Tesla is valued as high as Ford and GM -- but that has nothing to do with what it's done so far

Tesla’s stock has been on fire for much of 2017, but things came to a head this week when the electric carmaker’s market cap reached more than $US51 billion. In the process, it briefly surpassed General Motors to become the most valuable carmaker in the United States. Things have subsided a little bit since, but Tesla’s value remains well above that of the other giant US automaker, Ford.

Yet as this chart from Statista shows, Tesla’s rise has little to do with its abilities as a carmaker today. CEO Elon Musk has a devoted following, and by most accounts Tesla makes good cars. But compared to GM and Ford, it hasn’t shipped anywhere near as many cars, generates a fraction of the revenue, and isn’t turning a profit ten years into its existence.

Musk himself will tell you that market cap has more to do with future potential than current fundamentals, and in that sense there may be some reason for optimism. If you believe that electric vehicles are set to become the new norm — with or without the help of President Trump — you could argue that because Tesla is already synonymous with “clean” cars, its headstart will give it a leg-up as we approach the turning point. If its solar roofs take off, even better.

Still, there are ample reasons to doubt: Electric vehicle adoption remains extremely low; Musk still has his fingers in many pies; and, most of all, the company still hasn’t proven it can manufacture cars en masse, even as it’s about to release its first mainstream vehicle. But when you’re dealing with a guy who just reused a rocket, you can see why some might be willing to invest so highly in pure potential.

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