The Dallas Morning News

Tesla’sÿvalue aheadÿofÿG­M’s

NATIONÿ& WORLD

- Thomas Heath, The Washington Post

Tesla has surpassed General Motors to become America’s most valuable carmaker.

The luxury electric-car company Tesla has yet to turn a profit, losing hundreds of millions of dollars last year. But Monday, the darling of Silicon Valley became the most valuable U.S. car company, surpassing General Motors, the Detroit granddaddy with $10 billion in sales on nearly 10 million vehicles.

Shares of Tesla, run by highprofil­e chief executive Elon Musk, put the company’s value at $51.5 billion, above GM’s $50.2 billion. Tesla blew by Ford ($44.6 billion) last week.

Musk’s company produced just 84,000 cars last year, with prices starting at $68,000.

The story of Tesla’s rise speaks to the divided American economy in 2017. Eco-friendly government tax credits, a boom in financial backing and the promise of futuristic innovation have created in Tesla a badge for the drivers who can afford its lofty prices.

At the same time, Tesla, with its long-running saga of production problems, hasn’t come close to fulfilling its mass-market ambitions. Beyond selling far fewer cars than its Detroit rivals, its automated factories employ a fraction of GM’s factory workforce.

Tesla’s stock market rise has made Musk one of the country’s richest people and given him widespread influence, including another meeting with President Donald Trump on Tuesday.

But even critics who say Tesla could represent a technology bubble in the stock market acknowledg­e that the company’s success points to a new reality in the automotive industry that will reshape the experience of driving for most Americans.

“This is the ultimate bubble, which is doomed to burst,” former GM vice chairman Bob Lutz said.

“Tesla cars are fine, but the business model is not,” he said, pointing to the high cost of production, which is not recovered in the sale price. But, he added, “all legacy car companies will soon have a variety” of similar electric vehicles.

Ivan Feinseth, chief investment officer at Tigress Financial Partners, said Tesla competes in a rarefied market. “The car is a high-performanc­e, luxury car that happens to have an electric engine,” he said. “It competes with BMW, Mercedes and Lexus.” The stratosphe­ric climb of Tesla’s stock price from $40 in 2013 to more than $312 in trading Monday, propelled the company to its highest value yet.

A stock analyst’s recommenda­tion to buy Tesla shares is “one of the more absurd I’ve seen in a while,” said Michael Farr, president of Farr, Miller & Washington, a Washington, D.C., investment firm. He noted that the company is forecast to lose money in 2018 but that the stock is expected to increase to $368 a share.

“Investors were asked to employ a ‘creative’ valuation methodolog­y. I think that means that when the numbers don’t make any sense, one should ignore them and focus on other things,” Farr said. “It’s like being told to ignore the flames coming out of that airplane, I’m sure your trip will be fine.”

Feinseth said when you look at Tesla’s potential for growth, its dealer network, supply chain and the quality of the Tesla car, the value makes more sense.

“It’s not unusual to value growth companies even to the point of being a little crazy,” Feinseth said.

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