Tesla Loses No. 1 Spot in Market Value Among U.S. Automakers
For almost three months, Tesla reigned as the most valuable automaker in the nation, ahead of both General Motors and Ford Motor, thanks to a remarkable run-up in its stock this year. It seemed its chief executive, Elon Musk, could do no wrong.
But a spate of negative news this week has brought the electric-car maker’s many challenges into focus, especially its ambitious plans to ramp up production of its first mass-market offering, the Model 3, which begins rolling off the assembly line on Friday.
With investors shying away, Tesla has seen its shares fall by almost 17 percent since Monday’s intraday high, to $308.89, including a 5.6 percent drop on Thursday. That reduced the company’s market capitalization to $50.7 billion, according to Bloomberg, and put G.M. ahead once again, at $52.6 billion.
Most critical to Tesla’s troubles was a new, slower timetable for the Model 3 introduction, and a separate acknowledgment of problems manufacturing battery packs, a critical component of its cars, in the second quarter, said David Whiston, an analyst at Morningstar.
It may be harder for Tesla to pass G.M. a second time. Auto sales in the United States are slowing over all, and Tesla is not yet a significant player in China, the world’s largest auto market. In the second quarter, Tesla produced more cars than it delivered to customers, causing some analysts to question whether demand for current models — the Model S sedan and the Model X, a sport-utility vehicle — is reaching a plateau.
While Tesla is by far the most successful producer of battery-powered electric cars, analysts believe traditional automakers will catch up fairly soon. This week, Volvo, the Swedish company, stole some of Tesla’s thunder by saying that all its models would be hybrid or fully electric vehicles by 2019.
With established manufacturers expanding their electric options, “Tesla will face intense competition by the next decade,” Brian Johnson, a financial analyst at Barclays, wrote in a note to clients.
But by far the biggest concerns are related to the Model 3.
Until now, the company has produced the Model S and Model X, which can sell for $70,000 and up, in relatively small numbers. In 2016, Tesla made about 85,000 vehicles. But the Model 3 will be priced at roughly $35,000 and is aimed at a wider range of buyers. With the Model 3 in the lineup, Tesla expects to sell about 500,000 cars a year by 2018.
