Tesla broke through the $US500 billion barrier as it reached a $US544.1 billion ($A738.55) value at close of business on Thursday (US time), triple that of Toyota, and signalling a strong finish for what has been a massive year for the car maker.
As its inclusion in the prestigious Dow Jones S&P500 index approaches, investors paid as much as $US574 ($A779.13) after close of trade bringing the electric car maker’s value to more than 550% above its value at the start of 2020.
Analysts attribute the latest boost to the upcoming S&P500 inclusion, and it follows on news this week that Elon Musk has now surpassed Bill Gates to become the second-richest person in the world.
Now considered more tech company than auto maker, the company now has a “sustained path to profitability” as key jurisdictions around the globe ban electric vehicle sales by 2025 – in the case of Norway – or 2030 – such as in the UK and California.
Wedbush analyst Dan Ives says the investment firm expects global demand to more than triple to 10% by 2025 and that will “disproportionately benefit the clear EV category leader.”
By that, Ives of course means Tesla.
SP Global announced the surprise news that Tesla would be included in the index earlier in November, after snubbing it earlier in 2020 after it becaome eligible by reporting four conseuctive profitable quarters.
It is not yet decided if it will be Tesla will be added in separate tranches or all at once, but its inclusion will commence on December 21, 2020.
When it does, it will be within the top ten of most valuable members in the index.
Analysts expect that the value will continue to soar as investment managers who follow the S&P500 index move to include the revolutionary electric car and energy storage company in portfolios.
“Tesla’s addition to the broader, premier benchmark for U.S. equities, automatically will put the shares in the portfolios of countless index-tracking funds, cascading on to the many managed funds that would have to follow suit to balance their holdings,” Marketwatch notes.
Tesla’s kick-up in value is also pulling along other electric car startups, notably including Nio, which has a battery swap model and set a modest sales record of 4,708 units in September but the value of which has increased from $US3.72 at the start of 2020 to $US53.69, an increase of 1400%.
But Tesla is already far ahead of EV-only startups and legacy car makers alike.
While Volkswagen, the third most valuable car maker in the world by market cap has big plans for its ID series which has seen it convert its Zwickau factory to EV-only and has plans to do the same for other factories, it has admitted it is several years behind the Californian EV maker.
And it could soon have a serious competitor to its ID.3, which has burst onto the European market in 2020 with positive take-up, on its hands.
At the European Battery Conference on Tuesday (Europe time), Tesla boss Elon Musk hinted at a smaller Tesla electric car for the European market – something that has also been hinted at for China in job market advertisements.
“Possibly in Europe it would make sense to do, I guess, a compact car, perhaps a hatchback or something like that,” Musk said Tuesday at a virtual conference on batteries hosted by the German government, according to Reuters.
Musk has also said in a series of tweets to Cathis Wood of Ark Invest, a disruptive investment firm, that both Shanghai and Berlin will in time make original, locally designed electric cars.
At Battery Day in September, Musk also said that Tesla has plans for a $US25,000 electric car that would be a new model.
Bridie Schmidt is lead reporter for The Driven, sister site of Renew Economy. She specialises in writing about new technology and has been writing about electric vehicles for two years. She has a keen interest in the role that zero emissions transport has to play in sustainability and is co-organiser of the Northern Rivers Electric Vehicle Forum.