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Tesla passes GM as most valuable carmaker in U.S.

By Allen Cone
Tesla, which makes the Model S, become the most-most valuable automotive company in the United States ahead of General Motors. Photo courtesy of Tesla Motors
Tesla, which makes the Model S, become the most-most valuable automotive company in the United States ahead of General Motors. Photo courtesy of Tesla Motors

April 10 (UPI) -- Tesla, the electric car company, has become the most valuable automaker in the United States, surpassing General Motors on Monday.

Just last Tuesday, Tesla moved past Ford for the second-most market capitalization.

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On Monday, Tesla's value hit $50.84 billion, edging GM at $50.79. Tesla's value has risen nearly $3 billion since last week when at $48 billion it passed Ford at $45 billion.

Next within reach is Japan's Honda, which has a value of $54 billion. Others ahead of Tesla are No. 1 Toyota at $172 billion market cap followed by Daimler Chrysler, Volkswagen and BMW.

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Tesla's valuation rose after Piper Jaffray analyst Alex Potter on Monday upgraded Tesla's stock from a price target of $223 to $368. In trading Monday, Tesla's shares increased to an all-time high of $313.73 on Nasdaq early in the day.

"More so than any stock we've covered, Tesla engenders optimism, freedom, defiance and a host of other emotions that, in our view, other companies cannot replicate," Potter said in an analysis. "As they scramble to catch up, we think Tesla's competitors only make themselves appear more desperate."

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He said he drove a Tesla for seven months and met with the company last week.

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Rebecca Lindland, executive analyst at Kelley Blue Book, told CNN that Tesla is treated differently than other automakers. "They're classified as a tech company, so they're not really held to the same standards," she said.

Tesla, like other companies, is developing a self-driving car.

"When we think about the future of mobility, they're very well-positioned," Lindland said.

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Despite the high valuation, Tesla remains unprofitable and doesn't sell anywhere near as many cars as its competitors.

Bloomberg reported analysts predict Tesla will lose more than $950 million this year compared with a $9 billion profit for GM and $6.3 billion income for Ford.

Tesla has lost $2.3 billion the past five years on revenue of $7 billion last year.

"Cash flow should determine what the value of a company is and our cash flow has been pretty good lately," Joe Hinrichs, Ford's president of the Americas, told reporters Monday in New York. "At the end of the day, we run the business to serve our customers."

Tesla sold about 25,000 Model S and Model X vehicles worldwide in the first quarter compared with 617,000 by Ford in the United States and 690,000 GM cars and trucks in the first three months.

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Last year GM sold 10 million vehicles worldwide in 2016 compared with Tesla's 76,230.

"We've built a track record of strong financial performance," GM spokesman Tom Henderson said in an email. "We'll stay focused on delivering outstanding results and making decisions to deploy capital where it will generate the strongest returns, to enhance shareholder value."

Tesla, which is run by billionaire Elon Musk and based in Palo Alto, Calif., plans to debut its Model 3 this year. At $35,000, the new electric car will cost less than the Model S and Model X.

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