The Tesla electric Car Maker has outperformed traditional Ford in market value. The appreciation came one day after Elon Musk's company announced record sales in the first quarter of this year, prompting its stock price to rise seven percent.
At the close of trading on Monday, Tesla's value hit $49 billion, versus Ford's $46 billion. Hours earlier, on the same day, the carmaker which was founded 13 years ago had announced that it had sold 25,000 vehicles in the first three months of 2017, about 70% more than in the same period last financial year.
Although Tesla's sales are growing rapidly, they are still far behind those of Ford, which sold more than 6.7 million vehicles in 2016. Tesla sold 76,000 units during that period.
Tesla's massive growth
Even so, investors are thrilled with Tesla's growth potential. In this financial year, the company's plan is to start selling a cheaper model in the United States, Model 3, which the company believes has mass appeal. “Smoothness with legacy vehicles will likely allow more focus on a successful launch of the critical Model 3 vehicle later this year,” said Efraim Levy, an analyst with CFRA.
Tesla is also prone to more volatile stock movements because Mr. Musk and other board members and top executives own a large chunk of shares, leaving a relative few that change hands frequently, he said.
Meanwhile, Ford said its March sales dropped 24% due in large part to comparable figures from 2016 that included large fleet sales. The automaker said SUV sales slipped 3%, while truck sales rose 2.5% during the month.
Tesla's huge investment
Meanwhile, Tesla made a huge investment in battery production by building a $5 billion factory in Nevada, United States.
Musk believes that by operating on a larger scale, his company can innovate faster and cut battery production costs by 30%. In addition to providing batteries for cars, the plant produces the accessory for homes and businesses.
Last month, China's Tencent invested $1.78 billion in Tesla, which was considered a big vote of confidence in the electric car company. For Tesla, it’s now all about meeting big expectations.
