The electric vehicle and energy company has become the U.S.'s no. 2 auto firm, leapfrogging another of the Detroit giants
PALO ALTO, California—One is American institution, the other, an upstart.
Ford Motor Co. traces its roots back to rugged early 20th century Detroit, Tesla Inc. to sun-soaked Palo Alta, California about 15 years ago. Ford shipped more than 6.6 million vehicles last year. Tesla delivered about 76,000.
But none of that seems to matter.
On April 3, in what turned into a rough day on the markets for America’s traditional automotive industry, Tesla share prices surged more than seven per cent to reach their highest-ever value.
The Elon Musk-headed automaker—and now energy company as well—saw its market cap move up US$3 billion or so over the course day to settle at just under $50 billion. With Ford’s market value dipping to slightly more than $45 billion, Tesla overtook the Dearborn, Mich.-based company to become the U.S.’s second-largest automaker by market value, trailing just General Motors Inc.
As Tesla surged, the Big Three sputtered. Ford shares fell 1.7 per cent Monday, GM dropped 3.3 per cent and Fiat Chrysler Automobiles declined 4.7 per cent as investors reacted to fresh industry results.
Musk used to occasion to take a stab at short sellers and critics who have questioned the electric vehicle maker’s rise.
“Stormy weather in Shortville …” he tweeted as markets opened.
Tesla is gearing up for the production launch of its cheaper Model 3 EV this summer as the Big Three and other foreign carmakers pivot to electrics and autonomous vehicles.
After a somewhat rocky takeover of panel maker SolarCity Inc. last November—which led to some share price depreciation and questions about Musk’s leadership—Tesla seems to have silenced the naysayers, at least for the time being.
Despite Tesla overtaking Ford on Wall Street, it’s important to note that market cap is just one of the many ways to compare businesses—and in the Palo Alto-based company’s case, it rests more on prospects than current scale. Ford, for instance, posted revenues of $151.8 billion last year, Tesla just $7 billion.
Before markets opened April 5, Tesla’s market cap sat at $49.4 billion compared to Fiat Chrysler at $13.3 billion, Ford at $45.2 billion and GM at $51.3 billion.