Tens of billions of dollars flow through the auto industry every year, and billions are spent on advertising alone. Tesla’s a relative newcomer to the auto industry, but it’s already one of the most sought after car brands — even though it doesn’t spend any money on advertising.
Tesla is not without its skeptics or shortcomings either. Amidst production pitfalls (and perhaps reflected in recent growing concern among investors), Tesla is releasing its Model 3, a “for the masses” electric vehicle with production estimates of 500,000 by 2018.
To better understand the existing landscape of the auto industry and Tesla’s place within it, we’ve compared Tesla’s market capitalization, net income, and automotive revenue to those of Ford, General Motors, Toyota, BMW, and Volkswagen.
In comparing Ford, GM, Toyota, BMW, and Volkswagen’s marketing capitalization for the last two years (from Q1 2015 to Q1 2017) against Tesla’s, we found that Tesla was the only auto company that saw an increase (44.6%) in market cap. The market cap for all of the other auto companies fell, either a result of falling stock prices or share buybacks.
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Tesla’s market capitalization is beating out fellow American automakers Ford and GM despite a lower number of available shares. The difference is particularly acute in comparing Tesla and Ford’s net income and automotive revenue quarter by quarter from Q1 2015 to Q1 2017.
Barring a single quarter in 2016, Tesla has not turned a profit and seen net losses in the past 9 quarters. By comparison, Ford has seen profit in 8 of the 9 observed quarters, and consistent automotive sales ranging from $35-37 billion in the last 9 quarters.
Though its market capitalization is higher than Ford’s, Tesla has yet to break $3 billion in automotive sales.
Tesla’s net loss and automotive sales are due to its size. As a burgeoning auto manufacturer in a completely new market, Tesla is expected to rack up debt with research, development, and building costs. Tesla’s vehicle production in 2016 was 84,000 vehicles, where Ford sold upward of 6.6 million vehicles in the same period.
Tesla’s success with investors is a result of a wide range of factors, including strong branding and excitement around innovative technology. The only automaker in the world scaling electric-only automobiles and infrastructure, Tesla is a singular entity in the field. Tesla’s work has people excited to see what’s coming next, and their excitement makes it possible for Tesla to spend $0 on advertising where other automakers are spending billions.
Tesla also has the market all but cornered on electric cars. Led by visionary Elon Musk, Tesla has grown its capital to a point where it would be difficult for traditional automotive companies to catch up. The lack of commitment to building electric cars from traditional auto has not only led to stagnation in the industry, but it’s also given Tesla a valuable head start.
The Model 3 is Tesla’s entry-level model slated for mass market production. Starting at $35,000 without added premium features, the Model 3 has a range per charge of 215 miles, seats five adults, and can go from 0-to-60 miles per hour in 5.6 seconds.
The Model 3’s basic features also include autopilot hardware and pay-per-use supercharging capabilities. Purchasing requires a $1,000 down payment, and buyers can choose to add full self-driving capability and glass roof for a premium fee.
Production for the Model 3 begins in July 2017 and deliveries for new reservations are expected to come mid-2018. Tesla has reported that it’s received 400,000 orders so far reaching as high as $700 million in deposits.
Model 3 images used with permission from Tesla