In 2003, Tesla was a tiny California carmaker using other companies’ parts to build its vehicles. Tesla’s first model, the Roadster, crammed 990 pounds of batteries into a Lotus Elise chassis and cost at least $98,000.
Today, Tesla has factories around the world mass-producing models it can barely keep in stock. It is not only the world’s most valuable electric carmaker, it’s the most valuable carmaker period (and one of the most valuable companies in the US).
It owes its success to a massive expansion in the market for electric vehicles (EVs), as well as smart moves that positioned it to outpace its rivals in the electric vehicle race. Here’s the story of Tesla’s ascent in charts.
EVs grabbed a bigger slice of the pie
Electric vehicles (EVs) now represent 4.2% of all new vehicle sales worldwide, roughly doubling from a year prior. Tesla, partly responsible for this explosive growth, couldn’t have succeeded without it. The likely reason? Generous tax incentives, tightening fuel economy standards, and a new wave of popular models (especially Tesla’s) hitting the market that offer longer range, lower prices, and curb appeal.
Growth is accelerating almost everywhere
EVs defied predictions for a dismal year during the pandemic. Global sales surged 40% in 2020, even as overall vehicle sales fell 14% compared to the previous year. It was a pattern seen around the world (the US was a rare exception). Europe, in particular, has seen rapid growth, making Germany the world’s second-largest EV market (after China).
Tesla made the most popular models
No company has had a bigger impact on expanding the global EV market than Tesla. The company sold almost 500,000 vehicles last year, about one of every six EVs sold anywhere in the world. Most were the Model 3 sedan, the world’s most popular electric model, which outsold every other model by a factor of three.
Tesla is eating other automakers’ lunch
Tesla commands more than 16% of global EV sales. Its nearest rival, BMW, actually saw its share of global sales shrink last year to 5.9%. Tesla owes this dominance, in part, to an early dearth of competitors (the Nissan Leaf and Chevy Bolt are notable exceptions). But Tesla will have no choice but to keep expanding its lineup to keep pace. In 2021, dozens of new EV models, mostly popular SUVs, trucks, and crossover vehicles, will hit the market. By 2022 about 523 new vehicle models are expected to be on sale, estimates consulting firm McKinsey, nearly double the number of options available today.
Tesla finally posted profits
For years, the company saw its annual revenue rise, even as it piled up losses. But the company posted record profits in 2020, its first profitable year, primarily thanks to the popularity of its Model 3 sedan and Model Y crossover as well as the $2 billion it made from energy generation and storage (solar panels, batteries, and energy services). Sales of zero-emission credits to other automakers (many of which must buy credits to meet state and federal emissions regulations) were a critical income source, too.
Musk rallied the stock market
CEO Elon Musk promised to make Tesla the world’s most valuable automaker. In June 2020, he succeeded, eclipsing Toyota’s market capitalization. Just a few months later, Tesla’s valuation hit a record $844 billion on Jan. 8, 2021, exceeding that of the rest of the world’s automakers combined. Tesla has fallen back to Earth since then, and other EV makers have edged it out slightly, but its stock price remains at record highs. That has given it an enviable financial position.
No one can raise cash like Tesla (for now)
Tesla has raised more $12 billion since 2020, effectively doubling its funds on hand. Tesla’s stratospheric stock price effectively gives it a cash machine. By issuing more stock, it can raise billions of dollars with minimal dilution (selling shares) without loading up on loans. It will need every cent to fund aggressive expansion plans. Legacy automakers, with depressed stock prices, can’t pull that off. They must turn to the debt market and, with $1.1 trillion in outstanding debt, they’ve got limited options. As long as its stock price stays buoyant, that gives Tesla the edge.
