You could practically see Elon Musk smile. On July 1, after an impressive rally of its stock price, Tesla—the 17-year-old electric-car company for which Musk serves as CEO—became the world’s most valuable automaker, worth an eye-watering $209 billion. Barely a month later, it’s worth $279 billion—more than quadruple the combined value of American icons General Motors and Ford Motor, even though the California company sold just 4% of the vehicles the Detroit duo did last year.
How substantial must Tesla’s actual sales be to meet its investors’ outsize expectations? We asked Joe Osha, a JMP Securities analyst who specializes in energy and industrial tech—and a frequent Tesla bull—to show his math. By his calculation Tesla needs to sell 2.5 million vehicles per year, or almost seven times what it managed last year, by 2025 to justify its lofty valuation.
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How did Osha arrive at that number? The analyst estimates that the global EV market—of which Tesla controls nearly a third today—will represent 6 million vehicles per year by 2025, or about 8% of the total global vehicle market. If a substantial share of the EV market goes …