Tomahawk, WI 11/07/2013 (BasicsMedia) – That Tesla Motors Inc (NASDAQ:TSLA)’s electric cars tick is not in question. The concern is why the company has had to narrow its revenue focus and car deliveries in the coming quarter. The company has been very categorical about its challenges. It says that its not that the market doesn’t understand what its doing, but the problem lies in its production capacity.

In the most recent quarter, the company reported revenue that missed expectations of Wall Street. However, it managed to narrow its losses on the adjusted earning basis, although according to the company’s non-GAAP system, it did made a profit in the quarter. The company still has a wide ground to cover in terms of revenue and earnings improvement. And it has the strength and opportunities to do this.

So far, the company’s car deliveries are way below the demand. It has a backlog of orders coming from China and Europe, markets which although the company is yet to make serious foray in terms of marketing and sales, have already caught the wave of its next generation luxury cars.

The failure by Tesla to meet its revenue target in the previous quarter and why it has narrowed its forecast for the current quarter is that Panasonic, its primary lithium-ion cells provider, is not able to provide the demand. The company has been reported to be in talks with other suppliers but its CEO alluded that it could also take the challenge to supplementing its own battery cell needs by setting up a factory for cell making. Investors should understand that Panasonic which supplies Tesla with the lithium-ion cells used in its Model S sedan is also its business partner.

Tesla making its own cells looks like a remote idea. Instead, the company would rather seek deals with established cell suppliers who could also add credit to its machines. That Tesla is committed to churning out vehicles which take the market by surprise can be seen in its latest deal with leading carriers in the U.S. for the extension of 4G network to its vehicles. Tesla’s Model X which is expected late next year is a luxury SUV which features finer features than Model S. Orders for this car are already piling and the company has to do all it can to ensure that it doesn’t disappoint on delivery.

As of now, the electric automaker plans 21,500 unit deliveries of its flagship Model S this year. The company had initially intended for 25,000 deliveries through 2013. Last year, Tesla fell short of its 5,000 unit-delivery to only deliver 2,650 units of Model S.

In the most recent quarter, the company generated $431.3 million revenue, up from $50.1 million in the same quarter last year. This increase was due to improvement in car delivers. Following the latest revenue collection, the company’s loss came down to $38.5 million or $0.32 per share, from $110.8 million or $1.05 per share in the same quarter a year ago. In the quarter, the company sent about 1000 cars to Europe. Tesla now hopes to begin its foray into China next year starting January.

Currently Tesla’s shares trade around $151 per unit, way above that of its peers in the auto industry.

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