Tesla Motors Inc. (NASDAQ: TSLA) may sell 50,000 cars this year. Sales in the current quarter may only reach 10,000. Fiat Chrysler Automobiles N.V. (NYSE: FCAU) management reported that the manufacturer sold 633,000 vehicles last quarter. Sales volume is not the only major difference between the two companies. Tesla has a market cap of $31 billion. Fiat Chrysler’s is $21 billion.
The explanation most Tesla optimists would offer about why the market value difference between the two companies is so large is because Fiat Chrysler has no future. The gas-powered engine will be overtaken by demand for electric cars. Tesla’s success is based one other factor: that it will have a huge share of the electric car market a decade from now. That is improbable based on the number of large manufacturers rushing into the segment. If car sales are not sufficient to keep Tesla’s market share high, perhaps sales of its Powerwall home electricity product will. Powerwall costs about $7,000, with installation expenses. The initial reaction to this new product was almost entirely positive. Tesla has to wait to see if anyone will buy it. Presumably Tesla will have to gain a huge share in the new business, or management will find it challenging to keep its market cap high.
In most recent quarters, Fiat Chrysler’s unit sales have risen. In the most recent quarter, the figure rose 8% from the same quarter a year ago. Management says it has new products that will push momentum in the year ahead. These include improved sales of units of its largest division, Jeep. Sales of its Ram full-sized pickup also will rise, Fiat Chrysler’s management claims.
Another factor in the market value of Fiat Chrysler is that it may be bought by another company. CEO Sergio Marchionne is a proponent of industry consolidation. The New York Times reported a rumor that General Motors Co. (NYSE: GM) and Fiat Chrysler had merger discussions. Presumably, any buyout would come at a premium to Fiat Chrysler’s current market value.
It is hard to make the argument that Tesla is more valuable than Fiat Chrysler. Very hard.
ALSO READ: 10 Companies to Own for the Next Decade
Is Your Money Earning the Best Possible Rate? (Sponsor)
Let’s face it: If your money is just sitting in a checking account, you’re losing value every single day. With most checking accounts offering little to no interest, the cash you worked so hard to save is gradually being eroded by inflation.
However, by moving that money into a high-yield savings account, you can put your cash to work, growing steadily with little to no effort on your part. In just a few clicks, you can set up a high-yield savings account and start earning interest immediately.
There are plenty of reputable banks and online platforms that offer competitive rates, and many of them come with zero fees and no minimum balance requirements. Click here to see if you’re earning the best possible rate on your money!
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
