[dropcap]T[/dropcap]esla stock is the new ultimate driving machine. Shares of Elon Musk’s electric-car maker climbed 1,4% as of 11.10am Friday, boosting its market capitalisation to US$61,6bn, about $280m more than BMW.
Tesla now ranks as the fourth-most valuable car maker, behind Toyota, Daimler and Volkswagen.
Musk engendered more enthusiasm for the shares this week by reaffirming that the Model 3 sedan, Tesla’s most affordable car yet, will start production on time in July and be followed by a cheaper crossover he sees eventually drawing more demand. That vehicle, called the Model Y, is scheduled to arrive as soon as late 2019 and will necessitate its own assembly plant, the CEO said during Tesla’s annual meeting on Tuesday.
The shake-up adds to the fodder BMW CEO Harald Krueger can use to scare straight employees of the company that used to set the benchmark in luxury. The German automaker has been sending staffers to training near its hometown in Munich to warn them they’re “in the midst of an electric assault” and need to adapt.
Tesla topped US rivals General Motors and Ford by market capitalisation in April, a change in rank the largest car dealer in the country called “inexplicable”.
Tesla delivered fewer than 80 000 vehicles last year and has only reported two profitable quarters in its short history. GM, by comparison, sold more than 10m vehicles and expects to earn more than $9bn this year.
For Tesla, surpassing BMW is significant because luxury car makers earn bigger profit margins and their stocks trade at higher multiples of earnings than mass-market players like GM. Model S sedans and Model X crossovers compete for many of the same affluent buyers as BMW’s 7 Series or X6 sport utility vehicles.
Tesla shares are climbing for the fifth consecutive day and are headed for another record close. The stock trades at about $93 higher than the average target price among analysts surveyed by Bloomberg. — Reported by Craig Trudell and David Welch, (c) 2017 Bloomberg LP