Whether Tesla is a technology company has been a matter of debate for a long time. Opponents of the company don't want to recognize the most important advantage of the automaker. Unlike any other car manufacturer, Tesla is based in Silicon Valley, where the heart of the technological world is located. Skeptics and critics may continue to deny reality, but that will not change the fact that Tesla is a technology company.
Jim Cramer from 'Mad Money' talked about Tesla again on his show.
The reality is that despite more than a century of experience from manufacturers such as Ford and GM, a newcomer to the automotive business, Tesla, is now more valuable than the two companies combined. But no need to compare classic carmakers with Tesla.
“Ford and GM are in the commodity auto business; stop comparing their market capitalizations to Tesla, which is a thousand times more proprietary,” Cramer said. “Instead, I think it makes more sense to think of them as a tech company ... along the lines of Nvidia or AMD.”
Source: Top 25 automakers by Market Cap
“Tesla’s not really a car company, it’s a tech company on wheels. That’s what keeps confusing people,” he said. “Almost every major automaker now has an electric car, yet almost none of these cars have any demand to speak of at all, except for Tesla.”
“If [Nvidia and AMD] have become the relevant comparisons, it makes total sense that the stock would be moving relentlessly higher here. And while I hate to recommend anything that’s run this much, you know what, I think Tesla’s got more upside.”
Сramer agrees that Tesla has great potential in 2020, justifying this primarily with the success of the company in China and good prospects in the European market, in connection with the future factory in Germany.
“I think there’s a widespread recognition that 2020 is Tesla’s breakout year, and their breakout is coming from China, thanks to the new factory they built over there in record time,” he said. “Oh, and the company’s building another plant in Germany next year to meet the European demand, so there’s a roadmap for even bigger numbers in the outyears.”
Tesla also impressed the energy sector with its battery business. According to Сramer, lithium-ion batteries can be a source of profit for the company, as enterprises attach greater importance to reducing carbon production.
Time passes and everyone begins to see the success and potential of Tesla. This year, many long-standing critics of the company have changed their opinion about the electric car manufacturer in a positive way. Financial analysts continue to increase target price for Tesla [TSLA]. Increasingly, we hear from them that the main reason for the changes in old forecasts is that Tesla is not just a car manufacturer, but a technically oriented company.
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