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Summary
- Shares of Tesla Inc breached $2,000 mark ahead of the company’s announced stock split in the ratio of 1 to 5
- Through the year 2020, the shares of the company have surged by 300 per cent amidst a very strong financial performance reported by its quarterly results reported last month.
- The company has made investments into electric car manufacturing facilities in Germany, China, and the Netherlands from where its products would be launched into the local markets in the near future.
The poster boy of the electric car revolution in the world Tesla Inc breached a milestone, first time in its history, its shares have reached a milestone of $2,000 per share while trading on the NASDAQ. Founded in 2003 the company has made rapid advances over the years and has established itself as the leader in some of the cutting-edge technology-driven industries like electric vehicles and orbital travel. The phenomenal success the company has achieved over the years in selling its electric supercars Model X and Model Y, in such a short period has been a dream of many supercar manufacturers in the world. The company's other projects, namely its advanced battery products and its solar projects are held in high regard among technology sector analysts as well as its investors. The company's foray into Europe, Asia, Middle East, Australia, and South America hold high prospects for future expansion as well as reduction of its cost base.
Tesla Inc’s performance in 2020
With the rise in the stock prices of the company it is now valued at $ 372 billion, which would have placed it as the eighth-most valuable company on the S&P 500 index if it were included today to the index. In its quarterly results released on 22 July earlier this year, the company had reported a revenue of $ 6.04 billion against an expectation of $5.37 billion, while its earnings were slightly lower at $2.18 per share (ex-items) while expected earnings were at $3.00 per share.
On August 11 earlier this month the company announced a stock split of 5 shared for one, for shareholders who are on record as of 21 August 2020. The shares of the company have jumped 45 per cent since the announcement, as the share split is expected to induce a strong surge in demand. Companies whose share trade expensive are generally less in flavour with investors as they are not able to afford it. This prompts the management of the company to split the shares so that they become more affordable, and more people are able to buy those shares, which eventually results in increasing the market capitalisation of the company.
On the eve of the announcement of the stock split, the company had stated that the intention of the management behind this decision was to make the shares of the company more accessible to its employees and shareholders.
The company's shares are currently valued at nearly 148 times its expected earnings.
The performance of the shares of Tesla Inc on NASDAQ since the beginning of the year 2020
(Source – Thomson Reuters)
The Company’s future plans
The company has made investments into electric car manufacturing facilities in Germany, China, and the Netherlands from where its products would be launched into the local markets in the near future. This would give a major boost to the company’s revenue growth as well as expand its market reach.
The company also made major investments in advanced battery technologies. This year, on 22 September, the company has announced to mark it as battery day, which is also its annual shareholder's meeting day. The company is expected to make some major announcements regarding its future plans on that day.
United Kingdom and the status of electric car market
The electric vehicles market in the United Kingdom is picking up fast. As the automobile industry association, SMMT data since the beginning of the year 2020 till June stated that 30,957 battery electric vehicles were registered in the UK. This is a growth of 158.6 per cent over 11,975 number of vehicles that were registered over the same period last year. Battery electric vehicles currently hold 4.7 per cent of the total number of vehicles registered this year, up from 0.9 per cent last year, which is the highest growth rate achieved by any other propulsion types of vehicles in over last year.
Among the major companies that make and offer all-electric and hybrid electric vehicles in the United Kingdom are Nissan, Renault, BMW, Tesla, Volkswagen, Ford Motors, Kia Motors and Peugeot to name a few. Many of the top supercar manufacturers in the country either have active plans or have already rolled out electric models into the market. However, none of the British manufacturers currently have the technological base or financial strength to come anywhere close to Tesla Inc.
The United Kingdom has already pledged to make the country carbon-free by the year 2050 and has taken several steps in this regard. The British government runs a plug-in grant programme, offering government grants to people who purchase electric and hybrid electric vehicles. This programme partly covers the high prices of these vehicles compared to normal Internal combustion vehicles.
Vehicle manufacturers who want their vehicles to be eligible for the government grant scheme must apply to the government for the eligibility and confirm to the strict standard prescribed by the government. Other than those all-electric vehicles and Plug-in Hybrid electric vehicles qualify for the 100 per cent discount on the “ London Congestion Charge” that is levied on most vehicles plying in central London between 7.00 AM and 10 PM on all days of the week.
The British All-electric vehicle and hybrid vehicle market are moving towards a transformation, must faster than its counterparts in North America and Asia. There will be, however, more competition in this market from all over the world, and the position that Tesla has acquired in the United States of America may not be that easy to achieve by others so easily.
