Tesla charges ahead to overtake Ford in market value
Elon Musk’s electric car company has been valued at $49bn, leaving the 100-year-old motor manufacturer lagging behind
One is an automotive titan that has built more than 350m vehicles in an illustrious history spanning more than a century.
The other is less than 15 years old and has never made a profit.
And yet a 7% surge in the value of shares in electric car firm Tesla on Monday saw it zoom ahead of Ford Motor Company, in terms of its stock market value.
As Wall Street closed for the day, Tesla, led by 45-year-old tycoon and futurist Elon Musk, was worth $49bn (£38bn), compared with a paltry $46bn for the empire built by Henry Ford.
This astonishing overtaking manoeuvre says as much about the nature of stock markets as it does about these two very different carmakers.
The old cliche among stock market investors is that you should “buy on the rumour, sell on the fact” – the idea that investment is more about what you expect to happen in the future than the current state of play.
And Tesla, investors believe, is the standard-bearer of a battery-powered future – while Ford is the archetypal mass-production legacy car business.
Based in the Californian tech hub of Palo Alto, Tesla delivered 76,230 cars last year – a fraction of Ford’s 6.65m.
It made sales of $7bn but a loss of $746m, while Ford recorded a $10.4bn profit after racking up sales of $152bn.
But fresh figures published this week, which cover the most recent three months, showed 70% growth in sales at Tesla, with 25,000 electric vehicles rolling noiselessly into the garages of their new owners.
That sort of growth rate is what sent investors piling into
Tesla shares, expecting a continued global push for greener cars to be the
catalyst for converting notional value into concrete returns.
And if Musk is to to be believed, Tesla won’t be slowing down
any time soon.
The firm’s production targets are unprecedented in the
automotive industry. Tesla has set a goal of building 500,000 cars in 2018 and
Musk has even raised the prospect of doubling that to 1m by 2020.
Despite the setback of a fatal crash last year, when a Tesla on
autopilot failed to tell the difference between the side of a white lorry and a
bright sky, the company continues to make strides towards a fully driverless car.
Its new Model 3, slated for production this year, is intended
to offer a more affordable version of previous models, with a price tag around
$35,000.
If successful – and it is being seen as a litmus test of the
prospects for electric cars – the Model 3 could supercharge Tesla’s growth by
muscling in on the territory of mass market rivals.
The firm also has a potentially lucrative sideline in storage
batteries for the home. The Powerwall is intended to allow homes
to store solar power, and Tesla is also due to start installing its first solar roof tiles this
year.
Tesla may be on a charge, but Ford is in particularly bad shape.
It remains in the world’s top 10 auto firms and is also among the US “Big
Three” alongside General Motors and Chrysler. But while Tesla’s sales are
soaring, the 6.65m vehicles that Ford sold last year were just 16,000 up on
2015 sales. In the most recent quarterly update from Ford, sales actually fell.
The company that helped to build Detroit, often known as Motor
City, sold 1.7m cars in the quarter, about 68,000 fewer than in the same period
the previous year.
Musk was in the mood to gloat about Tesla’s comparatively rapid
growth story.
“Stormy weather in Shortville,” he tweeted, a reference to
traders who had been burned by “shorting” Tesla – betting its results would
disappoint and its shares would fall.
excerpt to theguardian
EmoticonEmoticon