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Tesla’s Good Day and What it Means

Things have been going pretty well for Elon Musk.  Just a short time ago one of the billionaire’s companies, SpaceX, became the first commercial company to put humans into space.  Now, the billionaire’s other company, Tesla Motors, surged past Toyota to became the most valuable car company on Earth.  Tesla, as most of you will know, is a company that specializes in the manufacture of electric vehicles.

The good news came on Wednesday afternoon when stock prices for the company surged 4%.  At one point, the price topped out at $1220 a share giving it a market cap of $210 Billion.  This put it ahead of Toyota, GM, Volkswagen, and many other household names in total value.  Not only that, but Tesla Motors has become even more valuable than well-known companies in other industries.  These include Coke, Disney, and Exxon Mobile. 

Now, this is all well and good, but what does it mean for the Average American?  Well, there are three things that you can look for.

First, Tesla’s surge in stock is an indication that electric is the future of vehicles.  Despite its new status as the most valuable auto manufacturer in the world, Tesla is not the largest manufacturer.  That is to say, Tesla is the most valuable in terms of dollars but it is not producing the most units.  Toyota still retains that crown.  GM, Volkswagen, Hyundai, and even a few others are also ahead of Tesla.  However, investors bet on the future, not the present.  And the behavior of these investors suggests confidence on their part that the future of Tesla is brighter than these other manufacturers.  Another indication of this is that Tesla isn’t the only manufacturer to specialize in electric vehicles to experience a spike in stock.  Nikola Motors and Lordstown Motors have seen this as well. 

Predictions indicate that within two decades more than half of vehicles sold will be electric.  Yesterday’s news indicates that investors are getting ahead of the curve and will seek to profit off that.

Another thing to look for with Tesla’s rise is the return of auto manufacturing to the United States.  I know, I know, technically it never left.  But there was a time that you couldn’t buy a car that wasn’t made in America.  GM, Ford, and Chrysler were the big three in reality, not just in name.  While these companies are still highly competitive, the largest of the three, GM, has been eclipsed in recent years by both Toyota and Volkswagen in terms of size.  Additionally, America’s traditional car companies, while still based in the U.S. have shifted much of their production to foreign facilities. 

With Tesla having an apparently bright future, it seems that the center of the automaking world may be shifting back to the U.S. from Japan in the near future.  Sure, its HQ and many of its production facilities are in California, but that still counts as the United States.

A final thing to look for is the traditional auto manufacturers scrambling to keep up.  In a lot of ways, it reminds me of Netflix.  Several short years ago Netflix was the only kid on the block when it came to internet video streaming.  The traditional media entertainment companies saw this company shaking up the way things were done and decided that they wanted in.  Now, after several years, consumers not only have Netflix to stream, they also have Disney+, HBO Max (Warner Media), Peacock (Universal), and CBS All Access (Viacom).  Additionally, companies from other industries decided to expand into this field as well.  The most notable being Amazon and Apple.

In like manner, you can look for Toyota, GM, Ford, and just about every other motor company doubling down on their research and production of electric cars.  In many cases, this is already happening.  Ford is expected to have a fully electric version of the F-150, their best selling vehicle, by 2022.  Chevy already has an electric vehicle called The Bolt.  And Nissan has The Leaf.  These are just a few of the projects traditional automakers have going on in this area.  Additionally, as with streaming, companies from other industries are looking to expand into the electric car business in one way or another.  Google and Apple being two prominent names. 

Electric cars may not be your thing.  You may not like the push for going green in every aspect of life.  But, yesterday’s stock spike for Tesla says it’s happening, and it will probably happen sooner rather than later.  In the end, it won’t be a bad thing by any means.  The huge influx of dollars into the research of these vehicles and the competition from so many companies ultimately means that the consumer will come out as the winner.

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