Musk Glows as Tesla Overtakes Ford and Disruption Overtakes Tradition

When Henry Ford’s first T-model car rolled off the production line in August 1908, it marked the dawn of a new industrial age. Now, almost 100 years later, Elon Musk’s Tesla has surpassed Ford’s market capitalization, underscoring the power of disruptive forces that are threatening to upend the way companies do business across multiple industries.

Musk couldn’t help heralding the moment with a message on Twitter that criticized the many investors that have shorted the company’s stock under the assumption that Tesla is a bubble poised to burst.

“Stormy weather in Shortville …” Musk wrote after the release of higher-than-expected electric car sales figures that pushed Tesla shares up by more than 6% to a new record high.

The company’s market value reached $48 billion, putting it ahead of Ford’s nearly $45 billion valuation. GM is still the biggest U.S. auto company, with a market value of around $51 billion.

Tesla’s success won’t just be making the likes of Ford CEO Mark Fields uncomfortable. Despite weathering some shaky times following the financial crisis, Ford and GM remain great symbols of American corporate strength. The new competition from Tesla will feed only CEO concerns about digital disruption and heighten their sense of urgency to assess new opportunities.

And those fears are widespread. According to a recent survey of more than 1,300 CEOs globally by KPMG, 82% said they were concerned about whether their company’s current products or services will be relevant to customers in three years’ time. Some 41% expected to be running significantly transformed companies within the same period.

Tesla’s stellar rise comes despite the fact that it has racked up billions of dollars of losses in recent years compared to Ford’s steady flow of profits. Tesla, which sells a fraction of the number of vehicles as Ford, is instead valued by investors for its potential.

A true test of its value will come via the looming launch of its Model S electric sedan, which will retail for around half the $68,000 price tag of its least-expensive model currently. The expected price reduction comes after Musk invested heavily in scaling up battery production facilities to bring down their cost.

The work has implications for the company’s separate power business, which is threatening to disrupt the way households and businesses source electricity by allowing renewable energy sources to be stored, overcoming the intermittency that’s currently a major drawback compared to fossil fuel-sourced power bought from the grid.

Of course, even Tesla isn’t immune to disruptive threats and a bet on Musk is still riddled with risk. Leaders such as Fields are fighting back with investments in electric cars and autonomous driving capabilities, while energy titans including Shell attempt to develop rival fuel-cell technology (something Tesla co-founder JB Straubel has described as a “scam”).

Electric cars are very much a play thing of wealthy environmentally-conscious tech heads. It remains to be seen whether a man nominated by fellow tech CEOs as the world’s most innovative leader can capture the imagination of mainstream consumers as much as he’s charmed the stock market.

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