When it comes to automobile giants, it doesn’t get bigger than the likes of Ford and General Motors. Except… that it does get bigger than one of them. Tesla, that little upstart of a company that made it’s first car (the Tesla Roadster) less than a decade ago is now valued higher than Ford Motor Company! Ford is a stalwart in the American automobile industry and has held it’s position for over a century, but not anymore. Interestingly, by valuation, Tesla now stands at $47.8 billion, Ford is at about $45 billion, GM is at $50.8 billion and very much beatable by the upstart. Heck, Japanese car maker Honda, at $54 billion might be beatable if Tesla’s stock rise continues.
Keep in mind that stock prices are influenced by the market perception of the company. In this case, Tesla has been consistently pushing out positive updates since the last quarter of 2016 with vehicle shipments rising beyond the rates predicted by analysts. Ford, on the other hand, has had a bad few months with vehicle recalls and dipping sales. As a result, this change in standings is expected. But that doesn’t make Tesla CEO Elon Musk any less jubilant about it, as he took to Twitter to take a jibe at ‘short sellers’.
Stormy weather in Shortville …
— Elon Musk (@elonmusk) April 3, 2017
The big picture
Of course, Tesla is a loss making company and all the others make profits, but the markets are placing their bets on the future as traditional car maker stocks continue to fall steadily. For a company at the scale of Ford, a dip in sales or stock valuation is recoverable. Whereas, Tesla is in a lot of debt and is depending heavily on the growing sales trend to persist for it to break even. It does have huge branding in the electric car segment, and is considered by almost anyone interested in electric cars to be the best. The self-driving aspect has also got them a lot of acclaim, and Tesla still remains a super car amongst the electrics. All this translates into huge rises in stock based solely on the promise of a better future, and only Tesla can screw it up from here. Let’s hope they don’t, because they sure do make some exciting cars!