Tesla Is The Most Valuable Auto Company In The History Of America*

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Barron’s noted on January 7th, 2020, that Tesla had become the most valuable auto company in the history of America. Let me repeat: Not just currently. We are talking about the most valuable American auto company since America was born. Congratulations to Elon, Tesla, and the team for unlocking this achievement!

Tesla beats out the old automaker market cap record held by Ford in 1999, at $81 billion. How valuable is Tesla? After January 8th’s surge, Tesla is valued at nearly $89 billion. Sure, the purists will argue it’s not an inflation-adjusted peak or the largest enterprise value (enterprise value includes equity and debt). Let’s call it a non-inflation-adjusted peak and market cap only. It’s impressive, nonetheless.

Tesla transformed the push for sustainable energy and became the most valuable American auto company within 10 years. We are not talking about high-margin phones. We are talking about a capital-intensive, low-margin, ruthless, heavily entrenched, lobbyist-backed industry.

Another way to note the importance of Tesla’s accomplishment is comparing Tesla with General Motors, Ford, and Fiat Chrysler’s market cap. According to Yahoo Finance, as of 1/8/20, GM was worth $52B, Ford was valued at $38B, FCAU at $25, and Tesla at $85B. Tesla’s value is larger than GM and Fiat Chrysler put together, and very close to being larger than GM and Ford put together. (On Google Finance, a bit different, Tesla is worth more than GM and Ford combined). In fact, Tesla is not too far off from being worth more than GM, Ford, and Fiat Chrysler combined.

As Frugal Moogal and I have speculated over the last few weeks, there are many reasons for Tesla’s surge. One reason that’s rarely discussed is the expected surge in Tesla auto sales over the coming two years. The below chart excludes the growth of Tesla Energy in the next two years, but it attempts to forecast Tesla’s coming auto sales.

My personal forecast.

Noted Tesla bear and Credit Suisse analyst Dan Levy states, “The framework contextualizes the lofty assumptions embedded in the stock – to justify the current stock price one arguably must assume that by 2025 Tesla will grow annual volume to 1.2mn units.” The same analyst raised his 12-month Tesla price target from $200 to $350 in an attempt to move from totally absurd to semi-reasonable.

I expect Tesla to produce 150,000 units in China and produce another 150,000 Model Y this year. As the ramp continues, I expect both to double production next year, joined by production of the CyberTruck and the Berlin factory coming online. Sometime during 2021, Tesla will have produced more than a million vehicles within a year. This is remarkable. I am hesitant to estimate beyond 2021 because Tesla is growing so fast. I don’t consider these super bull numbers, rather numbers based on what is genuinely possible.

*The asterisk in the title is mentioned since everyone is treating Tesla as simply an auto company. I disagree with that simplification, as do many of the writers here on CleanTechnica. Tesla is an energy and technology company, which happens to masquerade as an auto company. This is one reason why Wall Street analysts are completely befuddled. Most of them stick to one industry segment. Tesla crosses multiple major segments. That’s hard for the spreadsheet jockeys to model. What they miss is that the energy and technology markets are vastly larger than the auto market. At its, peak Exxon traded close to $500B in value. Microsoft and Apple are worth more than $1,000B at the moment. For more on this topic, see: “No, Tesla Is NOT The Largest US Automaker Ever.”

Disclosure: I bought back my Tesla shares a few days ago and am long on Tesla cars. The FUD didn’t reach the levels I expected. Don’t worry, I got pilloried hard for buying and selling Tesla from comments in my last post. I expect the same in this one. Keep it up!

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