Tesla Tops Toyota In Market Cap, Becomes World’s Largest Auto & Clean Energy Company
On January 22, 2020, I wrote that Tesla overtook Volkswagen to become the world’s 2nd largest auto company by market cap. At that point in time, Tesla had just crossed $100 billion in value.
It’s hard to imagine that five months later on June 10, Tesla overtook Toyota, becoming the world’s largest auto and clean energy company by market cap.
The market says Tesla’s move to volume production of the Semi was the reason it went high enough to topple Toyota earlier today (yesterday east of the Rockies). Tesla had a market cap of $190 billion and Toyota was worth $182 billion at the end of trading on June 10, according to Yahoo Finance. That’s almost a doubling of Tesla’s market cap in just a few months. That growth is absurd for a multi-billion-dollar company.
Tesla has another 10% or so higher to catch Exxon, which once held the title of most valuable energy company in the world. If you could believe it, Exxon shares have gone down from 10 years ago. Fate and hubris have conspired against Exxon and Toyota.
What’s Next for Toyota?
My guess? Stagnation and more plug-in hybrid vehicles in the USA. A slow march to electric vehicles in China and Europe. A dealership model that goes from being an asset to a liability.
Toyota blew a big lead. The Prius was groundbreaking tech. We owned one, more than a decade ago. We loved it. Toyota had a partnership with Tesla back in the day. It sold its stake too early. Toyota has always maximized profits and minimized costs on its investments very well. It was unable to keep up its risk taking, though, and became too cautious.
Logically taken, Toyota could have developed BEVs a long time ago. It endangered too many of Toyota’s profit centers and industry relationships. Hydrogen fuel cells became an expensive, time-consuming dead end.
No doubt, Toyota will live on, but the chance it can regain the #1 spot doesn’t look good. Capitalism and markets promote disruption and creative destruction. American capitalism excels at taking out wasteful, outdated third-party companies. Welcome to the list, Toyota.
What’s Next for Exxon?
Stagnation. More debt. Investors that buy Exxon for the high dividends. Lower CapEx, as the daily demand for oil continues to go down over time.
There will be a place for Exxon. My hope is the company realizes the future is cleantech and moves its investments in that direction. I don’t have high hopes it happens soon, though.
What’s Next for SpaceX?
How about that Demo-2 launch? Amazing to witness. I wish astronauts Doug Hurley and Bob Behnken a safe journey home from the ISS. Starship is the next big thing. It’s exciting to be a part of something positive and groundbreaking, a reason to look to the heavens and unite a very divided species.
What’s Next for Tesla?
The speed at which Tesla is progressing is historical. We have the Model Y ramp to watch. Tesla Semi will be starting volume production in Nevada. Perhaps that was timed to take the wind out of the sails in Nikola’s announcement. Cybertruck will be coming to Austin or Tulsa. Giga Berlin is going up at a speed greater than Giga Shanghai. Chinese sales have rebounded nicely. We have Battery Day coming, which has excited many among the CleanTechnica staff, as well as elsewhere. Even the Solar Roof was ramping up before the virus hit. Autopilot continues to make solid strides. A million-mile battery seems all but confirmed by CATL.
The one major thing I would hope to see is a compact BEV. While not very profitable, it would advance the BEV revolution, Tesla’s core mission. My youngest would love that. I keep telling her it’s 5 years out. Yes, vans might make a greater difference, but we can’t underestimate the power on the imagination of seeing a BEV in all consumer segments.
I am not sure if Tesla is worth its current valuation. The Fed has printed trillions of dollars in a short period of time to minimize disruption to the economy. That makes it hard to make any good judgment on value. On the other hand, a pattern we have seen over the last 30 years is great technology companies always seem overvalued for extended periods of time. They are misunderstood during their growth phase, and it takes a long time for the world-changing nature of their innovations to be understood.
For good measure, so reader beware, I bought 10 shares of Tesla this morning. That means the current rally is doomed. It doesn’t mean anything for the current exponential growth in Tesla batteries, production, or market segments. That will continue. The future of ESG investing, cleantech, and Tesla looks bright.
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