G.M. Takes a Back Seat to Tesla as America’s Most Valued Carmaker
Let's see, last year Tesla produced about 83,000 vehicles and delivered 76,000.DETROIT — By almost every measure, General Motors has been on a roll.
Its bellwether pickups and sport utility vehicles have hit the sweet spot in a record-setting American market for two years. The company is steadily increasing profits and revenue. And President Trump has vowed to ease regulations and put cars at the forefront of his crusade to add manufacturing jobs.
In short, G.M. has come a long way from a near-death experience eight years ago, when it filed for bankruptcy and needed a $49 billion government bailout. But apparently investors have yet to be convinced that G.M., the nation’s largest automaker, has put its troubled past behind it.
In a sign of how the industry’s future is being reimagined, the electric-car maker Tesla passed G.M. on Monday as America’s most valuable auto company.
With its stock gaining more than 3 percent for the day to $312.39, Tesla has a market capitalization of $50.9 billion, just a hair ahead of G.M.’s.
While the rise of Tesla is based on prospects rather than profits, G.M. is being dogged by its checkered history, and a perception on Wall Street that its days as a dominant force are over.
G.M. is working hard to establish its own bona fides in automotive innovation, developing home-grown technology, acquiring or investing in Silicon Valley companies with promising approaches to self-driving or ride-hailing systems, and bringing a new electric car, the Chevrolet Bolt, to market.
“We are spending money on the future, whether it is in mobility, autonomous vehicles, artificial intelligence or electrification,” said Mark L. Reuss, G.M.’s executive vice president for product development.
Yet the moves have so far failed to impress investors. The company’s shares are about 13 percent lower than they were when Mary T. Barra became chief executive in early 2014. And now an activist shareholder, the hedge fund Greenlight Capital, is pushing for a financial restructuring to unlock more of the company’s value.
G.M. is hardly alone in being outshone by Tesla among investors. A week earlier, another century-old Detroit icon, Ford Motor, fell behind Tesla in market value. And Fiat Chrysler, the parent of the third Detroit automaker, is so uncertain of its own future that it is actively seeking a merger partner.
But G.M. epitomizes both the frustration attached to the old American auto industry, and the determination to prove the skeptics wrong over the long term.
A G.M. spokesman played down the company’s loss of its title as the most valuable American automaker. “We have a track record of strong financial performance, with a great outlook for 2017,” the spokesman, Tom Henderson, said on Monday. “We’ll stay focused on delivering outstanding results, generating strong cash flows and investing capital where it will drive the highest returns.”
I guess if they were able to produce more, they could have sold a lot more and investors are thinking ahead. The only bottleneck right now seems to be how fast can they ramp up production. The demand is there. Meanwhile GM sold over 10 million worldwide. So over 100 times more than Tesla. Operating profit was $12.5 billion for GM. Tesla meanwhile has yet to actually make a profit and is not forecast to make a profit this year either. Still, based on past experience I expect Tesla's share price will probably continue to grow.