January 14, 2020

Tesla becomes the most valuable US car maker of all time with a market value of $81.39billion - surpassing Ford Motor's peak of $80.81billion set in 1999

This absurd valuation is driven by perceptions of electric cars as the next big thing.  They are not.  In the Northern North American winter the range of electric cars is going to be drastically reduced by the need to use battery power to keep the driver warm.  The average Canadian is likely to find that he can drive his electric car to work for only around two months of the year.   And in the American South, airconditioning will be a big range-shortening power drain too. A car that can be fully used for less than half the year will eventually put a lot of noses out of joint and the electric car bubble will burst.  Buy Ford

And the fad for electric cars is driven by the idea that their manufacture and use cause fewer pollutant emissions than do combustion-driven cars.  But it has been shown many times that obtaining the materials to make the large batteries needed and the manufacture of the batteries are both very polluting and cancel out any gains from running the cars -- given the short (c. 10 years) lifespan of the batteries




Tesla has become the most valuable US car maker of all time after the company closed Monday with a market value of $81.39billion. The company surpassed Ford Motor's peak of $80.81billion that was set in 1999.

Tesla shares were trading more than 5 percent before the market opened Wednesday and finished the day before at $469.07. 

But Tesla's market value still trails Toyota Motor Corp and Volkswagen AG. Toyota Motor Corp is valued at $227.90billion while Volkswagen sat at $98.65billion by Monday's close.

Tesla is currently the sales leader in the US, according to the latest data compiled by the Edison Electric Institute, an association that represents all of the country's investor-owned electric companies.

Tesla, as the sales front runner, also leads with the top selling model, its Model 3, according to EEI.

While there are almost 1.2 million electric cars on the road, according to EEI, the segment still only represents 1.8 per cent of the total number of cars sold in the US market.

Tesla's short sellers have lost a stunning $8.4billion over the last seven months as the electronic car manufacturer's stock hit a record high and beat investor expectations.

Short positions on Tesla shares suffered more losses than on any other company, according to S3 Partners, a financial analytics firm.

On Friday, Tesla's shares climbed another 3 per cent to close at $443.01 after reporting record fourth quarter sales.

In the first two trading days of 2020, short sellers lost more than $700million, according to S3. About 36 per cent of shares were being sold short in May, however many Tesla short holders are still holding onto to their stocks, adamant that Tesla shares will plunge.

Tesla creator Elon Musk has been an outspoken critic of short sellers, saying they deliberately try to hurt the company by driving down shares.

In 2018 Musk deliberated making Tesla a private company just to stop dealing with shorts.

He said their 'negative propaganda' was a reason to get off the public market and that being a public company creates 'perverse incentives for people to try to harm what we're all trying to achieve'.

But Musk got himself into hot water with federal regulators when he tweeted that same year that he had secured the funding to take Tesla private at $420 a share - a substantial premium over the company's stock price at the time - when he did not.

That tweet, in August 2018, sent Tesla's stock on a wild ride. The US Securities and Exchange Commission stepped in and charged that the post hurt investors who bought the stock after the tweet but before they had accurate information.

Tesla, in an agreement with the SEC, paid $20 million to settle claims it had not properly policed Musk's social media posts.

Meanwhile, unsold Tesla vehicles were seen parked in lots around the country after Tesla claimed it successfully ramped up production of its pivotal Model 3 sedan during the summer.

That suggested to some that the company wasn't making its production goals.

A leaked email from Musk began changing those perceptions this past September, indicating growing demand for the electric automaker's vehicles and causing shares in the company jump 6 percent.

Tesla then had its biggest trading day ever on December 18, when the stock hit $392.50, a jump of 4.3 per cent as sources said the company was exploring a 20 per cent price cut for its Model 3 sedan to compete with rivals.

By the close of trading Friday, Tesla seemed to have put any production concerns behind it, announcing it delivered 112,000 vehicles in the fourth quarter.

That beat expectations of 104,960 vehicles, according to IBES data from Refinitiv.

The company delivered approximately 367,500 vehicles during all of 2019, just meeting the low end of its target to deliver 360,000 to 400,000 vehicles.

Tesla said it demonstrated a production run-rate capability of more than 3,000 units per week at the Shanghai factory.

However, short holders still expect Tesla to be eventually overtaken by more established car companies such as General Motors, Ford and BMW entering the electric car industry.

'We think questions remain about first half 2020 results and gross margin sustainability; we point out that Tesla is already lowering prices in China and faces a flood of (electric vehicle) competition in the US, with at least 25 new models debuting this year,' CFRA analyst Garrett Nelson wrote in a client note on Friday.

The gains in Tesla's shares have elevated its market capitalization to more than $80billion, compared to GM's market value of $52billion and Ford's market capitalization of $37billion, according to Reuters.

The 48-year-old Musk, who's also had to contend with the challenges of getting his SpaceX aerospace company off the ground, as well as three divorces, including his split, remarriage, and second split with Talulah Riley, didn't hide his satisfaction over finally getting the Tesla Model 3 officially launched Tuesday.

Social media in China was abuzz with images and video of Musk celebrating with a unique disco dance routine in his $2billion 'Gigafactory' in Shanghai - exactly one year after construction of the massive plant began.

Musk, worth $27.8billion according to Forbes, busted out his moves on stage as his Chinese staff cheered during the inauguration ceremony, which was also attended by the city's Mayor and other senior government officials.

Tesla reported that it delivered China-made Model 3s to 10 customers from the public.

Last Monday, the company handed the very first batch of the sedans to 15 employees who had placed orders.

SOURCE