On Monday, Tesla surpassed General Motors as America’s most valued auto company.

Stock for the electric car company edged out GM’s value. This is both a show of market confidence in Tesla and an indicator that investors have reservations about GM.

So . . . why do the trade values of these companies matter to you? Let’s take a look.

Allen Day and John Nelson contributed to this post.

Is GM in Trouble?

The biggest question about these headlines (especially for our Chevrolet dealership readers) is probably “Is General Motors in trouble?”

The short answer is no. Tesla’s stock gained just over three percent on Monday, and the stock market fluctuates, so it’s unclear how long it’ll stay above GM.

Also, GM is having plenty of success with truck and SUV sales. This isn’t the same company that needed a government bailout at the start of President Obama’s tenure.

Tesla surpassing GM as the highest-valued auto company is less about bottom lines, because Tesla is being evaluated based on potential alone — and that’s what’s really significant.

Why Is Tesla Electrifying the Market?

Right off the bat, the odds of a company like Tesla successfully breaking into the compact field of auto makers were daunting just a few years ago (let alone when the company was founded back in 2003). The auto industry is a spread of old, established companies, and seeing a new kid break in is exciting.

Plus, Tesla isn’t taking the top spot over General Motors because it outsold. GM sold around 10 million cars in 2016, compared to Tesla’s 76,000 or so.

Instead, investors are backing the potential of what Tesla is doing.

Tesla drivers who preorder a vehicle and jump on the Elon Musk train are buying in with more than their money. They are the elusive “early adopter” crowd that online marketers are always chasing with a new product.

That’s why the passion of Tesla’s customers has been so instrumental. The company’s unique business model means it can’t sell a car without making the buyer a brand evangelist.

Tesla also represents the most fully developed fusion of tech company and automotive manufacturer, making it an important template to watch as things like autonomous technology advance. What can Uber and Waymo learn from Tesla’s model? What can Ford and GM learn?

Hopefully, this new valuation will encourage the “old guard” automotive lobbyists to consider progressive change.

As Tesla rises, so should competition from Ford, Chrysler, Chevy, Toyota, and the whole field of auto manufacturers. This will result in more change in COOP programs, encourage better online sales processes, and put more pressure on dealerships to have a polished and agile online presence.

What’s Next for Tesla?

With all that in mind, it won’t really be smooth sailing for Tesla just because it traded above GM for a day. The company will need to prove that it can turn a profit with the release of the long-awaited Tesla Model 3.

There are also some legal hurdles to get over:

• Tesla’s technology is, broadly speaking, advanced beyond current laws governing liability. Its self-driving features aren’t yet universally legal or trusted.
• Congress has over-regulated the auto industry, based on a 1940s-era view that is fundamentally opposed to Tesla’s “no-dealership” model and online car sales.
• American infrastructure is falling further and further behind the progress of the high-tech cars it needs to support (charging stations, car-to-car communication, streetlights, etc.).

Meanwhile, being the first to pioneer new tech isn’t always the best business strategy. Just ask TiVo.

Or look at Pebble. It was first to the market with a serious smartwatch, but now it’s gone. Likewise, Microsoft and Blackberry forged the way for smartphones, but it was Apple, Samsung, and others that carried the torch.

Tesla shows that people want something different, and they’ll pay for it — but Tesla’s contribution might just be proving the point for others. Then again, Musk might just have enough power, innovation, and influence to stay in the game.

After all, it’s a different kind of startup.

How Should Dealers Deal in an Evolving Industry?

Frankly, it’s amazing that a new challenger has been able to crack into the auto industry given all the challenges Tesla has faced. But it did so through comprehensive campaigns that educate buyers.

You can learn more about how your dealership might do the same by letting our us appraise your online presence.