Tesla Motors Inc (NASDAQ:TSLA) has a market capitalization of $35 billion compared to General Motors Company (NYSE:GM)’s $55 billion. Such numbers do raise a question: Can Tesla pass GM by this measure? It is not out of the question, says a report from 247wallst by Douglas A. McIntyre. It seems like Tesla is stronger than presumed, as its market cap isn’t as far behind as one would think, and General Motors’ legal issues are taking a toll on its earnings.
Difference between Tesla and GM
Shares of the EV manufacturer are trading at all-time high of around $270, a surge from the 52-week low of $116. General Motors, on the other hand, is hovering around $34, a drop from the 52-week high of approximately $42. The misery for GM does not end here, as its shares are flat over the past five years, whereas the S&P 500 has surged by 60%. Waning sales in Europe are to be blamed to some extent for GM’s crisis, but that’s not the only reason. According to market experts, deaths caused by to the defective ignition switches will eat into the billions of dollars of profits and could even result in a sales decline.
One of the key differentiators between GM and Tesla is sales. Revenue for General Motors came in at $155 billion last year, and global shipment of vehicles closed in at 9.7 million. Tesla managed to post sales of over $2 billion but shipped just under 10,000 cars. Revenue for Tesla came in at an impressive $769 million in the second quarter of the current year, compared to $405 million in the corresponding quarter of the previous year.
Rising competition could put the brakes on Tesla growth
Tesla Motors Inc (NASDAQ:TSLA) is gaining confidence in its future growth promises. In its most recent quarterly earnings statement, the company said that fiscal 2014 has turned out to be an active year so far and that the rest of the year is expected to remain even more active. Gigafactory developments are on the right track, and the company has entered into a deal with Panasonic for battery cell manufacturing at the facility.
The Palo Alto-based car manufacturer stated that recently added capacity in the Fremont facility will help in catering to the demand of vehicles. Not assuming any sudden micro-economic shocks, Tesla is expecting that its annualized rate should be over 100,000 units by the end of this year. The only hurdle for Tesla Motors Inc (NASDAQ:TSLA) in overtaking GM is increasing competition, as every big car company in the world is running an electric car project at some level, says the author.