Tesla Passes Toyota as World’s Most Valuable Car Company

By Douglas A. McIntyre Published Jun 11, 7:00AM EDT

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Tesla Passes Toyota as World’s Most Valuable Car Company — © jetcityimage / Getty Images

Toyota Motor Corp. (NYSE: TM | TM Price Prediction), founded in 1937, and in many years the world’s largest car company, is no longer the most valuable as measured by market capitalization. That honor now belongs to Tesla Inc. (NASDAQ: TSLA), founded in 2003. Tesla sells a fraction of the vehicles Toyota does each year.

Toyota’s market cap is $182 billion. Tesla’s is $190 billion. Some accountants would argue that Toyota has treasury shares held by the company that add to its value, but they are not shares outsiders can trade. On a comparable basis, Toyota has lost its crown. Tesla passed the market cap of other large car companies years ago. General Motors Co. (NYSE: GM) has a market cap of $41 billion, and Ford Motor Co. (NYSE: F) has a market cap of $27 billion

From year to year, Toyota alternates the spot as the company that sells the most cars each year with Volkswagen. The race is always close. Last year, VW sold 10.9 million cars while Toyota sold 10.6 million. Tesla is on a path to sell about 500,000 this year.

Toyota sells several brands, including Toyota, Daihatsu, Hino and luxury brand Lexus. Tesla sells only one. Toyota has dozens of models. Tesla has four: Model 3, Model X, Model Y and Model S. Most cars in the world are powered by gasoline, the preferred type of engine among consumers by far. Tesla sells only electric vehicles.

[nativounit]

The difference in market cap is that investors believe Tesla’s business model is the wave of the future. They think more and more people will want electric cars, though that case has not been entirely proven. Surveys of drivers show many shy away from electric cars because they are not what they are used to. Some think electric cars are dangerous. Others say electric cars do not have enough charging stations.

Some point out that several of the world’s largest car companies have started to make electric cars of their own. This includes Toyota. Tesla may face a market share block if its larger competition is successful.

At the core of the argument about market cap figures is that, even though Toyota has an annual revenue of $272 billion, it is no longer growing. Tesla has an annual revenue run rate of $24 billion, but it is exploding higher by almost 40% a year.

The argument about which is the more valuable company will be settled if Tesla can hold a growth rate that will get its revenue into the hundreds of billions of dollars.

[recirclink id=712739]
[wallst_email_signup]

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.