The market responded optimistically to Tesla Motors' (NASDAQ:TSLA) third-quarter results earlier this month. It delighted investors when it came to the metrics investors watch most closely, particularly its guidance for the fourth quarter. But one aspect of the company's quarterly results may be raising eyebrows: huge spending. Should investors be concerned about Tesla's cash flow?

Model

Recently launched Model X SUV. As Tesla's spending on Model X mounts ahead of a production ramp, should investors be concerned about the company's rate of cash burn? Image source: Tesla Motors.

Q3 cash flow: the doom and gloom view
Open Tesla's third-quarter letter to shareholders and pan down to the financial statements at the bottom. Keep going until you see Tesla's "selected cash flow information."

What investors will see here isn't pretty.

Not only is Tesla not yet free-cash-flow positive, which refers to cash flow from operations left over after capital expenditures, but the company also isn't even generating cash from ongoing operations. Tesla reported negative cash flow from operations of $203 million during the quarter.

On top of this spending, the company's capital expenditures were $392 million, driven primarily by expenditures related to capacity expansion, tooling for Model X, and the construction of the Gigafactory.

Q3 cash flow: the glass half full
But here's another way to look at the quarter's cash flow.

First, after making a few adjustments to more accurately reflect the health of Tesla's business, the company's core auto business is already almost breakeven. This is laid out clearly in the company's third-quarter letter to shareholders:

Our GAAP cash outflow from operations during the quarter was $203 million, but this does not include $163 million in cash inflows from vehicle sales to our bank leasing partners. Furthermore, $31 million of cash was consumed by our direct leasing business funded by Tesla, and is included in cash flow from operations. Adjusting for the impact of our leasing and financing business, our core business was almost breakeven on cash generated in Q3 prior to capital expenditures.

This is an impressive achievement following a late 2014 introduction of dual-motor and autopilot hardware technologies -- two aspects that significantly upped the ante in the Model S value proposition. With significant additions like these, the costs related to these new technologies and attributed for in Tesla's cost of goods sold will be higher initially.

Nearing breakeven on its core business is also impressive in light of how young this auto company is. Before Tesla, the verdict in the auto industry was that new automakers were doomed from the start, as succeeding in the industry requires significant capital expenditures, and the economics for new entrants are nonexistent. But Tesla's on a path to sell just 50,000 cars this year, and it's already nearing breakeven on its operations.

Tesla Fremont Factory

Tesla Fremont factory. Image source: Tesla Motors.

In other words, Tesla's progress so early in its expansion could be viewed as a testament to the company's excellent capital allocation stewardship. The company is building great cars and growing sales, while simultaneously reducing component and tooling costs.

What about Tesla's continued significant capital expenditures? If Tesla's ability to grow its business and outperform every comparably priced sedan in North America is any indication of how well its Model X may contribute to the car maker's business, and how well Model S will sell in newer markets as the company expands its business, shareholders should be happy the company is spending heavily on investments in its future.

Tesla shareholders need to zoom out
The glass-half-full view of Tesla's cash flow isn't meant to distract investors from its alarming rate of cash burn. This problem will have to be addressed in the coming quarters. If the company burns too much cash, Tesla will need to constantly raise new capital through debt or equity. Indeed, Tesla management does plan to begin tending to this issue next year, noting in its third-quarter earnings call that its capital spending will actually be less in 2016 than in 2015.

But it's worth reminding investors to at least zoom out and view the cash flow at a 10,000-foot level. The Street struggles to see beyond 12-month price targets -- a timeframe that matters very little to Foolish investors. Tesla's long-term shareholders should view the company's quarterly cash flow in light of the five- to 10-year vision.

When viewed this way, Tesla's business continues to show evidence of providing greater value at lower costs, and it's reassuring that capital spending during Q3 was primarily on efforts aimed at growing sales significantly.

"Capital expenditures were primarily for the capacity expansion and tooling associated with Model X, as well as for the construction of the Gigafactory," Tesla stated in its third-quarter letter.

Tesla Gigafactory

Rendering of Tesla's currently under-construction Gigafactory. Image source: Tesla Motors.

And the long view shouldn't be adopted out of hollow hope or baseless speculation. It should be taken seriously, because Tesla has shown investors over the last five years that its capital spending is frugal when compared to the outsized business growth and returns for shareholders it produces over the long haul. Failing to acknowledge the long view for Tesla's growth potential turns a blind eye to the company's extraordinary growth execution in the past.

So, yes, Tesla is spending huge sums of money. And the electric-car maker is currently burning lots of cash. But as a Tesla shareholder in it for the long haul, I believe the spending is justified. Indeed, I prefer Tesla spends heavily while its competitors continue to lag in introducing fully electric cars with 200-plus miles of range. Right now, slowing down growth initiatives prematurely could be riskier than forging on with rapid growth.

Daniel Sparks owns shares of Tesla Motors. The Motley Fool owns shares of and recommends Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.