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Tesla market cap surges past Volkswagen to $100 billion

  • January 29, 2020

Tesla’s market value surged past $100 billion (€90.2 billion) for the first time on Wednesday, as shares in the Palo Alto-based US automaker rose 8.6% to a new intraday high of $594.50. The stock is up more than 200% since last year’s closing low of $178.97 in June, making Tesla the most valuable US automaker of all time, topping the historic high of Ford in 1999.

On a global scale, the stock’s rally means Tesla is second only to Toyota in market valuation ($235.6 billion) and has overtaken Germany’s Volkswagen group, valued at about $99 billion.

After struggling amid “production hell” over its latest Tesla 3 mass-market model last year, the quick change in Tesla’s fortunes has even won the praise of US President Donald Trump, who marveled about “how it’s come so fast.”

“You go back a year and they were talking about the end of the company and now all of a sudden they are talking about these great things,” Trump told CNBC on Wednesday, adding that his administration would help Tesla in “building a very big plant in the US.”

In terms of numbers, however, the US electric car pioneer is still hugely outsold by the world’s leading automakers, Toyota and Volkswagen. Tesla delivered 367,500 cars in 2019, while its German and Japanese competitors sold more than 10 million each. So how come that Tesla is worth more than its rivals that sell 30 times more cars?

Room to run

Many analysts believe that Tesla’s rise reflects investor expectations that the company will remain at the cutting edge of technological change in the auto industry. Under pressure from a global movement for greener cars, the industry is rapidly transforming away from vehicles powered by the conventional internal combustion engine to electric modes of automobility.

Tesla is generally perceived to be at the forefront of that change. Its new Tesla 3 electric car is designed to be more affordable, costing around half of the $70,000 for previous models — thus fueling expectations of stronger growth. Moreover, Tesla last month begun manufacturing in China, the largest market for electric vehicles (EVs), and has announced a new plant in Germany that could start production by 2021.

Read more: Opinion: Tesla’s Germany plans are no coincidence

Auto industry analysts Dan Ives of Wedbush Securities believes Tesla has gained a headstart over industry rivals who have just begun to develop their own electric cars. “In our opinion, the company has the most impressive product roadmap out of any technology/auto vendor around (which the market cap reflects vs. its traditional auto competitors),” Ives said in a research note on Wednesday, adding that the US carmaker will be the “game-changing driving force” over the next decade.

Stefan Bratzel, a researcher at the Center of Automotive Management near Cologne, Germany, thinks the relatively low valuation of traditional automakers, compared with Tesla, is linked to uncertainty over whether they can navigate the looming industry shift. “Tesla has high innovative strength regarding battery-electric vehicles as well as connectivity, which can partly explain the high market capitalization,” he said in a report also published Wednesday.

But while Ives believes Tesla shares will have more room to run as the carmaker grows in China — increasing his 2020 price target to $550 — other analysts are more cautious. “Tesla’s tepid 0.3% gain in 2019 domestic unit sales suggests a tapped-out US [market], sales in China skew the US demand picture, which should become clearer by year-end with the ramp-up in Shanghai output,” says Kevin Tynan, senior autos analyst at Bloomberg Intelligence.

According to Bloomberg figures, consensus forecasts for Tesla of $363.92 are still well below where Tesla shares are currently trading, with just 10 analysts rating the stock a buy, compared with 10 holds and 16 sells.

VW girding for further Tesla rise

Gary Black, a former CEO of Aegon Asset Management and now a private Tesla investor, believes Elon Musk’s car company even could earn more than Volkswagen by 2025. He expects Musk to forecast at least 550,000 units for 2020 during next week’s Tesla earnings call.

Surprisingly, predictions that Tesla will continue to rise both in value and output are shared by its biggest rival, Volkswagen. The CEO of the German carmaker, Herbert Diess, no longer believes that Tesla is a niche manufacturer, and has highlighted its role in shaking up the auto industry.

Diess told top Volkswagen executives at an internal meeting in Germany last week that connected vehicles will almost double the time consumers spend online, and that cars will “become the most important mobile device.”

“If we see that, then we also understand why Tesla is so valuable from the view of analysts,” he said.

Volkswagen itself is planning to roll out the world’s largest EV fleet over the next decade, including 75 completely electric models and around 60 hybrid vehicles. The Wolfsburg-based carmaker said it would aim to sell 26 million all-electric vehicles by 2029 and around 6 million hybrid vehicles. For that, it wants to invest €60 billion ($66.3 billion) in the next five years.

  • From colonies on Mars to Hyperloop — Elon Musk’s multifarious projects

    A serial entrepreneur

    Tech visionary Musk intends to revolutionize transportation, both on earth and in space, and the way humans lead their lives. Over the past two decades, the South African-born American entrepreneur has emerged as one of Silicon Valley’s most recognized faces worldwide. Musk was cofounder of Paypal, which was acquired by eBay for $1.4 billion (€1.2 billion) in 2002.

  • From colonies on Mars to Hyperloop — Elon Musk’s multifarious projects

    Eying space

    In 2002, Musk founded SpaceX, an aerospace manufacturer and space transport services company currently valued at over $20 billion. He wants to make space travel cheaper and, eventually, enable human life on Mars, thus giving human kind a chance at becoming multi-planetary species.

  • From colonies on Mars to Hyperloop — Elon Musk’s multifarious projects

    A mission to Mars

    SpaceX’s Falcon and Dragon rocket programs both already deliver payloads into Earth’s orbit. The company has said it wants to launch its Mars-bound cargo flight in 2022, followed by the first Mars flight with passengers in 2024.

  • From colonies on Mars to Hyperloop — Elon Musk’s multifarious projects

    Transforming transportation

    After founding SpaceX, Musk set up Tesla in 2003 to come up with electric autonomous vehicles and renewable energy solutions. But production bottlenecks have plagued the company, with much of its future banked on the Model 3, its first mid-price, mass-market vehicle.

  • From colonies on Mars to Hyperloop — Elon Musk’s multifarious projects

    Really big Teslas are coming

    After the foray into electric cars, Musk last year opened a new chapter in his book of visions as he unveiled the prototype of a futuristic all-electric heavy truck. The vehicle — dubbed the Tesla Semi — is set to go into production in 2019. It would boast 500 miles of range, a battery and motors that will last 1 million miles and cheaper total operating costs than diesel models, Musk claimed.

  • From colonies on Mars to Hyperloop — Elon Musk’s multifarious projects

    Roofs made of solar tiles

    Besides running SpaceX and Tesla, Musk has also invested in the solar energy company SolarCity to turn his vision of a solar-powered future into a reality. Musk said houses equipped with Tesla’s Solar Roof would feed energy to Powerwall, a sleek storage unit designed to act as an electricity fill-up station for both the house and a Tesla electric car.

  • From colonies on Mars to Hyperloop — Elon Musk’s multifarious projects

    Dreaming an electric future

    In 2015, Musk unveiled Powerwall, a home battery unit with a selling price of $3,500 for 10kWh and $3,000 for 7kWh. The Powerwall can be controlled via one’s phone, from anywhere. But slow production rates have proved to be a problem.

  • From colonies on Mars to Hyperloop — Elon Musk’s multifarious projects

    Hyperloop

    Hyperloop came into global prominence after it was proposed by Musk in 2013. It is viewed as a next-generation transportation system — a “fifth mode” of transport (after planes, trains, cars and boats). It uses magnetically-levitated pods and sealed partial vacuum transit tubes to move people and freight at supersonic speeds estimated to reach over 700 miles per hour (1,127 kilometers per hour).

  • From colonies on Mars to Hyperloop — Elon Musk’s multifarious projects

    Merging brain with AI

    In 2016, Musk co-founded Neuralink, a neurotechnology startup that is reportedly trying to create brain-computer interfaces by integrating the human brain with artificial intelligence (AI). The project is currently at an early stage of development.

    Author: Srinivas Mazumdaru


Article source: https://www.dw.com/en/tesla-market-cap-surges-past-volkswagen-to-100-billion/a-52119603?maca=en-rss-en-bus-2091-xml-atom

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