Shares in US electric car maker Tesla have hit a record high this week, surging 9 per cent to pass the $US500 ($A724) mark on Monday.
This means Tesla stock has more than doubled since mid-October 2019, putting it at a current market value of $US94.6 billion.
This latest surge has Tesla on track to become the biggest automotive company in the world by market capitalisation.
For context, on paper Tesla is now worth more than Ford and General Motors combined and has overtaken BMW and Daimler in market value terms, according to the Australian Financial Review.
However, the AFR reported that Tesla is still less than $US10 billion behind Volkswagen and a fair way off matching Toyota's mammoth market capitalisation.
Of course, it's also worth pointing out that this valuation is not indicative of car sales – Volkswagen, for example, sells more than 30 times Tesla's volume.
But according to Scott Phillips, Chief Investment Officer at The Motley Fool, this surge means the market is essentially betting that Tesla's future will be brighter than that of incumbent manufacturers.
"The bet investors are making is that Tesla will continue to grow its volumes and maintain much higher margins than traditional auto makers," Phillips told CarAdvice.
The rise in Tesla shares can be partly attributed to the carmaker announcing a better-than-expected profit in the last quarter, delivering 367,500 cars in 2019.
According to Tesla CEO Elon Musk, that figure is only expected to grow, with Musk predicting a delivery figure between 360,000 and 400,000 vehicles for 2020.
Tesla and other electric vehicle manufacturers were also boosted by news out of China this week that Beijing would not be making significant cuts to electric vehicle purchase subsidies as previously expected.
According to Phillips, the Tesla surge can also be attributed to the fact growth stocks are currently in the ascendency, with Phillips citing Apple's recent market performance for context.
"Apple has doubled in size in 12 months, so some of this is company-specific and some is market-specific," Phillips said, adding that an increase in short sellers buying back stock after a boost in sentiment had also contributed.
Colin Rusch, an analyst for US investment firm Oppenheimer, told CNBC program Power Lunch that Tesla now poses a major threat to established car makers, especially after its move into China.
“Tesla has really proven to be an existential threat for those companies,” Rusch said.
This month Tesla delivered its first Chinese-made model 3s, less than a year after first breaking ground on its Shanghai factory site.
"First ground to first car was less than a year. I think that put a lot of automakers on notice,” Rusch said.
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