Tesla Inc has just revved past Volkswagen AG, for the first time, in the race to the $100 billion-plus mark, a point-of-entry that will give Elon Musk a huge paycheck if he can maintain the momentum in the coming quarters.
The electric car manufacturer's stocks were up nearly 9 percent during pre-market sessions Wednesday, to a new intra-day peak of $594.50. At this price value, Tesla's market capitalization rose approximately $107.2 billion, beating Volkswagen's $99.4 billion and coming only second to Toyota Motor Corp.
While Tesla detractors are pessimistic Musk should be worth more than an auto company that unloaded nearly 30 times as many cars in 2019, Volkswagen's top boss is not so disdainful.
Volkswagen chief executive officer Herbert Diess has been perhaps the most vocal top boss among orthodox car-builders to be amazed about its rival -- and point to its part in an unprecedented makeover of the more than 100-year old auto business.
After disclosing in October that Musk was no "niche maker" anymore, Diess told senior Volkswagen executives during a closed-door meeting in Germany last week that linked vehicles will nearly double the time customers spend on the internet, and that cars will be the most "important mobile device."
The 61-year old Diess is about to unveil the car market's biggest electric-vehicle fleet and targets to increase the company's market value to a level that will emulate Toyota, whose $232-billion market value is still more than Volkswagen's and Tesla's, combined.
Tesla's rally above the $100 billion threshold is about more than simply a stamp of pride for Musk, Tesla's tycoon boss. Musk is qualified to be granted the first chunk of an all-or-nothing pay award if Tesla's market cap remains above that level for a consistent period. As per contract, Musk will get around $346 million from the first tranche of the pay award.
Tesla's shares have climbed over 200 percent since it posted unexpected revenues in the third-quarter, and told shareholders the company was ahead of schedule rolling out its next car - the Model Y - and launching a facility near Shanghai.
According to Wedbush analyst Dan Ives, Tesla's shares will increase as the company grows in China. Ives upgraded his price target for Tesla to $550 from $370 while keeping the equivalent of a Hold rating.
Tesla's average target is $363.92 with just 10 analysts giving the stock a Buy rating, compared with 10 Holds and 16 Sells.
While at least eight market strategists have upgraded their price targets by over $100 since the start of 2020, consensus is still well below where Musk's stocks are trading.
