Alcoa Appreciates Tesla for Model S

Alcoa Inc. ( AA - Analyst Report ) , one of the members of the Aluminum Transportation Group (ATG), applauded Tesla Motors ( TSLA - Snapshot Report ) on the launch of its Model S electric vehicle. The Model S is an electronic vehicle that intensively uses aluminum, which reduces weight and produces zero emissions while offering rapid acceleration and nimble performance.

The ATG educates vehicle manufacturers about the benefits of aluminum in transportation applications and increase its usage in transportation through research and development activities. The ATG acts as a central resource for the automotive and commercial vehicle industries on aluminum issues. There are increasing concerns about automotive safety and fuel economy and it is where aluminum plays an important role in the design and engineering of cars and light trucks.

As per Tesla Motors, aluminum will reduce the overall weight of Model S to help maximize efficiency and range. The structure of the model is designed in such a way that it not only provides protection to the passengers, but also enables smooth handling of the car. Aluminum forms an integral aspect of the car as almost every parts of the car that are visible are made up of aluminum.

Tesla intends to increase the production of Model S throughout 2012 and plans to deliver 5,000 vehicles by the year-end. Reservations for the model currently exceed 10,000 units.

Pennsylvania-based Alcoa Inc. is among the world’s leading producers of primary and fabricated aluminum and alumina. The company is engaged in mining, refining, smelting, fabricating and recycling of aluminum.

Few months back, Alcoa released its first-quarter 2012 results. The company reported earnings of 9 cents per share in the quarter, compared with earnings of 27 cents in the first quarter of 2011. Excluding restructuring charges and other items, Alcoa's profit came in at 10 cents per share, beating the Zacks Consensus Estimate of a loss of 4 cents but missing the year ago profit of 28 cents. The impressive results were attributable to higher production and volumes, and improved market conditions.

Quarterly revenues inched up 0.3% sequentially to $6,006 million and edged up 0.8% over the prior-year quarter. It surpassed the Zacks Consensus Estimate of $5,735 million. The increase in revenues was driven by strong results in the company’s Global Rolled Products and Engineered Products and Solutions businesses.

Alcoa competes with Aluminum Corporation of China Limited ( ACH ) and RioTinto plc. ( RIO - Analyst Report ) . Currently, the stock maintains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating. We have a long-term Neutral recommendation on the shares of Alcoa.