Tesla Passes Ford, Becomes Second Most Valuable Car Company in America

By Douglas A. McIntyre Updated Jan 12, 1:22PM EST · Published Apr 3, 10:07AM EDT

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Tesla Passes Ford, Becomes Second Most Valuable Car Company in America — © Thinkstock

[cnxvideo id=”655237″ placement=”ros”]Tesla Inc.’s (NASDAQ: TSLA) market cap now is bigger than Ford Motor Co.’s (NYSE: F). The reason is primarily that Tesla sold just over 25,000 cars in the first quarter, well above expectations. Ford’s sales for March dropped by 7.2% from a year ago to 236,250.

On an annual basis, Ford will sell about 6 million cars worldwide this year. Analysts predict Tesla will sell as few as 200,000.

As a result of the new sales numbers, Tesla’s shares rose 3.5% to $387.50 Ford was down 1.7% at $11.44 a share. Tesla’s market cap rose to $46.5 billion, and Ford’s fell to $45.7 billion. General Motors Co. (NYSE: GM), the largest American car company by sales, has the highest market value among manufacturers at $54.1 billion.

Tesla’s market cap improvement is based to a large extent on the assumption that alternative energy cars will begin to take large market share from gasoline-powered ones. Additionally, positive expectations are that Tesla will hold a large portion of the electric car market in the future. CEO and founder Elon Musk says Tesla will reach total global sales of 500,000 in three years. Much of the increase will be based on the company’s new Model 3, which will be available late this year or early next. It is aimed at the midpoint of car prices in the United States, with a base manufacturer’s suggested retail price (MSRP) of between $30,000 and $35,000.

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Tesla is also a pioneer in self-driving cars, which are supposed to be a large part of the car market a decade from now. The technology for this is still in its infancy. Companies like Google, BMW and all the world’s major car companies have major initiatives in the sector. Ford is among these.

On the other hand, Ford is one of the largest gas-powered car companies in the world. Founded by Henry Ford in 1903, it has remained one of the largest operators in the industry since it pioneered the assembly line in 1908 and introduced the Model T, which sold hundreds of thousands of units.

The primary concern about Ford is that it is burdened by large legacy costs and may not be nimble enough to be a leader in self-driving and electric cars. Ford has 187,000 workers, as well as factories across the world. If traditional car sales drop quickly due to self-driving cars and a rapid consumer migration to electric cars, that spells more bad news for Ford.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.