struck gold again Monday when
the electric-car maker he founded and runs as CEO, reached a stock market capitalization of $1.03 trillion. That’s a staggering business achievement, even discounting for today’s monetary-policy induced surge in asset prices.
Tesla’s 12.7% Monday price leap was triggered by news that Hertz will buy 100,000 Tesla Model 3 cars for its rental fleet. Tesla only produced about half a million cars in all of 2020. The Model 3 sells for about $40,000. The Hertz purchase will broaden public awareness of Tesla’s vehicles, enhancing its chances to become a mass-market brand rather than a virtue-signaling indulgence of the affluent.
It seems only yesterday—2018—that
became the first trillion-dollar company by market cap. Now
and Alphabet (parent of Google) are all worth more than that, and
was too before the assault on its reputation by a former employee and stolen internal documents. Apple is worth nearly $2.5 trillion.
As for Tesla, its market cap exceeds that of the next nine largest auto makers combined.
is worth $237 billion, GM only $84 billion and
$64 billion. Mr. Musk is proving again that the rewards of being a market disrupter are larger than ever.
No one should begrudge Mr. Musk his commercial success, but one question comes to mind: Why does Tesla still need subsidies to make and consumers to buy electric cars? The House reconciliation bill would extend the existing $7,500 EV tax credit through 2031 and remove the 200,000 car per-manufacturer cap, which both GM and Tesla have hit.
This is in addition to the many other government subsidies to produce batteries and the cars themselves. Tesla also benefits from the sale of regulatory credits to companies that don’t produce enough electric or hybrid cars to meet government mandates. Tesla’s 10-Q filing shows revenue of $1.15 billion from selling regulatory credits through Sept. 30 this year.
A $1 trillion company doesn’t need government aid. If the Democrats follow through on their latest plan to impose a new wealth tax, the IRS will soon be pursuing Mr. Musk to turn over much of his wealth and any gain in his Tesla shares. We’d prefer to let him keep the gains of his entrepreneurial tenacity but give up the subsidies.
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Appeared in the October 26, 2021, print edition as ‘Tesla Hits $1 Trillion.’