Tesla became the latest US tech giant to reach $1 trillion (about Rs 75,05,550 crore) in market cap, as investors lauded a massive Hertz order and shrugged off criticism from a US auto safety official.
Shares of Elon Musk’s company ended the first time at $1,024.86 (about Rs 77,030), up 12.7 per cent and at $1 trillion (about Rs 75,05,550 crore).
“Wild $T1mes!” Musk said on Twitter.
The latest embrace of electric car technology by mainstream auto players came after rental car giant Hertz announced orders to buy 100,000 autos from Tesla by the end of 2022.
Hertz’s announcement came on the heels of Tesla’s strong earnings call last week, which illustrated the company’s resilience despite a lack of semiconductors that weighed heavily on other automakers.
Leading analysts at Morgan Stanley raised their target on Tesla to $1,200 (about Rs 90,180) from $894 (approximately Rs 67,190), pointing to the company’s “extraordinary” revenue in the last quarter despite supply chain problems.
The Morgan Stanley note predicted that Tesla would “demonstrate the capabilities of a trillion dollar Tesla” over the next 12 to 18 months, as it ramps up production and expands its capacity, model offerings and service offerings.
Criticism of the Security Board
Monday’s rally overlooked a letter from the National Transportation Safety Board rebuking Musk for not implementing key recommendations to protect the automaker’s driver assistance programs.
In a September 2017 report on a fatal incident in Florida a year earlier, the NTSB concluded that Tesla’s driver assistance system was prone to be employed on roads for which it was not designed. Tesla’s program also failed to detect signs that the driver was removed.
The agency urged Tesla to include safety measures to limit the system to the areas it was intended for and to alert a driver when it became disengaged.
The other five automakers that received the NTSB’s recommendations responded and outlined the steps being taken by them.
“Tesla is the only manufacturer that has not officially responded to us about the recommendations,” wrote NTSB President Jennifer Homendy.
Homendy described a second fatal accident in California in 2018, which also occurred in a roadway that did not have a driver assistance system and with an operator who was displaced.
“Our accident investigations involving your company’s vehicles have clearly shown the potential for abuse that system design changes are needed to ensure safety,” Homendy said.
But investors overestimated Hertz’s announcement.
According to a press release, the car rental giant, which emerged from a bankruptcy reorganization earlier this year, said that electric vehicles (EVs) will be available in early November “in key markets across Europe and select cities in Europe”.
“Electric vehicles are now mainstream, and we are only beginning to see increasing global demand and interest,” said Interim Hertz Chief Executive Mark Fields.
Briefing.com said on its website that the deal with Hertz is “a huge win” for Tesla.
“Beyond the windfall profit from the order, the availability of 100,000 new Model 3s on the Hertz lot is like a direct marketing campaign for Tesla,” the briefing said.
“After being first introduced to Tesla, some of those Hertz customers may eventually turn into Tesla customers. Additionally, the deal represents another milestone in the widespread adoption of EVs, while for Tesla Also opens up an entirely new market.”