Tesla Inc on Monday became the latest US tech giant to hit US$1 trillion in market value as investors cheered a large order from Hertz Global Holdings Inc and shrugged off criticism from a US auto safety official.
Shares of Elon Musk’s company closed at US$1,024.86, up 12.7 percent and topping US$1 trillion for the first time.
“Wild $T1mes!” Musk write on Twitter.
Photo: AFP
The surge followed an announcement from rental car giant Hertz of an order to buy 100,000 vehicles from Tesla by the end of next year in the latest embrace of electric vehicle (EV) technology by a mainstream auto player.
The Hertz announcement came on the heels of strong Tesla earnings last week that illustrated the company’s resilience in spite of a semiconductor shortage that has weighed more heavily on other automakers.
Leading analysts at Morgan Stanley raised their target on Tesla to US$1,200 from US$894, pointing to the company’s “extraordinary” revenue in the past quarter, despite supply chain problems.
The Morgan Stanley note predicted that Tesla over the next 12 to 18 months would “demonstrate the capabilities of the trillion dollar Tesla” as it ramps up production and expands its capacity, model offerings and service offerings.
Monday’s rally overlooked a letter from the US National Transportation Safety Board castigating Musk for not implementing key recommendations to safeguard the automaker’s driver assistance programs.
In a September 2017 report on a fatal incident a year earlier in Florida, the board said that Tesla’s driver assistance system was prone to being employed on roads for which it was not designed.
Tesla’s program also failed to detect signs that the driver was disengaged, it said.
The agency urged Tesla to incorporate safeguards to limit the system to areas for which it was intended and to alert the driver when they become disengaged.
The other five automakers that received the board’s recommendations responded and outlined the steps they were taking, it said.
“Tesla is the only manufacturer that did not officially respond to us about the recommendations,” board chairwoman Jennifer Homendy wrote.
Homendy described a second fatal crash in California in 2018 that also took place in a roadway not meant for the driver assistance system and with an operator who was disengaged.
“Our crash investigations involving your company’s vehicles have clearly shown the potential for misuse requires a system design change to ensure safety,” Homendy said.
However, investors gave more weight to the announcement from Hertz.
The vehicle rental giant, which emerged from a bankruptcy reorganization earlier this year, said in a press release that the EVs would be available “in US major markets and select cities in Europe” beginning early next month.
“Electric vehicles are now mainstream, and we’ve only just begun to see rising global demand and interest,” interim Hertz chief executive officer Mark Fields said.
The deal with Hertz is “a huge win” for Tesla, Briefing.com said on its Web site.
“Beyond the windfall from the order itself, the availability of 100,000 new Model 3s on Hertz’ lots is like a direct marketing campaign for Tesla,” Briefing said.
“After being introduced to Tesla for the first time, some of those Hertz customers may ultimately turn into Tesla customers,” it said. “Additionally, the deal represents another milestone in the broader adoption of EVs, while also opening up an entirely new market for Tesla.”
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