The stock market has been in for a wild ride the past few months, but projections from Tesla and General Motors could make the latter the most valuable U.S. automaker once again.
Tesla has held the crown for years as its stock price surged, but news that Tesla will cut 7 percent of its workforce as it focuses on continued profitability has led to a dip in its share prices. Bloomberg reported Friday that Tesla’s market capitalization could drop to around $55 million, which puts it in striking distance of GM’s $54 billion market capitalization.
GM may be in a better position, too. It shocked investors with a message that it expects continued profitability through 2019 and downplayed headwinds in the U.S. market and China, where sales have slowed down. In contrast, Tesla said it expects a “very difficult road ahead” as it prepares to finally put the most affordable Model 3 electric car into production sometime this year. Tesla has focused on high-margin Model 3s first, which cost far more than the $35,000 base price the company touted. Tesla will also enter 2019 with diminished tax credits after it sold a qualifying 200,000 cars in 2018.
GM, too, reached the threshold and will face diminished tax credits this year before they disappear in the next year. The automaker has joined forces with Tesla and Nissan to lobby for an electric-car tax credit extension
CEO Mary Barra said the company expects a very healthy 2019 as it prepares for a full year of sales of its redesigned light-duty trucks, the 2019 Chevrolet Silverado and 2019 GMC Sierra, and the 2019 Cadillac XT4. The 2020 Cadillac XT6 will also launch later this year and fill a void in the brand’s portfolio.
Should GM retake the the most valuable US carmaker crown, it will still lag far behind Japanese rivals. Toyota, for example, has a market cap of $202.8 billion.