Tesla gained an incredible 740% in 2020 and while the stock price was volatile earlier, analysts predict that Tesla would soon touch $1 trillion market cap.
What is it about Tesla that makes it more valuable than its competitors combined?
Let us look at the fundamentals.
- Emission credit sales up which form a bulk of Tesla’s profitability
- The Model Y SUV becoming a roaring success
- Well ahead of rivals when it comes to self-driving race (3 billion autonomous miles compared to Google Waymo’s 20 million miles)
- Battery advancements
- Starting production in China
While it is for sure a blockbuster profile, it might still not explain why Tesla’s value has grown exponentially high.
Enter Tesla’s secret metric:
People don’t buy what you do; they buy why you do it and what you do simply proves what you believe. – Simon Sinek
We live in a world where trust in institutions and organisations are eroding faster than the polar icecaps. Tesla is one company that stands out in bringing a mass solution to the problem of climate change, fossil fuels and big oil. It has made investors look beyond the time horizon of quarterly profits to how we are leaving this planet to the future generation. Elon Musk has also made us look beyond Earth to Mars.
So, it doesn’t matter if you sell only ~0.1% of the global cars (Global automobile industry sold ~75 million in 2019). What matters is that investors and stakeholders are willing to give a runway to Tesla that is not given to its competitors and where the RoI would be reaped by the coming generations.
It has a longer time horizon than any other company and that is its secret metric.
Tesla has come closer to bankruptcy earlier, but it has been Musk’s sheer dogmatism and humour that has made him see the day.
Tesla is less about sales and EBITDA, it is a movement – a rallying cry which is becoming more prominent – where we trust an individual more than we would trust organizations.