Tesla has quickly become the global automotive industry’s benchmark.
Legacy automakers such as GM, Ford, Volkswagen, and Mercedes-Benz seek to differentiate themselves from Tesla.
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Rivian (RIVN) – Get Rivian Automotive, Inc. Class A Report, Lucid Group (LCID) – Get Lucid Group, Inc. Report, and Fisker (FSR) – Get Fisker Inc Class A Report all want to be compared to Elon Musk’s electric vehicle juggernaut.
However, Tesla’s fame extends far beyond the automotive industry. Companies that want to be innovative and disruptive are watching Tesla’s actions.
The electric-vehicle manufacturer has transformed the car into a living room on four wheels using the most recent technological innovations. (Apple AAPL can also claim to have a technology ecosystem in the form of phones and computer equipment.)
The T brand has its own niche among consumers. Owners of Tesla vehicles are members of an exclusive club. Fans adore the brand, which currently sells four models: the Model S and Model 3 sedans, as well as the Model X and Model Y SUVs.
In 2023, the futuristic Cybertruck, Tesla Semi, and new Roadster will go into production.
Protect the Environment
It’s difficult to categorize Tesla, especially since Musk, the architect of this extraordinary success story, prefers to remain anonymous.
Those who consider Tesla to be merely a vehicle manufacturer are frequently reminded that the company’s market capitalization, which recently surpassed $1 trillion, tells a different story.
Tesla sells far fewer vehicles per year than Toyota (TM) – Get Toyota Motor Corp. Report, General Motors, Volkswagen, or Ford. In 2021, the Austin company sold fewer than one million vehicles, compared to millions for legacy automakers.
Those who classify Tesla as a technology company are frequently reminded that Tesla is essentially a way of life in its own right. It is a choice, they are told, to protect the planet and save it from pollution.
From these perspectives, Tesla’s true rival is difficult to identify, especially since Musk stares down his competitors but rarely speaks about them.
The billionaire’s technological efforts are frequently associated with Apple. He mocks its products, however, and wonders what the iPhone manufacturer invented that was revolutionary.
As Tesla shareholders and analysts wonder whether Musk will devote much of his energy to developing Tesla while acquiring Twitter for $44 billion, Musk just sent them a message that should reassure them.
Aside from the fact that he hopes not to have to use his Tesla shares as collateral to finance the takeover, the serial entrepreneur has just named the company that he likely regards as the final impediment to Tesla’s initial mission.
Not Apple, but Saudi Aramco
That company is Saudi Aramco, the world’s largest oil company.
According to the billionaire, “Tesla has the potential to be the most valuable company ever.”
“You know the future will be good for Earth when Tesla’s market cap, making sustainable energy products, exceeds that of Aramco, producing fossil fuels,” Musk wrote on Twitter on May 25. He was responding to a message in which he warned investors about the possibility of a recession, which would affect the stock price.
As of May 26, Saudi Aramco had a market capitalization of $2.387 trillion, making it the most valuable company in the world. The oil behemoth is capitalizing on the rise in crude oil prices caused by Russia’s invasion of Ukraine.
Apple is ranked second with a market capitalization of $2.327 trillion, followed by Microsoft (MSFT) – Get Microsoft Corporation Report with a market capitalization of $1.998 trillion.
Then there’s Get Alphabet Inc. Class A Report with a market value of $1.426 trillion and Amazon (AMZN) Report with a market value of $1.13 trillion.
Tesla is currently ranked sixth, with a market capitalization of $733.21 billion. Tesla had a market capitalization of $1.099 trillion as of December 31. That valuation has dropped by $366 billion since then. Tesla’s stock has dropped by one-third since January.
Fundamentals and Supply-Chain Disruption
This setback is undoubtedly related to supply-chain disruptions and rising raw-material prices, but it is also related to Musk’s potential distraction by Twitter.
Musk also owns the rocket company SpaceX and is involved with the medical-device manufacturer Neuralink and the infrastructure provider Boring Co.
Investors are curious about how he will divide his time between all of these companies once he completes his acquisition of Twitter.
Aside from these concerns, Tesla’s fundamentals are strong: its vehicle order books are full, recent vehicle price increases have been accepted by customers, and Tesla promises full vehicle autonomy by the end of the year.
The company now has four factories in Fremont, California, Austin, Shanghai, and Berlin, allowing it to significantly increase production.
Despite lower sales volumes than its main competitors, Musk’s company achieved wide margins and the best profitability in the automotive sector in the first quarter.
“The point of all of this was, and continues to be, to accelerate the advent of sustainable energy, so that we can imagine far into the future and still have a good life.” “That’s what’sustainable’ means,” Musk wrote in his Master Plan for Tesla, Part Deux in July 2016.
“It’s not some frivolous hippy thing; it’s important for everyone.”
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