Carmakers Step Up Production, Tesla Crosses Toyota Market Cap

On Jun 10, Tesla, Inc.’s TSLA shares hit $1,000 for the first time, surpassing Toyota Motor Corporation TM in market capitalization and becoming the most-valuable carmaker in the world briefly.

Carmakers have finally started reopening factories after two months of shutdown owing to the coronavirus pandemic and are now ramping up production to make up for the loss. Since restarting production on May 18, most carmakers have slowly been increasing output at their North American plants. Tesla too is planning to step up production of its Semi truck in North America.

Tesla on a New High

Tesla’s stock surged almost 7.6% to $1,011.65 on Wednesday, helping it to lift its market capitalization to an intraday peak of almost $189 billion. The jump helped the electric carmaker go past Toyota's valuation $182.3 billion, albeit for a small period of time.

The surge in Tesla’s stock price was in expected lines given its performance in recent months when it has been rapidly climbing up the ladder to the top. In January, Tesla had emerged as the second-most valuable carmaker in the world, beating Volkswagen to the third position. The carmaker is now worth more than General Motors, Ford and Fiat Chrysler Automobiles combined. Interestingly, Tesla is yet to turn an annual profit. In fact, it registered loss of $862 million in 2019.

Tesla is firing on all cylinders and aggressively trying to make up for the production loss owing to the coronavirus-led shutdown. The company is reportedly ramping up production of its fully electric truck Semi. Tesla CEO Elon Musk’s decision to increase production of Semi comes just days after electric vehicle manufacturer Nikola Corporation came under the spotlight with its battery-powered trucks. Nikola will offer vehicles with hydrogen fuel cells under the hood in addition to battery-powered trucks targeting other end markets.

Tesla has a Zacks Rank #1 (Strong Buy). The company’s shares have jumped 145% on a year-to-date basis. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Carmakers Speed Up Production

Almost all U.S. and foreign carmakers have been planning to ramp up production after reopening their factories in the country as states started lifting restrictions in May. Many are even adding extra shifts and canceling summer breaks.

On Jun 10, Ford Motor Company F, General Motors GM and Volkswagen AG VWAGY said at the Global Auto Industry Conference that production has been smooth sailing since the opening of the plants. Ford expects to return all of its U.S. plants to full, pre-COVID-19 capacity by Jul 6. The carmaker has built approximately 96% of its planned volume and is in the process of adding a third shift back to the key facilities.

General Motors recently said that it will gradually ramp up production with the goal of being back at full capacity by mid-to-late June. The carmaker plans to return to American plants that produce pickup trucks such as the Chevrolet Silverado to pre-coronavirus levels of three shifts. Other plants that produce cars and crossovers for General Motors have also added shifts.

Also, a Ford spokesperson last week said that the company has added second shifts at plants in Kansas City, MO, and Louisville, KY. Moreover, General Motors and Ford are canceling some or all of their usual summer breaks for many assembly plants to make up for lost production during the two-month shutdown. Ford, General Motors and Volkswagen each carries a Zacks Rank 3 (Hold).

Needless to say, carmakers are putting in all efforts to ramp up production over the next few months to boost sales. Also, they are cutting prices and giving incentives to lure more buyers despite massive job losses over the past couple of months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.