Tesla became the latest US tech giant to hit $1 trillion in market value Monday as investors cheered a large order from Hertz and shrugged off criticism from a US auto safety official.
Near 1735 GMT, shares of Elon Musk’s company were up 9.3 percent at $994.22, giving it a market capitalization of just under $1 trillion after earlier topping that level.
The surge followed an announcement from rental car giant Hertz of an order to buy 100,000 autos from Tesla by the end of 2022 in the latest embrace of electric car technology by a mainstream auto player.
The Hertz announcement followed 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 upped their target on Tesla to $1,200 from $894, pointing to the company’s “extraordinary” revenue in the last quarter despite supply chain problems.
The Morgan Stanley note predicted a Tesla over the next 12 to 18 months “that would demonstrate the capabilities of the Trillion dollar Tesla,” as it ramps up production and expands its capacity, model offerings and service offerings.
Safety board criticism
Monday’s rally overlooked a letter from the 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 NTSB concluded 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 the driver was disengaged.
The agency urged Tesla to incorporate safeguards to limit the system to areas for which it was intended and to alert the driver when he or she became disengaged.
The other five automakers that received the NTSB’s recommendations responded and outlined the steps they were taking.
“Tesla is the only manufacturer that did not officially respond to us about the recommendations,” wrote NTSB Chair Jennifer Homendy.
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.
But investors gave more weight to the announcement from Hertz.
The car rental giant, which emerged from a bankruptcy reorganization earlier this year, said the electric vehicles (EV) would be available “in US major markets and select cities in Europe” beginning in early November, according to a press release.
“Electric vehicles are now mainstream, and we’ve only just begun to see rising global demand and interest,” said interim Hertz Chief Executive Mark Fields.
“The new Hertz is going to lead the way as a mobility company, starting with the largest EV rental fleet in North America and a commitment to grow our EV fleet.”
Hertz orders 100,000 Tesla electric autos
© 2021 AFP
Tesla flirts with $1 tn in market value as Hertz deal fuels latest surge (2021, October 25)
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