At market close, Tesla was up 7.3 per cent to $298.52 for a market capitalisation of $48.63 billion. Photograph: (AFP)
Elon Musk's company has now overtaken Ford, and it's narrowing in on General Motors
Tesla on Monday became the second-largest US car maker in terms of market capitalisation, displacing Ford, whose sales lagged amid concerns about the ability of the US market to keep growing.
Many major auto makers reported US sales declines in March compared to a year ago, but Tesla over the weekend said it saw a huge jump in vehicles delivered to consumers in the first three months of the year.
That was enough to send the electric car maker's stock soaring Monday, even as investors punished major car brands for reporting lower-than-expected March sales.
Tesla said it delivered 25,000 of its high-tech vehicles in the January-March period -- a 69 per cent surge compared to the first three months of 2016 -- indicating it was on its way to meeting its goal of 50,000 vehicle deliveries by mid-2017.
Late last year, the company reported its first quarterly profit in more than three years, but then slipped back into unprofitability in the following quarter.
Investors still rewarded the company on Monday, with stock movements reshuffling the hierarchy among US carmakers. Tesla Motors overtook Ford for the number two spot and closed the gap with GM, the biggest US automaker by market capitalisation.
At market close, Tesla was up 7.3 per cent to $298.52 for a market capitalisation of $48.63 billion.
Ford, which at one point was down as much as three per cent, had a market capitalisation of $45.47 billion. At its low, GM fell 4.4 per cent, but maintained a market capitalization above $50.9 billion.
Tesla founder and CEO Elon Musk marked the occasion on Twitter with a dig at short sellers, investors who bet that a company's stock will decline.
"Stormy weather in Shortville," Musk wrote.
Major brands struggle
For the industry as a whole, it may indeed be stormy weather. Car companies failed to meet forecasts of an overall March sales increase, which fell instead industry-wide by 1.6 per cent, according to an estimate by the tracking firm Autodata. The seasonally-adjusted annual rate for US vehicle sales fell to 16.62 million units, versus 16.67 million units a year ago, Autodata reported.
Despite the bad news, there were bright spots among established auto makers. GM saw sales gain 1.6 per cent, helped by Americans' strong demand for light trucks and sport utility vehicles, as well as bigger discounts. Nissan sales also rose, up 3.2 per cent compared to March 2016, helped by its popular Rogue compact SUV.
But the news was not good for many other big players. Ford reported that sales fell a worse-than-expected 7.2 per cent, while Toyota sales dropped 2.1 per cent, compared to the same period last year.
FCA US, the American arm of Fiat Chrysler, continued to struggle, reporting a five per cent decline last month, while in the first three months of the year, sales were down eight per cent. Record Honda truck and SUV sales could not help the Japanese car maker notch an overall increase last month, as sales slipped 0.7 per cent, when accounting for declines at its Acura luxury brand.
In an earlier forecast note, Edmunds analyst Jessica Caldwell struck a cautionary tone for the industry, saying there were several areas of concern.
"Inventories have reached levels not seen in more than a decade, and incentives are rising," Caldwell said, referring to discounts and other enticements offered to consumers.
"We're also seeing an increase in loan terms and indications of a rise in subprime lending, which demonstrate sales aren't coming as easily as they used to," she said.
But while Toyota echoed that cautionary tone, pointing to a declining selling rate, GM remained optimistic. "More people are working, consumer confidence is at a 16-year high, fuel prices are low," Kurt McNeil, head of GM's US sales, said in a statement. "We see more growth ahead for our brands," McNeil said.