Why Tesla is the biggest car company in America

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As of 2020, Tesla is highest valued car company in America, ever. In fact, worldwide, it is second only to Toyota. This is very exciting information, especially since the company is only 17 years old. But if you think about it, Tesla does a lot of things to get people excited:

Tesla's Strategy

In 2006, Elon Musk, the CEO of Tesla, put up a 4-step master plan for success on Tesla’s website. It was very simple: 

"Build sports car
Use that money to build a [cheaper] car
Use that money to build an even [cheaper] car
While doing above, also provide [green electric power]..."

Elon Musk
Source: Wikipedia
Source: Tesla

Excitement aside, as of March 2020, Tesla sold just over 1,000,000 cars… In comparison, for the year 2019, Ford sold 2.4 million cars, and GM sold 2.3 million cars just in the United States. How could Tesla possibly be worth more than these companies when sales are so low?! Are the investors on drugs here?? Actually, no. The company might be overvalued, but even after 17 years of losses, and a (sometimes) crazy CEO, investors still believe in Tesla’s future.

Tesla’s Strengths

One thing to remember is that Tesla is not a car company, it’s a technology company that makes cars. Their goal is much bigger than building sexy cars (please notice car models S, 3, X, Y… “S3XY” = SEXY).

One sentence from their website states their future goals simply and clearly:

“increasing the use of sustainable (renewable) energy, so that we can imagine far into the future and life is still good.”

... Also said by Elon Musk

The company promises us hope for the future, but makes it fun today. Almost every car company offers up great, sexy cars. How many companies give users the chance to support a long and healthy future for life on Earth? Not many.

Elon himself has slept on factory floors, lost lovers, and invested all of his money to make this dream come true. When the leaders are invested from the heart, it wins the hearts of investors. Still though, companies do need to make money, and the good news is the company plans to change transportation in a few ways which will be extremely profitable:

"Create [beautiful] solar roofs with battery storage

Expand the electric vehicle product line to all [major types of transport]

Develop a self-driving car that is 10X safer…

Enable your car to make money for you when you aren't using it"

Again... said by Elon Musk

This is the “master plan part deux” (deux is the French word for two), written on the Tesla website in 2016. The plan is to not only make the cars, but also supply the energy they use. They will be the car company, supply power to the cars, and the solar panels could also power homes across the world. Their driverless technology will also allow people to easily share their cars. In places like New York City, Tesla will use their own cars like a driverless taxi service. They also have plans to build a full system of driverless, electric public transportation (buses, trains, and taxis). There are plans to build vehicles for the shipping industries and more.


Tesla is really the first-mover for this market, even though they did not create the first electric cars. The first electric car to market, the Henney Kilowatt, was introduced in 1960, but only 47 units were sold. In 1999, GM introduced an electric car called the EV1. In 2003, the EV1s were all destroyed by GM. This is actually what caused Tesla to begin:

Now that Tesla has proven profitability, major car companies are coming in with their own product to compete. Big players could cause big problems for Tesla, especially now, while they still have quite low product output and low revenues. In 2019, 85,000,000 cars were sold around the world. Tesla’s production in 2019 was just over 100,000.

Source: Tesla

If Tesla isn’t careful, their business could go to these older companies that already have high production and factories around the world. However, tens of thousands of people are ready to pay $1,000 for a chance to buy a Tesla car a year out into the future, all while other beautiful electric cars are waiting to be bought. This is amazing brand power. You could think of Tesla as being overvalued, the risk is high and they are not currently making serious money. However, for the investors, the rewards are equally high; Tesla could become the best car company of the 21st century, leaving investors very rich, and even more important, their strategy could save the world, which is a risk worth taking.