Tesla (TSLA) in a short time has become the benchmark for the global automotive sector.
Legacy automakers, such as GM (GM), Ford (F), Volkswagen (VWAGY) and Mercedes-Benz (DDAIF) , position themselves in relation to Tesla.
Upstarts like Rivian (RIVN), Lucid Group (LCID) and Fisker (FSR) want to be compared to Elon Musk's EV juggernaut.
But Tesla's fame extends far beyond automotive circles. Companies that want to be innovative and disruptive also have an eye on what Tesla is doing.
With the latest technological innovations, the electric-vehicle manufacturer has transformed the car into a living room on four wheels. (Apple AAPL similarly can claim to have a technology ecosystem, in phones and computer equipment.)
Among consumers, the T brand occupies a place of its own. Owning a Tesla car puts an owner in a select club. Die-hards swear by the brand, which currently markets four models – Model S and Model 3 sedans and Model X and Model Y SUVs.
The futuristic Cybertruck, the Tesla Semi and the new Roadster are due to go into production in 2023.
Save The Planet
It's difficult to classify Tesla, especially since Musk, the architect of this extraordinary success story, likes to cover his tracks.
To those who think of Tesla as just a vehicle manufacturer, they are often reminded that the company's market capitalization, which topped $1 trillion a few months ago, tells a different story.
Tesla sells far fewer cars annually than Toyota (TM), GM, Volkswagen or Ford. In 2021, the Austin company sold barely 1 million vehicles, compared with millions at legacy carmakers.
And for those who categorize Tesla as a tech company, they're often reminded that Tesla is pretty much a way of life in its own right. It is, they are told, a choice to protect the planet and save it from pollution.
Seen from these angles, Tesla's real rival is hard to pin down, especially since Musk stares down his rivals but hardly ever talks about them.
Apple is often the company that the billionaire's technology efforts evoke. But he makes fun of its products and wonders what the iPhone manufacturer invented that was revolutionary.
As Tesla shareholders and analysts wonder whether Musk will devote much of his energy to developing Tesla as he acquires microblogging website Twitter for $44 billion, Musk just sent them a message that should reassure them.
In addition to the fact that he hopes not to have to use his Tesla shares as collateral to finance the takeover, the serial entrepreneur has just named the company that he probably considers to be the last obstacle to Tesla's initial mission.
Saudi Aramco, Not Apple
That company is the Saudi oil giant Saudi Aramco.
The billionaire says he thinks that "Tesla has the potential to be the most valuable company ever."
"When Tesla’s market cap, making sustainable energy products, exceeds that of Aramco, producing fossil fuels, you know the future will be good for Earth," Musk wrote on Twitter on May 25. He was commenting on a message saying that he warned investors about a potential recession that will affect the stock price.
Saudi Aramco is currently the most valuable company in the world with a market capitalization of $2.387 trillion as of May 26. The oil giant is taking advantage of the surge in crude oil prices caused by Russia's invasion of Ukraine.
Apple comes second with a market cap of $2.327 trillion, followed by Microsoft (MSFT) with $1.998 trillion.
Next come Alphabet (GOOGL) with a market value of $1.426 trillion and Amazon (AMZN), valued at $1.13 trillion.
Tesla is currently sixth with a market cap of $733.21 billion. On Dec. 31, Tesla still had a market capitalization of $1.099 trillion. Since then, that valuation has fallen by $366 billion. Tesla stock is down by a third since January.
Supply-Chain Disruption and Fundamentals
This setback is certainly due to concerns about supply-chain disruptions and rising prices for raw materials, but much of it is also tied to concern that Musk will be distracted by Twitter.
Besides Tesla, Musk runs rocket company SpaceX and is involved with medical-device producer Neuralink and infrastructure provider Boring Co.
Investors wonder how he will divide his time between all these companies once he completes the acquisition of Twitter.
These fears aside, Tesla's fundamentals are solid: its vehicle order books are full; recent vehicle-price increases have been accepted by customers; and Tesla promises full vehicle autonomy by the end of the year.
The group now has four factories - Fremont, Calif., Austin, Shanghai and Berlin -- which will enable it to considerably increase its production.
In the first quarter, Musk's business achieved wide margins and posted the best profitability in the automotive sector despite lower sales volumes than its main competitors.
"The point of all this was, and remains, accelerating the advent of sustainable energy, so that we can imagine far into the future and life is still good. That's what 'sustainable' means," Musk wrote in July 2016 in his Master Plan for Tesla, Part Deux.
"It's not some silly, hippy thing -- it matters for everyone.
