Tesla Motors, the American electric car specialists, has overtaken General Motors to become the biggest car manufacturer in the US by market value.

Tesla's share price surged 3 percent to $311.74 (294.2 euros) on Monday afternoon to reach market capitalization of $51.43 billion - $1 billion clear of GM.

GM, established in 1908, sold more than 120 times more cars than Tesla last year, but the automotive industry's shift from Detroit to Silicon Valley has captured the excitement of Wall Street.

"More so than any stock we've covered, Tesla engenders optimism, freedom, defiance, and a host of other emotions that, in our view, other companies cannot replicate," investment bank Piper Jaffray said in a report.

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"As they scramble to catch up, we think Tesla's competitors only make themselves appear more desperate," the report said.

The Californian company's soaring share price put it ahead of Ford only last week. But while investors are getting excited about the long-term prospects of the company, their healthy market share is yet to translate into cars on the road. Tesla still only accounts for 0.2 percent of US cars while GM can console itself with 17.3 percent in this regard.

Tesla, who sold 84,000 cars last year and generated $7 billion in revenue, is yet to make a profit. In contrast, GM sold 10 million cars generated revenues of $166 billion.

"We've built a track record of strong financial performance," a GM spokesman told AFP. "We'll stay focused on delivering outstanding results and making decisions to deploy capital where it will generate the strongest returns, to enhance shareholder value."

While GM strategy will continue to see them make profits for many years to come, Tesla's increase in market share is the firmest sign yet that investors see Silicon Valley as the future of the car industry.

mds/hg (AFP)