Just last week, Tesla surpassed Ford Motor Company to become the second most valuable American automaker but was shy of General Motors. Now, that has utterly changed. Bloomberg reports Tesla is now the most valuable U.S. automaker as it passed GM yesterday.
GM, a company once so intertwined with the U.S. economy, slipped to the number two spot as Tesla ended the day valued $64 million more than the General. Tesla’s market capitalization climbed to $50.9 billion. It shows Tesla CEO Elon Musk’s vision of energy efficiency and electric vehicles taking over mass transportation is a better sell than GM, which has struggled to impress investors, despite launching the 2017 Chevrolet Bolt EV and Maven to redefine its approach to the auto industry.
“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 Cos. “As they scramble to catch up, we think Tesla’s competitors only make themselves appear more desperate.”
However, other analysts say Tesla will eventually have to actually make money to keep its value from eroding. Tesla is on pace to lose $950 million this year, while GM expects to earn $9 billion.
“Is it fair? No, it isn’t fair,” Maryann Keller, an auto-industry consultant in Stamford, Connecticut, said. “Even if Tesla turns a profit, they will eventually have to make enough to justify this valuation.”
“The market cares more about the potential new market value of the other businesses Tesla is in than about real profits and cash flow,” another analyst, David Whiston at Morningstar Inc., said.
Tesla is now the sixth most valuable automaker globally. Analysts believe the automaker will soon take down Honda to claim the number five spot; Honda is valued at a hop, skip and jump away at $52 billion.