Legacy automakers like General Motors and Ford have dominated much of the auto industry for decades. However, with electric vehicles gaining traction, Tesla could be poised to overtake the companies in a few short years — if it can continue growing rapidly each year as it has been.
Tesla’s sales revenue numbers have been growing rapidly over the past several years, and while it pulled in $16.9 billion in auto sales in the first quarter of this year, the automaker is still a far cry from GM’s $36 billion and Ford’s $34.5 billion in the same period, according to The Motley Fool. Tesla’s growth is expected to slow down in the years to come, but to what extent is hotly debated.
To be sure, Tesla’s first-quarter sales represented a growth of 87 percent year over year. By comparison, GM’s Q1 sales marked an 11 percent surge year over year, while Ford’s dropped around 11 percent. Just two years ago, in Q1 2020, Tesla only generated $5.1 billion in revenue, showing just how much the automaker has grown in the past few years.
Roughly $35 billion in auto sales seems a safe level at which Tesla would likely surpass GM and Ford. To reach this level by 2025, Tesla’s sales would have to continue to increase by a rate of at least 27.5 percent per year.
At Tesla’s earnings call for Q1 2022, CEO Elon Musk stated that he expects the automaker to grow at a rate of 50 percent per year in terms of vehicle production, which would see Tesla passing GM and Ford as soon as 2024. Still, Musk has been known to speak ambitiously about the automaker’s upcoming achievements, so only time will tell if this is realistic.
If there’s any single factor likely to help Tesla reach the milestone, it’s the expansion of its Gigafactory system. With new Gigafactories in Germany and the U.S., Tesla is well-poised to continue to expand its production output capacity as it ramps up production.
A deep dive into how Detroit is working to compete with Tesla in the electric vehicle space (YouTube: Yahoo Finance)
Additionally, it should only be a matter of time before Tesla doubles capacity from its current 1.05 million vehicles produced per year using the new production facilities, effectively putting the automaker above GM and Ford combined regarding production.
Still, Tesla will likely need more than just its current Gigafactories to surpass GM and Ford’s auto revenue, or to reach its own goals of 50 percent growth per year. So, even after production ramps up at Giga Berlin and Giga Texas, it will already have been time for the automaker to consider its next few facilities.
While it’s an extremely ambitious target to think Tesla could surpass GM and Ford’s auto revenue by 2025, especially amidst surging EV battery prices across the industry, it’s not beyond the realm of possibility. More likely, perhaps, Tesla will surpass the two legacy automakers in time, but it’ll take a few more years beyond 2025.
Originally posted on EVANNEX. By Zachary Viscont