Elon Musk’s Tesla has surpassed General Motors to become America’s most valuable car maker, eclipsing a company whose well-being was once viewed as interdependent with the nation’s.
Tesla climbed as much as 3.4 per cent in early Monday trading, boosting its market capitalisation to about US$51 billion. The company was valued at about $1.7bn more than GM as of 9:35am in New York.
The turnabout shows the extent to which investors have bought into Mr Musk’s vision that electric vehicles will eventually rule the road. While GM has beaten Tesla to market with a plug-in Chevrolet Bolt with a price and range similar to what Mr Musk has promised for his Model 3 saloon coming later this year, the more than century-old company has failed to match the enthusiasm drummed up by its much smaller and rarely profitable US peer.
“Tesla engenders optimism, freedom, defiance, and a host of other emotions that, in our view, other companies cannot replicate,” said Alexander Potter, an analyst at Piper Jaffray. “As they scramble to catch up, we think Tesla’s competitors only make themselves appear more desperate.”
The electric car maker is garnering a reputation among petrolheads for whom the word battery usually invokes a shudder of derision. Indeed, Tesla’s Model X when in Ludicrous mode can beat a Ferrari 458 over a standing quarter-mile track.
Tesla usurped GM a week after conquering Ford Motor and spurring debate over the relative value of Mr Musk’s company compared with some of the world’s top-selling car makers. GM expects to earn more than $9bn this year and analysts predict Ford will generate adjusted profit of about $6.3bn. On that basis, Tesla is expected to lose more than $950 million.
No matter, say investors who like the stock. Tesla is a technology player with the ability to dominate a market for electric cars and energy storage. To those same investors, GM and Ford are headed for a slowdown in car sales that will erode profits.
The Model 3 is expected to sell for about $35,000 and boast at least 50 kilometres of battery range per charge, marks GM achieved with the Bolt that began selling in California this year.
“They’re becoming a better car manufacturer in volume, and people underestimate where they are on battery cost,” he said.