Tesla now America's second largest automaker as competitors' sales falter

The luxury electric car maker delivered 69 per cent more vehicles in the first quarter than a year ago.
A Tesla Model S with Autopilot features is seen in Palo Alto, California.
A Tesla Model S with Autopilot features is seen in Palo Alto, California. PHOTO: REUTERS

CHICAGO (AFP) - Tesla on Monday became America's second-largest car maker in terms of market capitalisation, displacing Ford, whose sales are lagging amid concerns about the ability of the US market to keep growing.

Many major auto makers reported sharp US sales declines in March compared to a year ago, but Tesla over the weekend said it saw a huge jump in sales in the first three months of the year.

That was enough to send the electric car maker's stock soaring Monday, even as investors punished major car brands for reporting lower-than-expected sales last month.


Tesla said it delivered 25,000 of its high-tech vehicles in the January-March period - a 69 per cent surge compared to the first three months of 2016 - indicating it was on its way to meeting its goal of 50,000 vehicle deliveries by mid-2017.

Late last year, the company reported its first quarterly profit in more than three years, but then slipped back into unprofitability in the following quarter.

Investors rewarded the company, and stock movements Monday reshuffled the hierarchy among US carmakers, with Tesla Motors overtaking Ford for the number two spot and closing the gap with GM, the biggest US automaker by market capitalisation.

Near 1800 GMT, Tesla was up 5.5 per cent to US$293.89 ($335) for a market capitalisation of US$47.9 billion.


Ford, which fell 2.6 percent, has a market capitalisation of US$45.1 billion. GM fell 3.9 percent and has a market capitalisation of US$50.9 billion.

Tesla founder and CEO Elon Musk marked the occasion on Twitter with a dig at short sellers, investors who bet that the company's stock would decline.

"Stormy weather in Shortville," Musk tweeted.

For the industry as a whole, it may indeed be stormy weather.


Car companies appeared to be struggling to meet forecasts of an overall March sales increase of two percent year-over-year, according to auto data firm Edmunds.

GM saw sales gain 1.6 per cent, helped by Americans' strong demand for light trucks and sport utility vehicles, as well as bigger discounts.

Nissan sales also rose, up 3.2 per cent compared to March 2016, helped by its popular Rogue compact SUV.

But the news was not good for many other big players.

Ford reported sales fell a worse-than-expected 7.2 per cent, while Toyota sales dropped 2.1 per cent, compared to the same period last year.


FCA US, the American arm of Fiat Chrysler, continued to struggle, reporting a five percent decline last month, while in the first three months of the year, sales were down eight percent.

Record truck and SUV sales could not help American Honda notch an overall increase last month, as total sales slipped 0.7 percent, when accounting for declines at its Acura luxury brand.

In an earlier forecast note, Edmunds analyst Jessica Caldwell struck a cautionary tone, saying there were several areas of concern.

"Inventories have reached levels not seen in more than a decade, and incentives are rising," Caldwell said, referring to discounts and other enticements offered to consumers.

"We're also seeing an increase in loan terms and indications of a rise in subprime lending, which demonstrate sales aren't coming as easily as they used to," she said.

But while Toyota echoed that cautionary tone, saying the industry's overall selling rate may be declining, GM remained optimistic.

"More people are working, consumer confidence is at a 16-year high, fuel prices are low," Kurt McNeil, head of GM's US sales, said in a statement.

"We see more growth ahead for our brands," McNeil said.