Tesla Inc. stock is the new ultimate driving machine.
Shares of Elon Musk’s electric-car maker climbed 1.4% as of 11:10 a.m. on June 9, boosting its market capitalization to $61.6 billion, about $280 million more than BMW AG. Tesla now ranks as the fourth-most valuable automaker, behind Toyota Motor Corp., Daimler AG and Volkswagen AG.
Musk engendered more enthusiasm for the shares this week by reaffirming that the Model 3 sedan, Tesla’s most affordable car yet, will start production on time in July and be followed by a cheaper crossover he sees eventually drawing more demand. That vehicle, called the Model Y, is scheduled to arrive as soon as late 2019 and will necessitate its own assembly plant, the CEO said during Tesla’s annual meeting on Jun 6.
The shakeup adds to the fodder BMW CEO Harald Krueger can use to scare straight employees of the company that used to set the benchmark in luxury. The German automaker has been sending staffers to training near its hometown in Munich to warn them they’re “in the midst of an electric assault” and need to adapt, Bloomberg News reported in April.
Tesla topped U.S. rivals General Motors Co. and Ford Motor Co. by market capitalization in April, a change in rank the largest car dealer in the country called “inexplicable.” Tesla delivered fewer than 80,000 vehicles last year and has only reported two profitable quarters in its short history. GM, by comparison, sold more than 10 million vehicles and expects to earn more than $9 billion this year.
For Tesla, surpassing BMW is significant because luxury carmakers earn bigger profit margins and their stocks trade at higher multiples of earnings than mass-market players like GM. Model S sedans and Model X crossovers compete for many of the same affluent buyers as BMW’s 7 Series or X6 sport utility vehicles.
Tesla shares are climbing for the fifth consecutive day and are headed for another record close. The stock trades at about $93 higher than the average target price among analysts surveyed by Bloomberg.
By Craig Trudell and David Welch