Things continue to look grim for Tesla, with production bottlenecks and massive capital burn rate perpetually keeping it on the edge of collapse. But while some continue to hold on to hope that the electric automaker will eventually reach profitability, some have already given up hope, believing that the company’s fate is already sealed.
The company’s market capitalization is currently at $57 billion, surpassing the likes of decades-old Ford and GM while only selling a small fraction of what the old guard can produce. This has prompted many to see the automaker as overhyped and overvalued, even if they somehow manage to turn a profit.
While Tesla might not be a traditional car manufacturer, it’s still a manufacturer in all sense of the word, and one that is positioned in an industry known for its thin profit margins. With that in mind, analysts are questioning whether its current market cap is justified, whether or not it reaches profitability.
The automaker claims it will meet its 1 million vehicles a year production goal by 2020. So far, this is possible with sales for its Model S and Model X currently growing at about a 4.5% year-over-year growth rate. This equates to around 120,000 Model S and Model X yearly sales rate by 2020 suggesting that the bulk will be made up of its mass-market Model 3.
However, this still doesn’t come close to what Ford and GM can put out casting which means its valuation comes from its reputation rather than its business. To put it simply,…
… Read More
Click Read More to read the rest of the story from our content source/partners – The Christian Post.