Tesla becomes top US carmaker

Elon Musk’s Tesla briefly surpassed General Motors to become America’s most valuable carmaker, eclipsing a company whose well-being was once viewed as interdependent with the nation’s. A week after topping Ford Motor, Tesla climbed as much as 3.7 per cent in early Monday trading, boosting its market capitalisation to $51 billion. The company was valued at about $1.7 billion more than GM as of 9:35 am in New York and the two jostled for the lead spot in subsequent trading.

The turnabout shows the extent to which investors have bought into Musk’s vision that electric vehicles will eventually rule the road. While GM has beat Tesla to market with a plug-in Chevrolet Bolt with a price and range similar to what Musk has promised for his Model 3 sedan 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, who upgraded the stock Monday after owning a Tesla for seven months and meeting with management.

“As they scramble to catch up, we think Tesla’s competitors only make themselves appear more desperate.”

Tesla’s usurping of GM and Ford will undoubtedly spur debate over the relative value of Musk’s company compared with some of the world’s top-selling automakers. GM expects to earn more than $9 billion this year and analysts predict Ford will generate adjusted profit of about $6.3 billion. On that basis, Tesla is expected to lose more than $950 million.

Bloomberg