Tesla recently surged momentarily to the number four spot in market capitalization of car companies, at nearly 60 billion dollars, surpassing BMW, after passing Ford, Honda, and General Motors.
Tesla, sold fewer than 80,000 cars last year, yet is more highly valued than a company like General Motors, which sold 9.6 million vehicles. What explains this unusual surge? Analysts say the company’s selling the future – sleek, clean, futuristic vehicles that can drive themselves (under certain conditions). In some ways Tesla’s a tech company as much as a car company. And Tesla drivers get to purchase admission into a cool club.
There’s also the allure of anticipation. The new Model 3, priced at $35,000, is due to begin delivering vehicles at the end of July. You can reserve one for just $1,000. This is exactly how Tesla got members into the $100,000 luxury electric vehicle club a few years ago. This type of pre-order is unusual in the car business, but standard practice in the tech sector (have you waited in line for a new iPhone?). CEO Elon Musk said during the recent shareholders meeting that someone making a reservation today will get their car in a year.
Of course, Tesla’s not just a car company. It’s making new batteries for industrial power storage as well as for the home. Last year’s merger with SolarCity expands the company’s push into non-hydrocarbon based energy generation. (Ironically, at the turn of the last century, from the 19th to the 20th, Nikola Tesla’s arch rival Thomas Edison embarked on a ten year project to develop a successful battery for electric cars, only to fail.)
In the past our culture has been built on rapid change, fast food, and instant gratification. Perhaps we’re starting to think more long term, and the fear of climate change is also at the root of some of Tesla’s explosive stock market ride.
(Photo: Tesla Model 3, courtesy: Tesla)