Elon Musk’s Tesla is now worth more than most of the auto industry combined

As conventional automakers trade at rock-bottom prices and the industry is in a general malaise due to China’s economic slowdown and growing fears of Trump tariffs, Tesla stock continues to rise, creating one of the largest valuation gaps ever seen.

On Friday, Tesla reclaimed its place in the elite club of companies worth more than $1 trillion, having gained a full third in market capitalization since Election Day less than a week ago. The last time Tesla was worth this much money was in April 2022, when Musk had just unveiled his $44 billion plan to acquire Twitter.

Compared to its competitors, Tesla is now worth more than the next largest automakers combined – from Toyota and General Motors to Jeep’s parent company Stellantis and Hyundai.

If you add in lower-level names like Kia and Renault, valued at $26.6 billion and $12.6 billion respectively, Tesla is still ahead and only pulls ahead when you consider the $8.8 billion Japanese Nissan adds US dollars.

More names may soon be added to the list, as Tesla is expected to open Monday with a gain of nearly 7%, increasing its market cap to about $1.1 trillion.

No more Democratic “lawfare discount” weighing on stocks

Last week’s gains also reflect market optimism that Trump will implement his planned cut in the corporate tax rate from 21% to 15% for U.S. manufacturers like Tesla.

Musk may even get his wish for federal legislation that would enable autonomous vehicles and replace the confusing patchwork of state laws. This could accelerate Tesla’s plans to introduce unattended, fully autonomous driving.

And while some economists worry that Trump’s penchant for tariffs could hurt business for GM’s Chevrolet Equinox and Ford Mustang Mach-E imported from Mexico – both Tesla competitors – it is unlikely to slow Tesla down.

Musk makes all Tesla models sold in the U.S. at either his California factory in Fremont or Austin (but its battery cells, a key value driver, are still mostly imported from Asia).

David Sacks, like Musk a member of the PayPal Mafia who supported Trump, had a simpler explanation for why the stock shot up after the election. Musk’s influence in Trump’s second administration would hamper enforcement of regulations by agencies such as the NHTSA and bring a quick end to investigations into Musk’s business dealings.

“That was the lawfare discount – pricing in the Democrats’ viciousness in the stock market,” Sacks posted Friday.

Biggest gap between sentiment and fundamentals since October 2021

Tesla’s stock premium compared to its competitors is also huge.

According to the consensus estimate of 34 analysts surveyed, Yahoo Finance currently puts Tesla’s expected earnings per share in 2025 at $3.24.

That means investors are paying 100 times earnings for each share, versus 5.3 times for a share of General Motors. Generally, an earnings multiple of 100 is the point at which even tech stocks tend to lose touch with their underlying fundamentals.

Take Nvidia, for example: the stock that drove the S&P 500’s gains this year – it trades at 36.1 times next year’s forecast earnings. Other trillion-dollar megacap companies such as Amazon (33.9x), Microsoft (28.3x), Apple (27.3x), Meta (23.3x) and Alphabet (19.9x) are currently valued at even lower metrics .

This could indicate that Tesla’s earnings estimates are lagging the market and are not yet keeping up with investor sentiment. But 34 analysts recently revised it upward in the past 30 days, largely to reflect Musk’s optimistic October forecast that Tesla car sales will rise 20% to 30% next year on new models, including cheaper versions of the Cybertruck .

As a result, Future Fund asset manager Gary Black warned that the spread between Tesla’s sentiment-driven share price and Wall Street’s average price target based on fundamental business metrics has reached its highest level since October 2021 – a month before the stock’s price target Climax reached – time peak.

“Without earnings growth, analysts cannot raise Tesla’s price targets without economic justification,” he argued on Monday.

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