The never-profitable Tesla Motors has cruised past both Ford and General Motors in investor sentiment to become the most valuable American car company.
Last week, Tesla’s market capitalization “blew past” Ford’s US$44.6 billion, the Washington Post reports. Then this week, it lapped General Motors when the price of shares in the electric car-, battery-, and solar-shingle-making company brought its value up to US$51.5 billion, above GM’s US$50.2 billion.
“Musk’s company is now within $1 billion of Honda Motor Co. and cracking the top-five automakers worldwide,” Bloomberg observes.
“Tesla has yet to turn a profit, losing hundreds of millions of dollars last year alone,” the Post notes. The 84,000 cars it built in 2016, all in the United States, were a fraction of GM’s 10-million-vehicle production worldwide. And according to the Detroit News, GM reported profit last year of more US$9 billion.
“This is the ultimate bubble, which is doomed to burst,” former GM vice chair Bob Lutz said of Tesla’s ebullient stock. “Tesla cars are fine, but the business model is not.” And “all legacy car companies will soon have a variety” of similar electric vehicles.