Tesla Inc overcame Toyota to become the most valued automaker on Wednesday as its shares surged to record highs on account of growing investor confidence about the future of electric vehicles and Tesla's transition from a niche carmaker into a global leader in clean, battery-operated cars. The strong performance in Q2 was related to demand for Tesla's more affordable vehicles.
"Tesla is winning because they have a product that is measurably better than both gas and electric competitors", Gene Munster, a managing partner at venture capital firm Loup Ventures, wrote in a report.
With the recent world events and using other automakers' decline in sales as an example, it was not surprising that many had anticipated that Tesla would have a less than a stellar quarter. Tesla shares jumped $89.03, or 8%, to $1,208.66 on the news. In late June, Tesla placed last in a ranking of new-car quality.
During the year-ago period, Tesla produced 87,048 vehicles including 72,531 Model 3s, and delivered 95,200, including 77,550 Model 3s. "Please go all out to ensure victory!"
The market recognised this as a low bar, triggering gains that were further supported by two bullish emails chief executive Elon Musk sent to employees that leaked to several media outlets.
If Musk is on the mark this time, Tesla could qualify for inclusion in the Standard & Poor's 500 index. In 2019, Tesla reportedly sold 367,200 vehicles whereas Toyota sold around 30 times that figure, posting revenue that was 10 times higher than that of Tesla's.
In May 2019, the stock was trading around $200, and one Wall Street analyst who had always been enthusiastic about Tesla, Adam Jonas of Morgan Stanley, warned that the price could tumble to $10 if the company's strategies did not pan out. The new plant allowed the company to sell cars in China, the world's largest market for electric cars, without paying import duties that had previously limited its sales there. The automaker had to shutter its factory temporarily during the pandemic, although production is back up and running. That figure puts its worth $6 billion ahead of where investors now have Toyota positioned.