At approximately 699 billion USD Tesla's market capitalisation is larger than the top 5 automobile producers in the world, while Tesla is barely profitable and produces just a tiny fraction of the combined automotive vehicle production numbers of Volkswagen Group, Toyota Group and the Renault-Nissan-Mitsubishi Alliance.
How does the market value Tesla? The market seems to think that Tesla will control in the future something like 80 % of the market with the profitability of Ferrari. What is more, investors seem to think that Tesla will break into new markets and develop the market for electric batteries not only for automobiles, but also for other electricity needs.
How realistic are these assumptions? Basically, the outcome for Tesla seems to be binary. Either Tesla becomes a market leader for car production and in part substantiates its market value or it does not live up to the expectations and the losses of Tesla's main car production business sink the company into insolvency. Yes, Tesla in the last rolling four quarters became profitable, but that includes government subsidies for electric vehicles and accounting in advance for future sales of Tesla cars for which Tesla Inc. gets only 5 000 USD up front, that is now.
In my personal opinion, Tesla is worth in the long run around 120 billion USD. Tesla's value in my view is only based on its technological know how of electric vehicle production. Electric vehicles will take no more than 10-15 % of the market in the long run, in my new, mainly because the number of kilometres on one charge is not great and it takes up to five hours to charge a Tesla vehicle.
In short, the electric vehicle market needs a technological breakthrough to become a profit making, viable market.
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