Why is Tesla Worth So Much?
Tesla is an amazing company. In fact, as of late October 2021, the company cracked a market value of US$1 trillion, the first car manufacturer ever to do so.
But, why is Tesla worth so much?
We find out.
Firstly, what happened recently?
Tesla CEO, Elon Musk, instantly became around A$48 billion richer and Tesla, the company itself, cracked the US$1 trillion mark.
- Toyota comes in at about US$240 billion.
- Daimler AG, parent company of Mercedes-Benz, at around US$101 billion
- Volkswagen is valued at roughly US$122 billion.
Apple, on the other hand, is worth US$2.5 trillion.
The reason Tesla’s valuation went up so much recently was due to car hire company, Hertz, announcing their intention to buy 100,000 Tesla vehicles for their fleet.
Experts say that the large order will help Tesla be viewed as a mass-maker of vehicles rather than a luxury brand.
This is beneficial as more every-day buyers might be drawn to their products.
But there are way more Toyotas on the roads than Teslas!
It’s true too. Toyota sold over 9.3 million new vehicles in 2020 and Tesla sold only 500,000 – in other words, Toyota sold 1760% more vehicles than Tesla last year.
Tesla is, as many point out, as much a tech company as it is a car company. This makes the company’s stock hugely sought after, rising over an insane 20,000% since it went public in 2010.
This means that if you bought $100 AUD worth of Tesla (TSLA) shares in June 2010, when the price was $5.11, you would have received 19.57 shares.
Today, your $100 would be worth over $26,500 – not bad for doing nothing.
The above example shows how much the company’s shares have exploded. This is due to many reasons such as a booming demand for electric vehicles and technology.
Also, Tesla’s infrastructure, like its Powerwalls and array of charging options and stations, add to the longevity of the company.
The company has hot new products confirmed on the horizon like the Cybertruck and electric trucks which give it a promising future, something investors look for and another way Tesla makes money.
Topping all that off are the company’s consistent hit products such as the recent bullet-like Model S Plaid.
The Plaid is currently the world’s fastest production car in terms of acceleration with 0-60mph times around 2 seconds. That means a four door sedan costing around A$232,000 will beat hypercars priced in the millions.
The point is, Tesla’s valuation is based on demand for tech, EVs, infrastructure and its massive stock price boom, not only on how many cars it sells.
The brand’s quirkiness also helps
Tesla is well known for pushing boundaries, especially CEO Elon Musk.
For example, Tesla’s infotainment systems offer games on the giant screens playable with the foot pedals and steering wheel, turning the vehicle into a giant arcade game.
The infotainment system can also change the GPS screen to show the surface of Mars (as if you’re driving on the red planet like a Mars rover).
You likely won’t see that on cars from traditional brands.
Bruce Wayne-like Elon Musk shares the company’s quirks.
The “Musk Model 1”, for example, is a handheld flamethrower sold by Elon Musk. There aren’t many other car company CEOs selling personal flamethrowers.
In 2018, Musk launched his Tesla Roadster into space, making it the first production car launched into space and first to orbit the sun. The driver, “Starman”, is a mannequin dressed in a spacesuit. The Roadster was previously owned by Musk which he used to commute to work.
At the time of writing, the Roadster is 290,600,000+ kilometers from Earth.
Tesla products are also pretty attractive
The brand is an expert at creating hype and delivering products that appeal to consumers.
Often, buyers make purchases without even test driving a vehicle, sometimes paying before they even see a picture!
Tesla is struggling to keep up with demand for its vehicles and chip shortages only make things tougher.
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