Tesla Becomes Largest U.S. Automaker by Market Value

Tesla is getting lots of love from investors -- enough to value it above GM, albeit briefly.

Timothy Healey
    Apr 14, 2017 11:30 AM  PT
Tesla Becomes Largest U.S. Automaker by Market Value
author: Timothy Healey    

Tesla is now America's automaker.

Sort of.

No, the small California-based automaker hasn't overtaken General Motors or Ford in terms of sales or market share – after all, the brand sells just two models at present and has a third, the Model 3, on the way. That's hardly enough to call Tesla a full-line automaker. Even the addition of a potential pickup truck won't be enough.

Where Tesla has leapt ahead of GM, at least for now, is in market value. Earlier this week, the small startup jumped ahead of the Detroit stalwart when its shares rose to a high of $312.75 during trading on Monday.

That brought the company, which is just 13 years old, to a market capitalization of $51.01, which put it just ahead of GM's $50.89 billion market cap. Ford hit a high of $44.95 billion.

While it's like that GM may regain the top spot over time (indeed, GM already passed Tesla back before this writing), this appears to be a sign, that at least for now, the market believes in Tesla – or perhaps, a futuristic vision that includes more electric cars and self-driving vehicles. Of course, traditional automakers are as involved in building electric vehicles and developing autonomous cars as any non-traditional automaker.

A slight sales slide is working against traditional automakers – sales have been at record levels over the past few years as the nation has continued to emerge from recession, and they may now be finally cooling off.

Tesla boss Elon Musk is also considered somewhat of a Silicon Valley rock star, and he's had plenty of success with his other businesses. His presence at Tesla likely helps drive some of the enthusiasm. So, too, may the news about the pickup and Musk's promise that final version of the Model 3 is on track for July.

As for GM, the brand offered this from a spokesperson: "We've built a track record of strong financial performance," the spokesperson said to Fox Business News in an email. "We'll stay focused on delivering outstanding results and making decisions to deploy capital where it will generate the strongest returns, to enhance shareholder value."

Tesla declined to comment to Fox. Market capitalization aside, Tesla still has a tiny slice of market share, just 0.2 percent. That's more than exotic-car maker Ferrari or luxury/sports car maker Maserati, but far from GM's 17.3 percent, a number that makes GM the number-one automaker in the U.S. by market share.

Tesla is mired in debt and not yet profitable, but it remains popular with investors. In addition to Musk's popularity, the brand's unique sales model and the high-tech features offered on some of the models in its all-electric fleet – such as the AutoPilot feature – investors may simply be feeling bullish about Tesla because it's different from just about any other automaker, large or small, foreign or domestic.

"What's fun about following this company now is that anything can happen," Chaim Siegel, an analyst for Investing.com, told Fox Business in an email about Tesla. "The potential is huge. The hopes are huge."

And indeed, investors may be acting based merely on future potential and not past results, as Tesla has struggled with past product launches. If that's the case, investors are banking a lot on Tesla's future – for example, Musk has promised to move 500,000 units next year after selling 84,000 last year.

Tesla faces a lot of challenges as it grows, but generating enthusiasm isn't one of those at this point.

Fox Business News