Tesla surpassed a market value of $ 1 trillion on Monday, making it the fifth company of its kind to reach the milestone.
Shares in the electric carmaker were up 12.6% after reaching an agreement to sell 100,000 vehicles to car rental company Hertz.
Tesla has long been the world’s most valuable automaker, but brands like Ford and GM produce more cars.
Previously, only Apple, Microsoft, Amazon and Google owner Alphabet had achieved a $ 1 trillion valuation.
For years, Tesla has struggled to increase production of its cars, leading some investors to speculate that it would go bankrupt.
But last year the company, led by billionaire Elon Musk, raised the bar and became profitable for the first time, pushing its shares to take off.
After the stock price jump, Musk’s 23% stake in the business is worth about $ 230 billion.
The deal with Hertz is the largest electric vehicle rental car order and seen as an additional vote of confidence.
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Hertz will pay $ 4.2 billion for 100,000 Model 3s over the next 14 months, which is roughly one-fifth of its fleet. The rental company will also build a network of charging stations.
Teslas have a range of around 200 miles per charge, but there is a shortage of charging infrastructure in the US, something the Biden administration hopes to change.
“Electric vehicles are now widespread and we are just starting to see an increase in global demand and interest,” said Hertz Acting Chief Mark Fields.
By Michelle Fleury, New York Trade Correspondent
Tesla just won major bragging rights.
Only a handful of American publicly traded companies have managed to reach $ 1 trillion or more in market capitalization, and they are all technology companies.
Think big names like Apple, Microsoft, Alphabet, and Facebook. Amazon joined this elite club in January last year, 23 years after it became a public company.
By comparison, the electric carmaker Elon Musk led took just 11 years.
What makes Tesla’s success even more remarkable is that it is the first automaker to reach this milestone.
Tesla is now worth as much as the combined market capitalization of the nine largest automakers from around the world, including auto giants like Volkswagen and Toyota.
Yet Tesla accounts for less than 1% of global auto sales.
Elon Musk and the company are honored for anticipating the future direction of the industry.
Although Tesla may be an auto company, Wall Street treats it – and rates it – as a technology company.
Tesla produced around 500,000 cars in 2020, far fewer than those like Volkswagen which produced 9.3 million, Toyota’s 7.2 million vehicles, and the Renault-Nissan-Mitsubishi Alliance which produced 6.8 million.
However, Musk has set an annual sales growth target of 50% and hopes to reach 20 million vehicles per year.
It emerged on Monday that Tesla had pulled its latest update to Autopilot, the “full self-driving” car software, after drivers complained of problems.
Some drivers have reported intermittent problems such as the sound of safety warnings, despite the fact that no danger was present.
The company did not say when the driver assistance software will be released again.
In August, the US National Highway Traffic Safety Administration opened a formal safety investigation into the autopilot system, which is found in 765,000 US vehicles.
The investigation comes following a series of 11 incidents involving Tesla models and emergency vehicles since 2018.
- Car technology
- Elon Musk
- Electric car
- United States
- Machine industry
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