Tesla became the most valuable car marker in the country Monday, even though the electric car company has yet to turn a profit in its 13 years of existence.
The California-based automaker raised its market capitalization to $51 billion, a number that is valued at about $1.7 billion more than GM. The two companies wrestled for supremacy during early trading Monday.
There is significant debate over whether Tesla’s recent surge is sustainable, given the company’s chronic inability to deliver products on deadline. Some analysts say the old metrics of valuation do not apply to Tesla, because investors and the public believe the company is upending the auto market.
“Tesla engenders optimism, freedom, defiance, and a host of other emotions that, in our view, other companies cannot replicate,” said Alexander Potter, analyst at Piper Jaffray Cos who owns stock in the company. “As they scramble to catch up, we think Tesla’s competitors only make themselves appear more desperate.”
Some are much more pessimistic about Tesla CEO Elon Musk’s ability to move past both companies based on market fundamentals. Analysts believe GM will pull in more than $9 billion this year while Ford is expected to rake in $6.3 billion. Tesla, meanwhile, is expected to lose more than $950 million.
“It’s ridiculous,” Philip Davis, a co-founder of PSW Investments, told The Daily Caller News Foundation earlier this month after Tesla stepped in front of Ford to become the second most valuable auto company in the country. He believes many investors don’t care a wit about whether Musk can produce a viable product.
GM and Ford make more cars in one week than Tesla has in a year – to pretend that they are comparable in any way is “crazy,” he added. Ford and GM produced more than 1 million vehicles in 2016; Tesla sold 80,000.
Another analyst argued Tesla will eventually have to ante up before Wall Street will fully buy into the hype
“Is it fair? No, it isn’t fair,” Maryann Keller, an auto-industry consultant in Stamford, Connecticut, said of the Model 3 maker’s recent fortunes. “Even if Tesla turns a profit, they will eventually have to make enough to justify this valuation.”
Tesla’s Model 3 – a supposedly inexpensive sedan – is expected to sell for about $35,000 and boast at least 215 miles (350 kilometers) of battery range per charge. The company has yet to produce any of the highly touted inexpensive sedans.
Musk, who owns 20 percent of the company, has promised to deliver between 100,000 and 200,000 Model 3s to the market in the second half of this year. He must produce more than 40,000 Model 3s a month to keep that promise – Tesla managed to produce only 25,000 cars during the first three months of this year.
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