Tesla becomes first car maker to surpass $1 trillion market value

Tesla is currently the fifth American firm, and the first automobile company to reach the milestone

Tesla chief Elon Musk gestures during the Tesla China-made Model 3 Delivery Ceremony in Shanghai (AFP via Getty Images)

Tesla’s market value surpassed the $1 trillion mark for the first time after American car rental company Hertz placed an order for 100,000 cars with the Elon Musk-owned electric vehicle manufacturer.

The EV company’s stocks rose by over 12 per cent on Monday, making Tesla the fifth US firm, and the first automobile company to reach the milestone of $1 trillion market value.

Tesla is also the second-fastest company to cross the milestone, only preceded by Facebook, reaching it in just over 11 years since its listing in 2010.

The company is currently worth more than the combined market value of the largest automobile manufacturers around the world such as Toyota, Volkswagen, and Ford.

Other companies with a trillion-dollar valuation include Apple, Alphabet, Amazon, and Microsoft, while Facebook is currently below the mark with stocks sold off in the last two months.

Tesla’s chief noted in a tweet that he was surprised the Hertz order moved the company’s valuation, adding that Tesla faced a “production ramp problem,” and not an issue with demand.

Experts and investors see this as a positive shift that vehicle fleets are going green worldwide.

“Electric vehicles are now mainstream, and we’ve only just begun to see rising global demand and interest,” Hertz interim CEO Mark Fields, said in a statement.

Coupled with high efficiency, climate change benefits, and breakthroughs in battery technology, global EV sales have skyrocketed in the last two years, with three leading US car makers pledging to boost EV sales to 40-50 per cent by 2030.

Countries like India have also made similar promises to increase the fraction of their electric vehicle fleet.

“The new Hertz is going to lead the way as a mobility company, starting with the largest EV rental fleet in North America and a commitment to grow our EV fleet and provide the best rental and recharging experience for leisure and business customers around the world,” Mr Fields added.

While Hertz did not reveal how much they are paying for the vehicles, Mr Musk noted in a tweet that there were no discounts and that the company would be paying the “same price as to consumers.”

The car rental company could be paying over $4bn for the Model 3s EVs over the next year, which would make up about a fifth of its fleet.

“This includes an initial order of 100,000 Teslas by the end of 2022 and new EV charging infrastructure across the company’s global operations,” Hertz noted in a statement.