Written by Erik Schriemer, investment expert at MeDirect
The magic of Elon Musk and Tesla
Investors often prefer strong brands. Tesla is such a strong brand. Or maybe it is: Elon Musk is such a strong brand. Tesla’s high-profile chairman is also at the helm of SpaceX, The Boring Company and, since last year, Twitter. With Tesla and SpaceX, he has achieved achievements that few others emulate. Tesla’s share price increased tenfold in 1.5 years between March 2020 and November 2021. Then you make many friends at stock exchanges. Okay, from the top, the stock is also down 60% again. Still, Tesla remains immensely popular with investors, who are confident that they can piggyback on Musk’s success in the future.
Competition between the makers of electric cars is increasing
For a long time, Tesla stood alone as a maker of electric cars. The company still has a street-length lead, but competition is increasing. In China, where Tesla has achieved excellent results, more than 300 car manufacturers are active, all hoping to benefit from the increasing demand for electric driving.
In Europe and the United States, it is mainly the traditional car brands, from Volkswagen to General Motors, that free up huge investment budgets to compete with Tesla. An important driver behind this is the decision of governments in all over the world to say goodbye to cars with an internal combustion engine around 2030.
For the time being, only the Chinese manufacturer BYD can come close to Tesla, in terms of numbers of cars. BYD sold 1.8 million cars in 2022, about half of which are 100% electric. Tesla came up with 1.3 million electric cars. In terms of market capitalization and turnover, BYD follows Tesla at an appropriate distance (see Table 1).
Future outlook
At the moment, it looks like the mobile transition from fossil fuel to electric will continue. New elections with new governments, for example in the United States in 2024, could lead to a different decision. Traditional automakers will have to pull out all the stops to keep up with the electric competition. It is expected that Tesla and BYD will give full throttle to further expand their lead.
Table 1: Market capitalization and turnover of the largest car manufacturers
| Automaker | Market capitalisation | Turnover in 2022 | |
| 1 | Tesla | $494 billion | $86 billion |
| 2 | Toyota | $187 billion | $267 billion |
| 3 | Porsche | $112 billion | $38 billion |
| 4 | BYD | $105 billion | $62 billion |
| 5 | Mercedes-Benz | $82 billion | $158 billion |
| 6 | Volkswagen | $75 billion | $294 billion |
| 7 | BMW | $73 billion | $150 billion |
| 8 | Ferrari | $51 billion | $5 billion |
| 9 | Stellantis | $51 billion | $101 billion |
| 10 | Ford | $46 billion | $158 billion |
| 11 | General Motors | $45 billion | $157 billion |
Disclaimer
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