Tesla Stock Value Passes Ford

Elon Musk, according to a Bloomberg report, has poked fun at doubters as Tesla’s stock value increased to a record high and surpassed the value of its 113-year-old rival Ford. Musk tweeted “Stormy weather in Shortville…” clearly targeting short sellers who doubted the company. With the current rise in stock value, Tesla is now valued at $48.2 billion, $3.1 billion more than Ford, putting the California-based EV automaker just behind General Motors. The announcement of Tesla’s value increasing comes after the automaker reported that worldwide shipments of cars topped 25,000 units, which exceeded analysts’ estimates.

Ben Kallo, an analyst from Robert W. Baird & Co., told Bloomberg that while demand for electric cars is unclear, people do want Tesla’s vehicles. However, Ford’s overall net income in the last five years totaled $26 billion whereas Tesla lost $2.3 billion in the same time frame. Ford’s revenue last year was $151.8 billion while Tesla stood at $7 billion. In the U.S., Tesla sold 40,697 vehicles last year, according to a registration data compilation from IHS Markit.

Kallo believes that since Tesla has more ambitious plans going on since Musk has the so-called “star power” being the CEO of SpaceX. As a result of its other activities, Tesla has been treated more as a tech company rather than an automaker. With the arrival of the Model 3, which will be Tesla’s most affordable vehicle, Musk predicts that the automaker’s annual production will increase to about 500,000 units by 2018.

Chinese Internet company Tencent Holdings Ltd. recently bought a 5-percent stake in Tesla and will be key to the brand’s attempt at breaking into the Chinese auto market. The Model 3 will also mark Tesla’s first foray into the mass market segment and will be it’s most important activity this year, according to Joseph Fath, a fund manager at T. Rowe Price. Maryann Keller, an auto industry consultant said that once Tesla breaks into the mainstream segment, it will look like a normal automaker. However, Keller cautions that the company will have a harder time justifying the value of its vehicles due to current low demand for mainstream electric cars and that Musk will have to add more staff and stores to sell and service its vehicles.

Tesla will also be facing plenty of competition as many automakers are now developing electric vehicles for release sometime around the end of the decade, meaning it will face more competition. Ford, for instance, plans to spend $4.5 billion for electric vehicle fleet development, which it plans to release by 2020.

Source: Bloomberg

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