreed on a 10-year repayment program. However, the company repaid the full outstanding amount of the loan in the second installment itself.

Electric cars have always been criticized for limited driving range leading to their weak demand. This led to limited sales of vehicles such as Nissan Motor’s Leaf and General Motors’ Volt. However, Tesla’s innovative ideas about making electric cars much more affordable and driver-friendly give it a competitive edge over rival automakers.

The revelations of Tesla’s innovative ideas and mounting stock price pose a threat to the prominent automaker General Motors, so much so that the Detroit automaker revealed that it has recently assigned a team to study the challenges faced by the Calif.-based automaker in electric vehicle technology.

We expect TSLA to beat estimates when it reports 2013 second quarter results before the opening bell on Aug 7 due to the combination of the stock’s Zacks Rank #1 (Strong Buy) and +16.7% ESP (Read: Zacks Earnings ESP: A Better Method).

Please login to Zacks.com or register to post a comment.