Shares of Tesla Motors Inc (NASDAQ:TSLA) soared on Monday, climbing almost 6 percent and taking the EV automaker’s market capitalization over $20 billion. Over the weekend Tesla CEO Elon Musk said he would release a video of a system he and his team created which can design rocket parts using gestures and then print them out in titanium.
Tesla’s market cap compared to other automakers
Many investors and analysts have been harping on the fact that there is no rational numerical way to provide a reasonable valuation for Tesla Motors Inc (NASDAQ:TSLA). The company expects to build 21,000 vehicles this year, keeping it much smaller than competing automakers. Even so the company’s market cap is now double that of competitor Fiat, according to Tyler Durden of Zero Hedge.
In his first-quarter letter to investors of Greenlight Capital, David Einhorn lashed out at regulators. He claimed that the market is "fractured and possibly in the process of breaking completely." Q1 2021 hedge fund letters, conferences and more Einhorn claimed that many market participants and policymakers have effectively succeeded in "defunding the regulators." He pointed Read More
Several experts have noted that Tesla Motors Inc (NASDAQ:TSLA)’s valuation is based on expectations of what the company will do in the future. When the automaker’s market cap hit $20 billion, Durden notes that it will have to sell between 500,000 and 3 million cars by 2022 “to grow into its valuation.”
Competing U.S. automaker Ford Motor Company (NYSE:F) has a market cap of $64.9 billion, while General Motors Company (NYSE:GM) has a market cap of $48.8 billion. Both automakers sell far more vehicles every year than Tesla Motors Inc (NASDAQ:TSLA) expects to sell this year.
GM, others worried about Tesla
But the fact remains that there are signs that Tesla Motors Inc (NASDAQ:TSLA) may pose a threat to long-established automakers. Last month it was revealed that General Motors Company (NYSE:GM) had formed a group tasked with examining Tesla because it was worried that Tesla would become a major disruptor in the industry.
Also there are 10 different automakers whose vehicles Tesla Motors Inc (NASDAQ:TSLA) outsold in California in June. They are: Buick, Cadillac, Chrysler, Fiat, Jaguar, Land Rover, Lincoln, Mitsubishi, Porsche and Volvo.