The Behemoth $ 1T Tesla: Welcome to the Crazy World of Market Capitalization

Have you ever wondered about the world's top auto manufacturers' market caps? First, let's clarify what the term actually means. Put on your economics hats, everyone. Market Capitalization, sometimes called market cap, refers to the value of a company traded on the stock market, calculated by multiplying the total number of shares by the current share price. 

According to this list compiled by Companiesmarketcap, Tesla holds an outlandish market capitalization of over one trillion Dollars! Just imagine this for a second: 

Tesla's market cap is worth more than Toyota ($242.42 B), Volkswagen ($107.05 B), BYD ($101.02 B), Mercedes-Benz ($74.68 B), Ford ($66.79 B), General Motors ($63.61 B), BMW ($56.33 B), Stellantis $49.52 B, Honda ($48.55 B), Lucid Motors ($42.81 B), Rivian ($40.52 B), Ferrari $38.19 B, NIO ($36.50 B), and Hyundai ($34.69 B) COMBINED! That's about 47% of the $2.3 T capped global car market.

Let that sink in a little.

An electric company that started just 18 years ago is now worth more than the top 15 automakers globally? Tesla is one of the world's most valuable companies and remains the world's most valuable automaker with a market capitalization of nearly US$1 trillion. How is that even possible? 

Welcome to the world of crazy market caps.

To understand this conundrum, you need to realize that the big T's valuation is based on demand for electric vehicles, representing the future of the automobile industry. Although the rest of the automakers are already jumping on the electric bandwagon, including Mercedes, Porche, Toyota, and others, Tesla is considered by many to be the pioneer of the EV industry. Tesla's infrastructure and its enormous stock price boom also contributed to the valuation, not just how many cars it sells. In fact, Tesla lags in volumes despite its vast market capitalization. 

In my opinion. the secret also in Tesla's acclaimed Autopilot program, which is considered the most advanced, AI-based autopilot software in the world. According to Wikipedia, "The company had the most worldwide sales of battery electric vehicles and plug-in electric vehicles, capturing 23% of the battery-electric (purely electric) market and 16% of the plug-in market (which includes plug-in hybrids) in 2020. Through its subsidiary Tesla Energy, the company develops and is a major installer of photovoltaic systems in the United States. Tesla Energy is also one of the largest global suppliers of battery energy storage systems, with 3.99 gigawatt-hours (GWh) installed in 2021." 

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Sources: 

Market Cap Source: https://companiesmarketcap.com/automakers/largest-automakers-by-market-cap/

Tesla Information Source: https://en.wikipedia.org/wiki/Tesla,_Inc.

Tesla Image Source: www.tesla.com