NEW YORK: Tesla engineered its latest coup Wednesday, becoming the world's richest car company while two of Detroit's old guard, General Motors and Fiat Chrysler, reported sagging auto sales amid the coronavirus pandemic.
Led by Elon Musk, Tesla has had its share of ups and downs, but shares have risen steadily since late 2019 as it met key production targets for its Model 3 car, with the automaker topping Japan's Toyota in market valuation.
The company still sells only a fraction of the autos of the Big Three, yet it has captivated investors' imaginations as a bet on the future under charismatic leader Musk, who has challenged conventional wisdom on CEO comportment while also trying to shift the industry away from combustion vehicles and towards electric cars.
Meanwhile, the lower sales at two of Detroit's "Big Three" reflected the hit from coronavirus, which depressed auto demand for part of the quarter and prompted a shutdown of US auto production. Both GM and FCA pointed to improving sales trends later in the quarter, although GM also said the recent spike in US coronavirus cases added to uncertainty.
Cox Automotive has warned of the possibility of a "cruel summer" for auto sales as the United States contends with a resurgent coronavirus outbreak and automakers struggle to replenish inventories.
Cox surveys indicated one third of potential car buyers planned to delay purchases "driven by general uncertainty in the market, civil unrest and continued unemployment concerns."
At GM, sales plunged 34 percent in the second quarter from the year-ago period to 492,484 vehicles, GM said. The auto giant, along with Ford and FCA, halted manufacturing for nearly two months at the height of the virus outbreak, but has returned to normal operating levels at most plants, GM said.
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