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Tesla's Market Value More Than Doubles Since the Start of 2020, Topping $170 Billion

Tesla's Market Value More Than Doubles Since the Start of 2020, Topping $170 Billion

Author: Eric Walz   

Electric automaker Tesla is now more valuable than U.S. automakers Ford Motor Company and General Motor combined, as the company's stock continues to surge following an impressive earnings report on Jan 29.

On Tuesday, Tesla's stock surged another 20%, reaching a record high of $960, more than double the company's market value since the beginning of the year. Tesla's market cap surged to $173 billion on Tuesday, up from $75.4 billion at the close of 2019.

Tesla's sudden surge is also being fueled by investors jumping on board and betting on Chief Executive Elon Musk's vision of accelerating the world's transition to a sustainable energy future.

Tesla's latest stock surge has also helped its battery supplier Panasonic. Tesla's battery partner posted its first ever profit in its joint venture with Tesla.

The batteries for Tesla vehicles, as well as for its energy storage systems, are built in a joint venture with Panasonic at Tesla's Nevada gigafactory. In 2016, Panasonic invested $1.6 billion in Tesla's battery factory as part of its joint venture agreement with Tesla.

Panasonic shares closed up 10%, while those of Tesla's Asian suppliers South Korea's LG Chem Ltd and China's CATL also closed higher.

"Investors are now starting to believe that Tesla can make mass-volume electric vehicles, and automakers, battery makers and suppliers can make money from EVs," said Cho Hyun-ryul, analyst at Samsung Securities.

Tesla's rapid rise was fueled after the company reported a second consecutive quarterly profit and said it would build more than half a million vehicles this year, its highest annual output in its history.

Tesla produced around 365,300 vehicles in 2019, with production steadily increasing throughout the year. Tesla built 105,000 units in Q4 alone.

However, some Wall Street analysts have attributed the recent stock rally to short covering creating a "short squeeze", which happens when a heavily shorted stock moves sharply higher, forcing short sellers to close out their short positions, adding to the upward pressure on the stock.

Tesla Short Sellers Lose Big

Tesla is one of Wall Street's most shorted stocks with 24 million of its shares, or around 18% of its float, held by short sellers, according to financial technology and analytics firm S3.

Investors betting against Tesla were hammered in the month of January, losing nearly $6 billion. Tesla's 20% surge on Monday, which helped push Tesla share price to today's record highs,  resulted in short-sellers losing another $3.2 billion on top of the $6 billion from last month. 

Tesla production ramp up is keeping its battery supplier Panasonic busy as well.

Panasonic said it was expanding production to keep pace with rising demand from Tesla, indicating the U.S. company was finally getting ahead of battery production bottlenecks it flagged last April. 

In April 2019, Panasonic and Tesla announced they were holding off on further investments in Tesla's Nevada gigafactory while the two companies expand existing resources and study market demand. At the time, Japan's Nikkei reported that financial issues had led the companies to reevaluate plans to expand the capacity of Tesla's Nevada Gigafactory by another 50 percent this year.

Panasonic said on Monday it expects to stabilize profit at Tesla's Gigafactory by next year, and that there is a lot of room to improve production efficiency. for what is an EV's most expensive component, accounting for a significant portion of the purchase price.

Panasonic expects to offset its losses with its  new joint venture with Toyota to develop a type of EV battery pack that can be sold to other automakers.

For now, with exceeding $170 billion, Tesla is cementing its place in the most valuable automaker in the U.S. and at the same time spearheading the adoption of EVs around the world.

"When you look back, say two to three years ago, there were doubts about whether the EV era would arrive," said analyst Kang Dong-jin at Hyundai Investment & Securities in Seoul told Reuters. Now with Tesla's record stock price and high-demand for the mass-market Model 3 worldwide, it looks as though its almost here.

Eric Walz
Eric Walz
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
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