In terms of market capitalization, Tesla has overtaken General Motors to become the most valuable car manufacturer in the United States. This comes as automobiles increasingly become reliant on cutting-edge energy technology and software. It is also the first time that America’s most valuable motor vehicle manufacturer is based outside Detroit, Michigan.
The rise in Tesla’s value was partly helped by recommendations from analysts. This saw the shares of Tesla appreciate by 3.26% on Monday and to reach $312.39, a record high. With a market capitalization of $50.887 billion, Tesla exceeded the value of General Motors by approximately $1 million.
In the past one month, the shares of the electric motor vehicle manufacturer have appreciated by 35% based on future prospects since investors are betting on the fact that Tesla’s chief executive officer and co-founder, Elon Musk, will revolutionize both the energy and the car sectors.
But even as Tesla became the largest automaker by market capitalization, General Motors still has the lion’s share of the market in the United States. In 2016, General Motors accounted for 17.3% of car sales while Tesla’s market share was a paltry 0.2%. While General Motors sold approximately 10 million cars, Tesla sold about 76,000. Another huge difference between the two is that General Motors made a profit of over $9 billion in 2016 while there only two quarters in the history of Tesla have been profitable.
According to Alexander Potter, an analyst at Piper Jaffray, Tesla has an emotional pull not just on consumers but also investors.
“Tesla isn’t just another company. More so than any stock we’ve covered, Tesla engenders optimism, freedom, defiance, and a host of other emotions that, in our view, other companies cannot replicate,” Potter said in a report which upgraded the electric automaker’s stock from ‘neutral’ to ‘overweight’.
The appreciation in Tesla’s share price come even as the electric car maker encounters hurdles in its ambitious efforts to increase production levels. One of Tesla’s targets for instance is to make half a million vehicles in 2018 which would be a huge leap from last year’s production figure of 84,000.
Most of the half a million vehicles that Tesla is targeting to produce will be the company’s first mass market car, the Model 3 sedan, whose launch date has not yet been made public. The expected price of the Model 3 is approximated to be $35,000. It will have a battery range of 350 kilometers.