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Tesla’s Rapid Growth and Market Potential Could Propel It to Become the World’s Most Valuable Automaker

Elon Musk (Shutterstock)

As Tesla’s market capitalization crosses the $100 billion milestone, discussions about its potential to become the world’s most valuable automaker are gaining traction. Eddie Yoon, founder of the think tank EddieWouldGrow, outlined a bullish outlook for Tesla on CNBC’s “Trading Nation.”

“The next milestone that I see happening is [Tesla becoming] the world’s most valuable auto company,” Yoon stated. Currently, Toyota Motors holds this title with a market cap of $233 billion. However, with Toyota’s overall sales declining by 2% in 2019, Yoon suggests that Tesla is well-positioned to capitalize on this shift.

According to Yoon’s research, U.S. Toyota owners are three times more likely to consider purchasing a Tesla. This trend could spell trouble for Toyota while boosting Tesla’s market share. “What you’re seeing is really every lineup that Tesla has is going after every major segment that Toyota has at a much higher purchase intent, and that’s going to be bad news,” Yoon explained.

Yoon estimates that roughly 9% of U.S. households, approximately 10 million, are highly likely to purchase a Tesla as their next vehicle. This growing interest provides a robust foundation for Tesla to expand its offerings, including its insurance segment and various software services.

“You’re already seeing this now with the advent of the full self-driving [vehicles], the half-a-second acceleration for $2,000,” Yoon noted. He anticipates that Tesla’s burgeoning insurance business could mirror the success of Progressive, which has 13 million policies, $36 billion in revenue, and a $48 billion market cap.

Yoon argues that these factors can generate significant cash flow, enabling Tesla to sell its proprietary software and battery technology to legacy automakers struggling to keep pace. “Tesla is growing the pie, even in the midst of a flat to even, in some cases, declining auto segment,” he said, emphasizing that Tesla operates differently from traditional automotive companies.

With its technological advancements, expanding business model, and a growing customer base, Tesla is positioned for substantial growth. Yoon predicts that Tesla’s nascent operations in China and plans for a globally designed vehicle by Chinese engineers could drive its market valuation to $500 billion, potentially reaching $1 trillion within the next decade.

“The most exciting thing I see from there is [Tesla CEO Elon] Musk’s announcement that they’re going to design a car by Chinese engineers for the rest of the world,” Yoon said. He believes that a sub-$30,000 vehicle designed for global markets could secure Tesla’s lead in the industry.

Tesla shares closed on Thursday at $572.20, up about 0.5%, while Toyota saw a 1% increase to $143.06. Despite some skepticism from UBS analysts, who reiterated their sell rating on Tesla stock, Yoon remains optimistic about Tesla’s future growth and market dominance.

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