Following the announcement that Tesla had delivered over 76,000 vehicles in 2016 into customer hands, exceeding analyst estimates, the California-based EV-maker’s stock price surged up over last weekend to a record high, beating Ford’s market valuation to $48.2 billion US Dollars (or roughly $64 billion AUD).
By contrast, Wall Street values the Ford Motor Co, an automaker with over 100 years under its belt, at a slightly more modest $45 billion US Dollars. It’s a clear sign that investors are optimistic of Tesla’s future despite selling a comparatively tiny number of cars and recorded a loss of $675 million USD for 2016 or $2.3 billion USD over the past 5 years; a period that Ford profited to the tune of $26 billion USD, according to Bloomberg.
To its credit, Ford, like Tesla, is investing heavily into alternative methods of propulsion (including battery-powered electric cars) as well as a more publicised program to develop autonomous driving systems.
Tesla CEO Elon Musk, however, expects his company’s production numbers to balloon as a result of their new manufacturing facility in Nevada, which they call the Gigafactory. His plans for aggressive growth foresee up to 500,000 vehicles produced in 2018 - the bulk of which comprising of the more affordable Model 3 - and 1 million vehicles by 2020.
It’s a lofty ambition, but even if Musk and Tesla meet those goals, the company will likely still not be worth $50 billion USD, though the murky realm of stock price alchemy doesn’t work that way, wherein good news drives market action just as much as strong financial performance.
Ford moves over 2 million vehicles globally, including tens of thousands of SUVs and pick-up trucks, two highly profitable streams for revenue for the Blue Oval. However, investors seem to be more pessimistic about Ford’s prospects in much the same way they are about many other established automotive brands, encapsulated in the newly coined term ‘peak auto’.
While there is plenty of enthusiasm surrounding the Tesla brand and its cars, it will still need a solid products and a steady flow of sales to rival automotive conglomerates such as General Motors and the Volkswagen Group (particularly Audi and Porsche), who are both working hard toward a portfolio of electric vehicles at multiple price points that should start rolling out to customers in the near future.
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