For most of its history, over 15 years, Tesla has reversed this wisdom. A few years ago, the automaker was barely selling vehicles compared to its global competitors. Last year, Tesla only delivered around 250,000 vehicles, while General Motors sold almost 8 million.
Investors have decided that this means Tesla is expected to be worth $ 300 billion in market capitalization, more valuable than GM, Ford and Fiat Chrysler Automobiles combined – and overtaking Volkswagen and Toyota, the world’s two largest automakers.
Vehicle sales obviously do not represent $ 300 billion in value; Tesla’s quarterly revenue remains well below a Detroit Big Three automaker. It’s a bet on the future and a prediction that Tesla should be able to expand its near monopoly of the electric vehicle market as this market grows from a currently tiny base, barely 1 to 2% of worldwide sales.
Investor optimism is that Tesla will maintain a dominant share, increase its scale, and score enviable profit margins, perhaps over 10% (high-volume luxury automakers operate at this level, while companies in the market of mass evolve within the single-digit range).
But for now, the Tesla brand is powerful. Here is how it happened: