America’s Biggest Car Company Has Yet to Make a Profit

05.04.2017 • Australia

By Kris Sayce – Port Phillip Insider (Australia) –

Our stock market nemesis, Tesla Inc. [NASDAQ:TSLA], is North America’s biggest car company.

It is now bigger than Ford Motor Company [NYSE:F] and General Motors Company [NYSE:GM].

Today, the Tesla stock price gained 1.74%, closing at US$303.70 per share. Its market capitalisation is US$53.07 billion.

And yet, as we showed yesterday, its production levels are but a fraction of Ford’s and GM’s.

Is it time for your editor to eat humble pie? Not so fast.

The folks at Business Insider make a compelling and, for Tesla shareholders, worrying point about the company’s growth plans into the mass market:

‘…Tesla’s next big move could also be its greatest weakness going forward: the launch of the Model 3, its first mass-market sedan priced at $35,000 before federal tax incentives.

‘…Musk is launching the Model 3 at a time where demand for sedans is waning. Gone are the days where people bought smaller cars to contend with higher gas prices. Gas is cheap and it will likely stay that way as Trump prepares to roll back fuel-emissions standards.

‘…Couple that with the fact that it’s much harder to generate a profit off a mass-market sedan and you can see how Tesla could have a problem going forward. Tesla is entering a market that isn’t growing and takes a greater toll on its bottom line.’

Remember, Tesla doesn’t currently make a profit by selling premium-priced cars.

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