Tesla Surpasses GM and Ford in Market Capitalization

Market Cap Approximately 103 Trillion KRW

Successful Production of 'Model 3' in Shanghai

US Automakers Struggle in China

[Image source=AP Yonhap News]

[Asia Economy Reporter Kwon Jaehee] Tesla's corporate value has surpassed the combined value of GM and Ford for the first time. While American automakers are struggling due to the US-China trade dispute and the global downturn in the car market, Tesla alone is thriving, drawing attention to the reasons behind this success.

According to major foreign media including The Wall Street Journal (WSJ) on the 10th, Tesla's market capitalization as of the closing price on the 8th (local time) was $89 billion (approximately 103 trillion KRW), which is larger than the combined $49 billion of GM and $36 billion of Ford. However, when considering total enterprise value including total debt and cash, Tesla still falls short of these companies.

The turning point between Tesla and GM & Ford was China, their largest overseas market. GM struggled in China last year as well as in 2018. GM's sales in the Chinese market decreased by 15% last year. Its profit was $883 million, about 50% less than the $1.7 billion in 2018. Since entering China, GM recorded a 10% sales decline in 2018 for the first time and has seen sales decrease for two consecutive years. Ford is in a similar situation. Ford's sales in China dropped by 30% in the third quarter of last year, resulting in losses for two consecutive years.

While GM and Ford suffer from deteriorating performance in China, Tesla is setting an ambitious strategy to leap forward using China as a foothold. Less than a year after groundbreaking, Tesla succeeded in trial production of the 'Model 3' at its first overseas production plant in Shanghai, China, in December last year. The Model 3 is Tesla's first mass-market sedan, and this is the first time it has been produced outside the United States. Tesla is also aggressively marketing by lowering the Model 3's selling price by about 10% compared to before, strongly driving its China market penetration.

Tesla announced plans to establish a new design and development center in China and to mass-produce the mid-size SUV 'Model Y' in China as well. If production proceeds smoothly, the Shanghai plant's annual output of 150,000 units will increase to 500,000 units. Tesla's localization strategy allows it to avoid high tariffs caused by the trade war and adopt a competitive pricing strategy. Last year, Tesla's global deliveries reached 367,500 units, a 50% increase compared to the previous year.

This content was produced with the assistance of AI translation services.