Just last May, shares in Tesla were trading at just $185. Today, at time of writing, that number has jumped up to a high of over $920, as the company’s market capitalization continues to surge past $160 billion. It continues to smash expectations as it posted a profitable quarter in January, and battery supplier Panasonic worked to erase earlier losses and production troubles as the electric automaker ramps up production. As Tesla expands, Panasonic saw the benefit to its bottom line, which in turn is also driving Tesla’s growth.
To put those numbers in perspective, legacy automakers have more or less held steady for the past two years. Toyota’s market cap is hovering around $225 billion, presently making it the world’s most valuable automaker. Volkswagen has gained some steam in 2019, and is sitting around $100 billion. Ford and General Motors are between $40 and $50 billion respectively.
Tesla flew past VW, GM and Ford in the past six months alone.
Some analysts are puzzled
On Monday alone, Tesla’s stock jumped to $780, a 20 percent increase in a single date. Now, shares are up another 20 percent, and some are scratching their heads trying to understand the explosive growth. Sure, the company posted a net positive quarter and Panasonic’s own fortunes are a boon for Tesla. Those events on their own, though, are unlikely to be the only things sending traders into a frenzy. Then reports like this one from Reuters emerged, citing one investment firm’s bullish prediction regarding Tesla stock. Ark Invest said it expects the share prices to rise by $7,000 by 2024.
If that were to happen, Tesla would handily round the $1 trillion value mark, particularly as it aims to launch full self-driving capability and a host of new models by then.
Speaking of those models, the excitement around Tesla’s Model Y, Cybertruck and Roadster could be a reason the stocks have rallied so much in the past several weeks. As a company notorious for product delays, the Model Y is actually reaching production ahead of schedule, and the company’s Shanghai Gigafactory’s rapid completion has been another boon for the company’s expansion. We aren’t financial analysts by any means, so that’s just an attempt to explain investors’ excitement and Tesla’s skyrocketing stock value. At this point, though, there doesn’t seem to be a single major driving factor, at least according to some experts, and it’s unclear how long the huge upward swing in Tesla’s value will last.
Tesla is still the only major player, at least for now
Jalopnik‘s Justin Westbrook points out that a probable reason for Tesla’s recent success may not have to do with the company or its products. Instead, it’s not so much about Tesla’s success as it is other automakers failing to present a real threat. Automakers like Ford and GM have announced electric vehicles — GMC just revealed the Hummer’s return as an electric truck — but haven’t actually launched any new vehicles yet. Chevrolet does have the Bolt, but its ambitious plan to launch dozens of EVs in the next few years hasn’t happened yet. Same goes for Ford, as we expect the Mustang Mach-E to reach production later this year.
The other two large players, Toyota and Volkswagen, haven’t put full battery EVs on U.S. streets in large numbers, either. We’re expecting the ID. Crozz crossover from VW in the coming months, and Toyota just launched a joint venture with Panasonic to make EV batteries. Yes, the Japanese automaker has a range of hybrid vehicles and the hydrogen-fueled Mirai, but Tesla still dominates the current EV market. Even with some other players in the market, Tesla has the sales numbers and brand recognition to increase its hold on the market. As its product stack consists entirely of electric vehicles, it already has the range legacy automakers are struggling to reach as they transition away from internal combustion.
That said, as far as global reach is concerned, the others still have an edge. Tesla’s status as the first full EV automaker has won it thousands upon thousands of loyal customers, but those who have been in the game much longer may prove a serious threat as they continue toward electrification. Their impact may curtail Tesla’s explosive growth in the long run with increased competition. We’ll have to see what happens, but for the moment Tesla is undoubtedly riding high.
