Tesla’s (TSLA) market capitalization has now surpassed Daimler’s again as the electric automaker announces a big investment in the German automotive industry’s backyard.
It’s hard to directly compare Tesla to other automakers because the company is more than an automaker due to its growing energy division.
But most of its revenue currently comes from its automotive business, which mostly makes the company an “automaker” on a market capitalization standpoint.
Last year, Tesla had a surge in stock price that made it more valuable than several major automakers, but it was short-lived after a difficult year on the stock market for the electric automaker.
Now Tesla’s stock (TSLA) is on a roll again after delivering a profit last quarter, and now its market capitalization is even surpassing Daimler’s again, becoming the third most valuable automaker in the world (via Top 25 Automakers by Market Cap by u/brandude87):
Tesla surpassed Mercedes-Benz’s parent company after its stock rose more than 2% following the announcement that Tesla is going to build a factory in the Berlin area.
The automaker has had success in several European markets, but less so in Germany, where they often prefer sticking to German-made cars.
However, German automakers themselves haven’t sold many all-electric vehicles as they mostly focused on plug-in hybrids until recently.
Tesla’s vehicles have dominated sales of several premium segments in the US, and other markets were most often dominated by German automakers.
Now Tesla wants to do the same in Europe, and it expects to achieve this through wider availability of its vehicles and lower costs by having a local factory instead of shipping cars from California.
Established automakers are starting to respond with their own larger investments in all-electric vehicles to try to replicate Tesla’s success, but those are often seen as “too little, too late” by the EV community.
When Mercedes-Benz announced a $1 billion electric car investment, Tesla CEO Elon Musk joked that it was “missing a zero.”
Though in 2017, Daimler also announced that they will spend $11 billion on 10 new electric car models by 2022.
Tesla hasn’t announced how much they are going to spend on Gigafactory 4 in Germany, but it is expected to be over $1 billion.
I think Tesla’s success in the public stock market, which is driven by profits, is important because it shows that electric vehicles are financially viable.
Investors are clearly serious about electric vehicles and if other automakers want to make their shareholders happy, they have to have a serious electrification plan. That’s partly due to Tesla’s success.
Now that Tesla’s stock is back on track and it has a major presence in the US, Europe, and Asia, I think it will light a fire under established automakers to accelerate their EV programs.
It will all lead to major changes throughout the entire automotive supply chain and lead to reduced costs for electric vehicles.
Ultimately, it will make EVs even more affordable and lead to a change in the public perception of electric vehicles.
As I have been predicting for a while, that change will result in most new car buyers only seeing all-electric vehicles as a viable option before 2025.
Full disclosure: I am long TSLA.
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