Tesla's Market Value Tops $500 Billion as the Company Nears its S&P 500 Debut
【Summary】Electric automaker Tesla has further cemented its place as the world’s most valuable car company by far. The company’s stock continues to surge despite the worsening pandemic and is up nearly 5% to $546.59 on Tuesday pushing Tesla’s market cap over $500 billion to $518 billion.
Electric automaker Tesla has further cemented its place as the world's most valuable car company by far. The company's stock continues to surge despite the worsening pandemic and is up nearly 5% to $546.59 on Tuesday pushing Tesla's market cap over $500 billion to $518 billion.
This year's sixfold increase in Tesla's share price has also made Chief Executive Elon Musk one of the wealthiest people on the planet. Musk's net worth grew by $7.2 billion to $127.9 billion, which helped him pass Microsoft founder Bill Gates and become the world's second-richest person, according to the Bloomberg Billionaires Index.
Renewed Government Support in Washington
Tesla's latest stock surge can partly be attributed to President-elect Joe Biden, who will be sworn in as the next U.S. President on Jan 20, 2021. The Biden administration has signaled its strong support for electric vehicles, including building out a nationwide infrastructure to support the adoption of electric vehicles in the U.S.
The incoming Biden administration said it will work to expand the Federal EV Tax Credit of up to $7,500 on the purchase of an zero emission electric vehicle. The tax credit was first introduced in 2009 by the Obama administration and went into effect on Jan 1, 2010.
It was designed to spur the adoption of electric or plug-in hybrid vehicles in the U.S, encouraging drivers to switch by offering a tax break that could be combined with other local incentives. At the time, President Obama declared a goal of reaching 1 million plug-in vehicles sold in the U.S. by 2015.
The tax credit was instrumental in helping Tesla sell more electric vehicles, especially in its home state of California where the federal credit could be combined with the state's own $2,500 credit, giving buyers of the Tesla Model S and Model X SUV a $10,000 incentive up front.
However the federal tax credit was designed to gradually phase out once an automaker reaches sales of 200,000 qualifying vehicles. Tesla became the first automaker to reach that limit in July 2018 after the launch of the mass-market Model 3 sedan. After being halved for subsequent 6 month periods after July 2018, the credit officially expired for Tesla on Dec 31, 2019.
Many agree that the federal EV tax credit has helped to launch the electric vehicle market in the U.S. as it was intended to do. It also helped to put Tesla on equal footing with more established global automakers. Now it appears that Tesla will have the strong support its needs in Washington for the first time since 2016, which is a positive sign for the company going forward.
One of President-elect Biden's primary campaign promises is the creation of 1 million new clean energy jobs and the manufacturing of new electric vehicles, including a nationwide EV charging infrastructure and improving the nation's crumbling roadways.
The new initiatives will also benefit Tesla rivals such as General Motors, which is investing $27 billion on electrifying its model lineup in the next five years to help it compete with Tesla.
It's a sharp contrast to the Trump administration that sought to roll back fuel economy and emission standards, which would have allowed automakers to sell more gas guzzling pickups and SUVs, with few incentives to purchase electric vehicles.
But with a changing of the guard in Washington and Tesla's December inclusion in the S&P 500 for the first time, Tesla's future looks bright, which is reflected in the strong interest from investors and growing demand for its battery-powered vehicles around the world.
To help support its mission to accelerate the world's transition to sustainable energy, Tesla has two new vehicle factories under construction, one in Germany and the other in Texas.
The company's other factory in Shanghai started producing the Model 3 sedan last year in the world's biggest auto market.
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
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