Tesla surges past US$100 bil market value, surpassing Volkswagen

NEW YORK: Tesla Inc’s market value has climbed above Volkswagen AG’s for the first time to more than US$100 billion, a threshold that will trigger a huge payout for Elon Musk if he can sustain the feat for months.

The electric-car maker’s shares soared as much as 5.9% in early trading Wednesday, extending a 31% surge already this year. At the pre-market high of US$579.51, Tesla’s market capitalisation was roughly US$104.5 billion, exceeding Volkswagen’s US$100 billion.

Musk, Tesla’s billionaire chief executive officer, is eligible to receive the first tranche of an all-or-nothing pay award if the company’s market value stays above US$100 billion for a sustained period.

On paper, the first chunk of the award would net him about US$346 million.

Tesla shares have more than doubled since the company reported a surprise third-quarter profit and told investors it was ahead of schedule opening its factory in China and bringing out its next product, the Model Y crossover.

Musk, 48, has built a commanding lead selling electric vehicles over established automakers.

Volkswagen is the world’s largest car manufacturer, selling 10.97 million vehicles last year. Tesla delivered about 367,500.

Wall Street’s most bullish analyst on Tesla was behind Tuesday’s rally. New Street Research analyst Pierre Ferragu predicted the company will sell 2 million to 3 million cars per year after 2025 at industry-leading margins.

He raised his price target by US$270 to US$800, the highest among analysts surveyed by Bloomberg.