Date
19 November 2017
A Tesla Model S charges at a Tesla Supercharger station in California. Tesla now has a market capitalization of  US$50.887 billion. Photo: Reuters
A Tesla Model S charges at a Tesla Supercharger station in California. Tesla now has a market capitalization of US$50.887 billion. Photo: Reuters

Tesla becomes most valuable US carmaker, edges out GM

Tesla Inc. on Monday became the most valuable US carmaker, hitting a market capitalization of US$50.887 billion and edging past General Motors which produces many more cars, Reuters reports.

Helped by an analyst’s recommendation, the luxury electric carmaker’s stock rose 3.26 percent to a new record high close of US$312.39, and its market value exceeded that of GM, which ended at US$50.886 billion.

Over the past month, Tesla has surged 35 percent as investors bet that it and chief executive Elon Musk will revolutionize the automobile and energy industries.

Tesla’s market capitalization is now equivalent to US$102,000 for every car it plans to make in 2018, or US$667,000 per car sold last year. By comparison, GM’s market capitalization is equivalent to US$5,000 per car it sold in 2016.

Proponents believe Tesla will become a carbon-free energy and transportation heavyweight and they argue its valuation is reasonable based on long-term expectations for Tesla’s growth.

They also point to opportunities from Tesla’s acquisition last year of money-losing solar panel installer SolarCity and Tesla’s Nevada battery cell plant aimed at driving down manufacturing costs.

Skeptics believe Tesla’s growth targets are unrealistic and that it is at risk of being overtaken by GM, Ford and other deep-pocketed manufacturers that are ramping up their own electric-vehicle offerings.

Jeffrey Gundlach, who oversees more than US$105 billion in assets at Los Angeles-based DoubleLine Capital, told Reuters last week: “As a car company alone, Tesla is crazy high valuation. As a battery company – one that expands and innovates substantially – maybe the valuation can work.”

– Contact us at [email protected]

RC/RA

EJI Weekly Newsletter

Please click here to unsubscribe