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Tesla’s Electric Shock

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Tesla, based in Palo Alto, Calif., is 14 years old, offers just three models and sells fewer cars annually than Ford sells hatchbacks. Yet on April 10, its market value reached $51.5 billion, surpassing GM’s. How can Tesla stay at cruising speed?


Tesla’s rally is irrational. Investors don’t care that in 2016 it sold 76,230 cars globally, compared with GM’s 10.3 million. Or that it may lose close to $1 billion this year. They have faith in the story CEO Elon Musk has been telling about one day dominating the market for electric power.


The new Model 3 is Tesla’s first mass-market car. The sedan, like its predecessors, is sleek, fast and all electric. But its price starts at just $35,000. Now the firm has to ramp up production–a stumbling block in the past–if it wants to meet its 2018 goal of building 500,000 vehicles a year.


Last year Tesla acquired SolarCity, an installer of rooftop solar panels, for $2 billion. Tesla aims to become a one-stop shop for consumers who want to become energy-independent. But if the unit begins to look like a sideshow, investors could waver on Musk’s vision.

–Matt Vella

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