Elon Musk makes an insane prediction
The business world is dazed.
The declaration felt like an explosion, and everyone in the market shook as they absorbed the impact.
The launcher of this latest rhetorical missile is, of course, Elon Musk, CEO of Tesla, serial entrepreneur and the richest man in the world.
Though investors and fans are used to Musk issuing huge proclamations, the tech tycoon took everyone by surprise when he suggested that Tesla (TSLA) would be valued at more than Apple (AAPL) and Saudi oil giant Saudi Aramco combined.
Tesla’s valuation will reach at least $4.5 trillion in the next few years, Musk estimated. He did not give a timeline.
Apple is currently the world’s most valuable company, with a market value of $2.34 trillion at last check, according to companiesmarketcap.com. Saudi Aramco, which is benefiting from soaring oil prices, has a market value of $2.1 trillion.
Between them, the two largest companies in the world are worth $4.5 trillion.
Tesla valued at $4.5 Trillion
Currently, Tesla has a market capitalization of more than $665 billion. The manufacturer of electric vehicles had at one point passed the symbolic valuation threshold of $1 trillion.
To overtake Apple and Saudi Aramco combined, Tesla needs to increase its market value by a factor of six, about $4 trillion.
All this does not seem to daunt Musk, who has built his brand on big and ambitious promises. Some would say that without promises and crazy predictions, Musk wouldn’t be Musk.
“Several years ago, I said I thought it was possible for Tesla be worth more than Apple, which was then the highest [capitalization] company I think on the market at the time,” the billionaire told analysts during the Tesla third-quarter-earnings call on Oct. 19. “I said it required incredible execution [and] at least some luck. And we didn’t even intend to achieve that.”
But he continued: “Now I have the opinion that we can far exceed Apple’s current market cap. In fact, I see a potential path which has us [Tesla] to be worth more than Apple and Saudi Aramco combined.”
“That doesn’t mean it will happen or that will be easy. In fact, I think it will be very difficult; it will require a lot of work. Some very creative new products, madness expansion.” “For the first time, I see a way for Tesla to be, let’s say, roughly twice the value of Saudi Aramco,” Musk added. “This is the first time I’m seeing that potential.”
Unsurprisingly, the prediction was met with a great deal of scepticism. But Musk held firm and even doubled down on Twitter, recalling that he had already been met with doubt in 2015 when he predicted that Tesla would be valued at $700 billion by 2025.
“Tesla will be worth way more than Apple + Saudi Aramco by 2030 ($4 trillion). @elonmusk made a similar prediction in 2015 when he said Tesla would be worth $700 billion by 2025. Tesla ended up being worth $700 billion by December 2020, 5 years earlier than predicted,” a Tesla investor commented after the new prediction on Twitter.
“The media reports with great fanfare my predictions that are late, but rarely those that come early,” Musk quipped.
The billionaire continued to defend his position while acknowledging that it was a titanic mission. “Will require truly exceptional execution, but it is possible,” Musk said.
The road ahead
The path to this valuation is cluttered. In the next two years, Tesla faces a titanic task, even if public policies have never been so favourable to clean vehicles. The Austin company will start producing its first semi truck, and deliveries begin on Dec. 1.
Next year is the most sensitive as production and deliveries of the highly anticipated Cybertruck are due to start in mid-2023. Also in 2023, Tesla must start marketing Optimus, its humanoid robot. If the feedback is positive, it would start of a new era for Tesla.
Musk also has said that In 2024 the company will launch its robotaxi service. To enable the service, however, Tesla’s Full-Self-Driving driver-assistance system must go through and solve the various regulatory investigations it is facing after some of its cars outfitted with the system had been involved in fatal accidents.
And broadly Tesla must stand strong against the onslaught of competitors in the EV market, ranging from the legacy U.S. automakers to, in particular, the Chinese car manufacturers like BYD.
