Cramer: Tesla Is A Tech Company On Wheels, Unlike Ford And GM
Tesla Inc (NASDAQ: TSLA), Ford Motor Company (NYSE: F) and General Motors Company (NYSE: GM) all manufacture cars, but there's one distinctive difference that separates Tesla from the others: it's not an auto company, according to CNBC's Jim Cramer.
What He Said
Ford and GM are part of the traditional Detroit-based "commodity auto business" and it's unfair to compare the two with Tesla, Cramer said Wednesday on "Mad Money." Instead, Tesla is a tech company on wheels and its home base in Silicon Valley speaks to its disruption status.
"Almost every major automaker now has an electric car, yet almost none of these cars have any demand to speak of at all, except for Tesla," Cramer said.
Why It's Important
Cramer said Tesla has more in common with Nvidia Corporation (NASDAQ: NVDA) and this should be reflected in its valuation. Tesla has yet to show a consistent profit, but there are signs the company is on the right path.
Most recently, Tesla showcased to the world its new factory in China that was built in record time. Wall Street analysts cited strong demand in China as a reason to become incrementally bullish on Tesla's stock, which broke above the $100 billion milestone on Wednesday.
2020 could prove to be a "breakout year" for Tesla and momentum should carry over in 2021 when Tesla oversees another production plant in Germany to satisfy demand in Europe.
"There's a roadmap for even bigger numbers in the outyears," Cramer said.
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