The court of the Sun King at Versailles was a nest of snakes, as movies and television series like to depict this fascinating period when French art dominated Europe.
Power games, shenanigans and other plots enliven daily life in the court of Louis XIV. When it's not to curry favor with the king, courtiers scheme to oust him.
Now imagine that Versailles is the stock market.
Apple (AAPL), whose market capitalization is currently around $2.6 trillion, as of this writing, would obviously be the king, and the rest of the companies therefore form the circle of courtiers, who are not, however, housed in the same boat.
As under Louis XIV, there is a hierarchy among the courtiers.
Microsoft (MSFT) ($2.09 trillion in market cap), Alphabet (GOOGL) ($1.67 trillion in market value), Amazon (AMZN) ($1.39 trillion in market cap) and Tesla (TSLA) ($831.5 millions in market value) form the first circle.
Their particularity is that they are very ambitious and hope to dethrone King Apple. But the most rebellious of all is Tesla, which has never hid its criticisms of Apple. Until recently, Tesla's chief designer said that Apple had become very boring.
"Oh my God, I've heard about Apple products now is like there's nothing to look forward to. Right!" Franz von Holzhausen, Tesla chief designer, told Spike's Car radio. "I feel like it's just a continuation. It's just kind of a slight refinement on the same thing. Inspirationally, it's been hard to get, you know, super motivated by what they're doing."
Tesla
Tesla, The Ambitious
It would thus be an understatement to say that Tesla sees himself as the new king. The coronation is possible for the manufacturer of high-end electric vehicles. Some, like investor Gary Black, say Tesla's market cap can go as high as $4 trillion by 2030.
Black and his firm The Future Fund recently published their calculations. These are very optimistic and count on a massive adoption of electric vehicles around the world.
Black's estimate is based on the following assumptions: Electric vehicles will be more popular by 2030, with 60% penetration. Tesla, which is currently the leader of this booming market, will increase its leadership, with a market share that will reach 21%.
The production and deliveries of the firm led by Elon Musk will also explode, predicts Black. Sales of global light-electric vehicles should reach 85 million units per year, including 10 million sold by Tesla.
Tesla's operating margin, which was 14.1% in 2021, will jump to 26.1% in 2030 thanks to an improvement in technologies related to batteries in particular. The automaker's adjusted earnings per share (EPS) would go from $6.79 in 2021 to $100 in less than 10 years, Black calculates.
"When EV adoption hits 60%, $TSLA with 20% EV share will be viewed a safe haven like $AAPL," Black posted to his followers on Twitter.
Tesla has just received the permit to start production in its gigafactory in Berlin, which will start manufacturing cars soon to serve the European market. The Austin gigafactory should be fully operational soon as well.
"The Berlin factory establishes a major beachhead for Tesla in Europe with potential to expand this factory to production of ~500K vehicles annually with Model Y front and center over the coming 12 to 18 months," Wedbush analyst Daniel Ives wrote in a recent research note.
Ives added that Berlin Gigafactory will help solve the bottlenecks of production for Tesla globally.
Scary Numbers
Black gives other figures such as assuming that the production of electric vehicles will increase from 4.6 million in 2021 to 51 million in 2030.
It must be said that most vehicle manufacturers — GM (GM), Ford (F), Volkswagen (VWAGY), Honda (HMC), Stellantis (STLA), Toyota (TM), Volvo (VOLAF) , Rivian (RIVN), Lucid (LCID), Nikola (NKLA)— also have hyper-aggressive production targets.
GM and Ford, for example, are talking about producing 2 million units per year from 2025 for the first and 2026 for the second. The two groups produced just 50,000 electric vehicles each in 2021.
Black's projections sparked a lot of comments on social media. On the one hand, they seemed to be well received by some, especially Tesla fans. But other users pointed out that a probable arrival of Apple in the automobile could torpedo these beautiful plans.
"Gary, you do a great job and are the level headed voice of reason in the TSLA community. No hype," praised one user.
"Until another company makes 1/10th what $TSLA does, the idea that they only get 20% is laughable," another user added.
But others argued that the prohibitive prices of Tesla vehicles were going to be a drag on the firm. Tesla currently markets four models — Model S, Model X, Model Y and Model 3 — the base price of the Model 3, the entry-level vehicle is $40,690.
"Just one problem: how many people can afford a $50K car?" asked one user.
"$AAPL are working on a car though, and they have proved consistently to be the best supply chain company on the planet. How many TSLA buyers would be likely to jump ship? I probably would..."
Black isn't the first investor to see Tesla's market capitalization soar to $4 trillion.
In March 2020, Cathie Woods' Ark Invest predicted that there was over a 25% chance that Tesla will be worth more than $4 trillion by 2025.
