Corn Tesla’s market capitalization is greater than the combined total of Toyota, Volkswagen, Daimler, GM, BMW, Honda, Ford and Fiat-Chrysler. The the zoo has gone mad.
By Wolf Richter for WOLF STREET.
Tesla announced today that it has finally almost reached 500,000 deliveries in a calendar year, with its 499,550 vehicles delivered worldwide in 2020, and has finally reached its goal of producing 500,000 vehicles per year, or two years behind on its promises. In May 2016, it had promised in its quarterly report that it would produce 500,000 vehicles in 2018.
But that didn’t happen in 2018, far from it, and it didn’t happen in 2019 either. It finally happened in 2020. That May 2016 promise, like so many promises from Tesla and CEO Elon Musk, had his shares soaring.
Every promise made by Tesla and Musk is worth several billion dollars in the company’s market cap, which in turn allows the company to raise many more billions of dollars by selling more shares. In 2020 alone, it raised $ 12.3 billion through the sale of shares, in addition to the roughly $ 20 billion it had raised since its IPO.
It doesn’t matter that those promises don’t come true at all, or ultimately happen years after the promised date, when many more promises were made, which pushed the shares even higher, allowing the company to to raise a lot more billions. Musk walks on the water and the SEC sleeps peacefully.
These 500,000 deliveries worldwide are a significant figure for Tesla. But that’s a tiny number in the overall global automotive market, which in 2020 is estimated at 73 million deliveries. Tesla’s global market share in 2020 reached a whopping 0.7%.
Tesla doesn’t even rank in the top 20 car makers. It’s a small automaker, it’s growing up, and it’s great especially in a year like 2020, but it’s just very small. One day, Tesla could reach a global market share of 1%.
At the close of business on Dec. 31, Tesla’s share price of $ 705.67 created a market cap (share price times outstanding shares) of $ 669 billion. Its market capitalization is now greater than the combined total market capitalization of Toyota (Toyota and Lexus), Volkswagen (VW, Audi, Porsche and many other brands), Daimler, GM, BMW, Honda, Ford and Fiat Chrysler Automobiles. And each of them wows Tesla in vehicle sales. What a view:
Tesla, however, accomplished a huge feat: it shook up mainstream automakers and caused them to take electric vehicles seriously. It is a real achievement. GM and others dabbled in EVs years before Tesla’s arrival, and EVs have been around since the 1800s when they competed with steam cars, but modern automakers have hesitated between themselves. mock electric vehicles and focus on diesels and how to cheat on diesel emissions testing. But they finally got it. And that’s what Musk does.
They all now produce electric vehicles. And the prices are going down. Tesla has cut prices throughout 2020 to stay competitive. This resulted for the first time in the creation of a real market for electric vehicles, with a lot of innovation and price pressures all around.
Electric vehicles are much easier to assemble than ICE vehicles. EV powertrains are inexpensive compared to ICE powertrains. Battery technologies have advanced rapidly. And the charging infrastructure is being built for people who can’t charge their electric vehicles at home or at work.
But it also produces huge unrest in the traditional auto industry which will expand over the next few years, including the destruction of large-scale jobs in the global components industry that supplies vehicle assembly plants. with internal combustion engine (ICE); and it creates different but far fewer jobs in the electric vehicle sector.
Traditional automakers are now investing billions of dollars each in electric vehicles. Volkswagen alone spent $ 86 billion over the next five years on electric vehicles. They finally got it. And they will ensure that Tesla remains a small automaker. But Tesla’s share price is another sign that this zoo has gone completely nuts.
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