Tesla Is No Longer America’s Most Valuable Automaker

A drop in its stock price this week bumped Tesla off the top spot of market value among U.S. Automakers.

byGabriel Loewenberg| UPDATED Jul 7, 2017 11:58 AM
Tesla Is No Longer America’s Most Valuable Automaker

Telsa saw a 15 percent drop in its stock price this week moving General Motors back to the top of the list of most valuable U.S. automakers. But for now, it's a bit too soon to declare "The King is dead! Long live the King!" as GM slides onto the throne. The real test for Tesla will be getting the new Model 3 into buyer's driveways with no further delays. 

Tesla's stock price spent the last half of 2016 dropping from a high of $234.70 per share to a low of $181.45. Since early December, the price has, for the most part, gone up, reaching a high of $383.45 on June 23. Since then, it has dropped virtually every day, closing today at $308.83. Today, The New York Times reported that Telsa's market value had dropped to $51.8 billion, giving GM the top spot with a value of $52.7 billion.

Market fluctuations happen. Maybe a bunch of short-term investors jumped ship with Model 3 production starting. Any issues with production could be a money looser for people not in it for the long haul. Tesla CEO Elon Musk recently told a group of investors to take their money and go buy Ford stock, so maybe they did. If the stock continues to fall, even as the Model 3 is delivered to customers, then Tesla has a problem. But that it's unlikely to be the case. 

But even Musk doesn't know why his electric car company is valued so high. Earlier this year, when Tesla took the top spot on the market value list, Musk said "We're a money-losing company." and "I do believe this market cap is higher than we have any right to deserve." Musk probably isn't losing any sleep of any of this. 

If Musk is losing any sleep, it's because of the Model 3 production. The number of cars Tesla plans on making and the speed at which the cars need to be produced will be a challenge. Musk said in a series of tweets on Monday that he expects Model 3 production to go from 100 cars in August to 20,000 per month by December. That is a big ask with little room for error in working out any production line bugs. 

But this is Musk we're talking about. He always seems to pull off the impossible. A year ago or two, who would have thought that SpaceX would be landing rocket bodies and reusing them again? Building cars isn't rocket science, it's just regular science. Musk and Tesla probably have this all under control.