Tesla automobile company briefly outperformed Boeing in terms of market capitalization, becoming the most valuable industrial company and narrowing the gap, which was almost $200 billion a year ago.
Tesla’s market capitalization exceeded Boeing’s capitalization by approximately $83 million on Wednesday in New York trading according to data compiled by Bloomberg. Boeing shares, which fell amid the coronavirus epidemic and the catastrophe losses of two Boeing 737 aircraft, fell 11% to the lowest intraday level since July 2017.
Tesla shares rose more than 50% this year after two consecutive quarters with higher than expected gains. For the first time, the company surpassed Volkswagen AG in market value in January and is currently the world’s No. 2 carmaker in terms of this indicator, second only to Toyota Motor Corp.
Tesla’s millionth car
Tesla recently celebrated the milestone of producing its millionth car. The red SUV Model Y became the “anniversary” electric car. Deliveries of such cars to American customers began quite recently. Tesla was the first American manufacturer to produce so many zero-carbon vehicles.
For comparison, BMW at the end of last year announced overcoming the milestone of 500 thousand electric vehicles and its intention to achieve the goal of 1 million units by the end of 2021, Volkswagen produced half as much – 250 thousand electrified cars. Nissan Leaf – 450 thousand electric cars.
Elon Musk’s company has been producing electric cars since 2008, but Tesla started mass production only in 2012. Now Tesla has factories in the USA, the Netherlands and Shanghai, and a gigafactory in Berlin will soon come online.
Nevertheless, falling oil prices risk carry a degree of risk for an electric car manufacturer. Historically, when oil and gas prices go down, electric car sales slow down. Tesla also fights the effects of coronavirus outbreaks in China and beyond.
However, analyst Dan Ives from Wedbush Securities said that Tesla’s prospects in China are strong in the long run, but the company will face difficulties throughout 2020. Ives believes that Tesla is unlikely to meet demand in the first quarter.
Tesla produced 3958 cars in China during February. The reports did not say how many Tesla cars made in China were delivered to the company’s own stores, but how many were shipped to final consumers.
Ram Chandrasekaran, an industry analyst at Wood Mackenzie Consulting Group, commented that Tesla shares had been up for weeks on the back of China’s success and lower losses. Therefore, it is not surprising that Tesla shares fell on Monday amid a free fall in the market.
Chandrasekran noted that only a small part, about 10%, of buyers of new cars make the final decision about which car to buy based on a comparison of energy prices.
“Most people make a purchase decision based on whether they like the car, how comfortable it is, its design and performance, and so on. While gas prices of $2 per gallon may have a little effect on Tesla sales, battery prices, battery performance and charging station infrastructure will be more important. “Ram Chandrasekaran
Damaged reputation of Boeing
Boeing, meanwhile, is struggling with losses and a damaged reputation. Direct and indirect losses due to the situation around the 737 MAX, according to the company’s own estimates, will exceed $18.5 billion. Compensation to customers has already cost the American corporation more than $8 billion, about $6.5 billion will be required to modernize production and restart the conveyor. But the payments to the relatives of those killed in the crash will be approximately $100 million – only half a percent of the total.
At the same time, there is no specifics about when the company will return to the release of the ill-fated 737 MAX. It was previously assumed that this would happen at the end of 2020. At the same time, the company’s management clarified that they would return the former bestseller to the sky gradually so that there was no flurry of orders that would require additional resources.
At the same time, analysts are not particularly optimistic about the prospects of Boeing: in January, the company managed to attract loans worth $12 billion, but experts believe that most of the money will be eaten by problems associated with the 737 MAX. Meanwhile, the long-standing competitor of the American manufacturer, the European company Airbus, has already seized leadership in the aviation industry.