Elon Musk’s Tesla Is Now A Trillion-Dollar company

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Electric car manufacturer Tesla, headed by the world’s richest man, Elon Musk, has joined the United States’ trillion-dollar club as its share price rallied in today’s market skirmish. Tesla becomes the 5th United States company to join this rank alongside Apple, Microsoft, Amazon, and Alphabet.

The rally in the price of Tesla could be traced to a deal concluded by the automaker, landing its biggest-ever order from rental car company Hertz, a deal that reinforces the vision of Tesla, which is to top the entire auto industry in sales over the next decade.

Most automakers do not boast about sales to rental car companies, as it is perceived as a deal, which is often made at discounts, to unload slow-selling models. For Tesla however and its investors, Hertz’s decision to order 100,000 Tesla vehicles by the end of 2022 is an indication that electric vehicles are no longer a niche product but will dominate the mass car market in the near future.

What you should know
Elon Musk had earlier set an annual sales growth target of 50%, on average, eventually reaching 20 million vehicles a year. That would be more than double the volume of current sales leaders Volkswagen AG and Toyota Motor Corp.

Tesla also appears to be making progress in resolving regulatory problems that threatened its business in China. The company said it had opened a new data and research center in Shanghai to comply with government requirements that data collected from vehicles in China stay in the country.

Tesla is also facing new U.S. regulatory pressure. The National Transportation Safety Board’s new chief sent Musk a letter questioning why Tesla was rolling out its “Full Self Driving” software even though the company has not officially responded to the NTSB’s questions about the automated driving system’s safety.

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Consulting firm JATO Dynamics reported today that the consumer demand for electric vehicles is turning a corner in some major markets. The Tesla Model 3 was the best-selling vehicle of any kind in Europe last month.

Tesla now faces the daunting day-to-day challenge of becoming a high-volume automaker growing at a rate not seen since the early 1900s when demand exploded for Henry Ford’s Model T. The automaker is trying to cope with an order backlog for its vehicles and extended supply chain disruptions.

Tesla’s cheapest Model 3 sedan starts at about $44,000, making this order worth about $4.4 billion if the entire order were for its mass-market sedan. With the current order, Hertz said EVs will make up more than 20% of its global fleet.

Tesla shares surged over 9.5% to top $995.75, making the company worth $1 trillion as of the time of this report. It currently trades $994.40, up 9.31% as of the time of this report. Morgan Stanley has increased Tesla’s share price projection to $1,200 per share.

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