Tesla’s Market Cap Nears Half of Global Auto Industry. Toyota and BYD tailing far behind.

1) Tesla shares just reached a new all-time high following Trump’s victory in the 2024 presidential election, propelling the company to a massive $1.5 trillion valuation as of December 18, 2024. This graphic highlights the most valuable automakers by market cap worldwide as of December 13, 2024, based on figures from CompaniesMarketCap.com.
2) Tesla accounts for nearly half of the market capitalization among global carmakers. Its valuation surpasses the combined value of the next 29 automakers. Trailing far behind Tesla, the four other top automakers on the list are Toyota ($231 billion), BYD ($107 billion), Xiaomi ($98 billion), and Ferrari ($81 billion).

3) Positive Catalysts

•Elon Musk’s close relationship with Trump, along with Musk’s growing role in government, will serve as a powerful catalyst for Tesla.

•Some of the stock’s recent gains hinge on expectations that Trump’s planned corporate tax cuts will benefit U.S. manufacturers, including Tesla.
•Tesla’s stock has also regained popularity due to investor expectations that its Robotaxi and Full Self-Driving (FSD) technology will drive a new phase of growth.

4) Year-to-date, Tesla’s stock is up 57%. Tesla’s massive market cap is not reflected in its production numbers. In 2023, Tesla sold 1.8 million vehicles, while Toyota sold 11.2 million vehicles during the same period.

My Take:

•Tesla production numbers reflect sales numbers and indirectly imply earnings. The bears have always considered Tesla's market cap overvalued. They used P/E (pruce-to-earnings) ratio to argue that Tesla stock is expensive as compared to the other automakers. However they can't explain why the P/E ratio remains high since 2021. Tesla's P/E ratio is currently 115.36 as of December 20, 2024.

•It is not easy to justify the market cap of a company (or the value of a stock) like Tesla. Some analysts and investors have argued that Tesla belongs in the "Tech" category, where P/E ratios tend to be higher. For example, some large tech companies in the "Technology Companies" chart can be seen as having current P/E ratios as high as 149. According to World PE Ratio, the average PE ratio for tech companies stands at 37.15.

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