Tesla Stock Price Up 3.9%, Market Cap Value Almost Equals GM, Ford Combined

Tesla's share price on the NASDAQ hit $469.06, up 3.9 percent, at the end of trading Tuesday bringing its market cap to $84.55 billion. The spike continues a run of luck since the third quarter of 2019 that saw Tesla's shares end 2019 up nearly 29 percent. Tesla's shares are also six percent higher since the start of this year.

But what's equally astonishing about Tesla's continuing Wall Street success is that the company's market cap Tuesday was just $2 billion shy of the combined market cap of both the Ford Motor Company and General Motors Company combined -- the top two automotive manufacturers in the United States. GM ended Tuesday with a market cap of $50.22 billion ($35.15 per share) with Ford at $36.80 billion ($9.25 per share), for a combined $87.02 billion. A market cap measures the value of a company's outstanding equity.

At mid-day Tuesday, Tesla's stock jumped to more than $470 per share after news about Elon Musk's successful appearance at the new Tesla Shanghai Gigafactory. In Shanghai, Musk awarded the first 10 Tesla Model 3 four-door sedans assembled at Giga Shanghai to their Chinese owners in a historic first. He then went on to say Tesla will boost its investments in China and open a design and engineering center in the country that will build an "original car" for sale in markets around the world.

“We intend to continue making a significant investment and increasing the investment in China, making the Model 3 and the Model Y and future models also in China,” said Musk. “Something that would be super cool … So we’re going to do it … is to try to create a China design and engineering center to actually design an original car in China for worldwide consumption. I think this will be very exciting."

Market capitalizations notwithstanding, GM and Ford are still more valuable than Tesla when it comes to total enterprise value (TEV). TEV is a valuation measurement used to compare companies with varying levels of debt. It adds market capitalization, interest-bearing debt and preferred stock and deducts excess cash from this total.

Based on TEV, Ford would be worth $154 billion and GM, $132 billion, according to Factset data. On the other hand, Tesla’s total enterprise value comes to just $92 billion.

Analysts believe Tesla's outsized market cap compared to GM's and Ford's is further confirmation the era of electric vehicles (EVs) is here to stay, and car companies that can't adapt to this new environment are doomed.

“They caught their competition in the U.S. just dead flat-footed,” said Paul Holland, a general partner at Foundation Capital on CNBC. “I don’t think it’s quite going to be the same in China … but nonetheless, terrific day for Tesla and well-deserved because they’ve innovated with a product that many of us love.”