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Wall Street Should Go Easy on Tesla

NEW YORK (TheStreet) -- The first three months of 2014 were a mixed financial bag for Tesla Motors (TSLA). This week, the visionary automaker had to admit that it lost $49.8 million in the first quarter of this year, as compared to an $11.2 million profit in the first quarter of 2013. Its new SUV, the Model X, will be delayed until 2015 and, according to news reports, production on its existing Model S was somewhat delayed by a short supply of the battery cells that power Tesla's vehicles.

That negative news hasn't hurt Tesla's shares, which are up 1.5% as of 11:30 a.m., to $187.40.

Investors shouldn't be too quick to punish Tesla. The automaker's first-quarter losses were less than Wall Street expected, and the company's overall GAAP revenue rose to $620.5 million in the last quarter, compared to $561.8 million in the year-ago quarter and $615.2 million in the prior quarter.

Tesla produced over 7,500 cars in the first quarter, delivering 6,457 to customers and retaining the rest as inventory to satisfy international demand. Tesla says it intends to continue ramping up production without sacrificing quality, and projects that it will produce about 35,000 vehicles this year.

The company has also begun building right-hand drive vehicles for international sales. That temporarily drove up its R&D costs, but should boost Tesla's long-term profitability.

To deal with its battery shortage, Tesla has signed a letter of intent to partner with Panasonic to jointly build its Gigafactory for electric car batteries, to be completed by 2017.

In short, Tesla's short-term financial difficulties were offset by long-term benefits that investors should keep in mind when valuing the company's stock.

More important, though, investors should consider the significant contribution that Tesla's vehicles can make to the greater good. According to the National Climate Assessment report released this week by the U.S. Global Change Research Program, human use of fossil fuels is warming the Earth much faster than predicted, creating intense storms and floods that overflow riverbanks, close businesses, rip up roads and destroy homes. Crippling drought shrivels crops and drives up food prices, leaving consumers with less discretionary income which, in turn, slows economic growth.

That, if nothing else, should get investors' attention.

To minimize the harmful effects of global warning, fossil fuel use must be quickly and significantly reduced. That's where Tesla and other electric car companies come in. Tesla isn't just building a product. It's literally trying to change the way the world drives by providing beautifully designed, reliable electric alternatives to traditional gasoline-powered automobiles.

A vision that grand takes time to execute, and there are bound to be bumps along the way. To batter Tesla's stock every time the company meets Wall Street's official projections but misses the whispered numbers is short-sighted and unfair.

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At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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