When Henry Ford introduced the Model T in 1908, he may not have invented the automobile or the internal combustion engine, but he sure revolutionized it. In 2017, Elon Musk is following in Ford’s footsteps by transforming the electric vehicle. It’s not just Ford the man we are talking about either – this is Ford, the company. According to The Wall Street Journal, Musk’s company, Tesla, just surpassed Ford’s valuation on the New York stock exchange.
Broken down to Main Street terminology, Tesla took a mere fourteen years to grow larger than Ford has become in one hundred fourteen years. What spurred this sprint past Ford? Aside from the stellar and visionary leadership of Musk, it is all about the Model 3 Sedan. Tesla’s most recently released car is also its cheapest to date. Starting at $35,000, the Model 3 is in the range of most any middle-class buyer who truly wants one. This price contrasts with the other two models, the S, and the X, which start at $92,750 and $99,250, respectively. Bringing down the cost of those first vehicles is the fundamental drivers behind the success of Tesla. After all, Henry Ford was able to lower the price of his mass-marketed car from $850 at launch to just $300 seventeen years later. Looking at the cost of laptops and big screen TVs today versus two decades ago, the idea of a $12,350 electric vehicle in the near future does seem reasonable.
While Tesla fanboys may rejoice at beating grandfather Ford at his own game, some perspective is in order. Tesla sold less than 2% of the number of vehicles in 2016 as Ford sold, while revenue was less than 5% of Ford’s. Musk’s company also lost money (and incidentally, has never had a profitable year), while Ford was profitable. Clearly, some exuberant traders are bidding up this stock to astronomically high levels. Nonetheless, Musk’s sales goals for next year, if met, would mean the Tesla would sell more vehicles than Lincoln or Cadillac – combined.
A company’s stock price is first and foremost a reflection of public opinion. It would appear that in spite of its diminutive presence in the marketplace, investors are extremely excited and optimistic about Tesla’s future. With the Model 3 on an almost two-year back order, it looks like buyers are as well.Whatfinger.com