Elon Musk’s Tesla Valuation Vision: $15 Trillion and Beyond?
Tesla (NASDAQ: TSLA) Chief Executive Officer Elon Musk is infamous for his bold claims.
Known for overseeing both SpaceX and other ventures, Musk has made numerous grand but often exaggerated statements. For instance, he referred to the unbuilt Hyperloop as the “fifth mode of transport” and once claimed that he could take Tesla private through a tweet, stating he had secured funding that, in fact, he did not have.
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Despite this tendency for hyperbole, Musk has succeeded in delivering on some of his ambitious promises. For example, the much-anticipated Cybertruck finally launched in late 2023 after years of speculation. Now, Musk has made yet another striking prediction.
During Tesla’s most recent earnings call, Musk stated, “I’m not saying it’s an easy path, but I see a path to Tesla being the most valuable company in the world by far. Not even close, like maybe several times more than— I mean, there is a path where Tesla is worth more than the next top five companies combined.”
Currently, the top five most valuable companies in the U.S. are Apple, Microsoft, Nvidia, Alphabet, and Amazon. Their combined market value is nearly $15 trillion, which sets the bar for Musk’s expectations of Tesla. At approximately $1.2 trillion currently, Musk anticipates a significant rise in Tesla’s valuation, especially as these competitors’ values may also increase in the future.
Image source: Tesla.
Understanding Musk’s Financial Forecast
Musk has not detailed how he arrived at this valuation, but he believes that full self-driving technology and operating a robotaxi service could lead Tesla toward that goal.
He has always imagined a ride-sharing market driven by autonomous vehicles as a way to generate significant value. On the earnings call, Musk pointed out that an average passenger car is only in use for about 10 hours a week. He estimates that a shared autonomous vehicle could be utilized for 50 to 55 hours a week, a shift he claims would represent the “largest asset value in human history.”
Putting a concrete number on this is complicated, but Uber (NYSE: UBER) could serve as a useful comparison. Though Uber has not yet reported its fourth-quarter earnings, it projects around $160 billion in gross bookings for the year, reflecting a 16% increase in the third quarter. This figure represents total customer spending on ride-sharing and delivery services, with Uber taking a small cut while most goes to drivers.
Musk envisions that in an autonomous vehicle framework, the bulk of gross bookings would benefit the owner. He posits that this model could achieve software-like gross margins, estimated at around 80%. Operating costs would mainly include charges for vehicle maintenance. If Tesla were to earn $160 billion from ride-sharing at that margin, it would result in a gross profit of $128 billion—significantly higher than Tesla’s projected gross profit of $17.5 billion in 2024. Yet, operating expenses would also rise to support this ride-sharing initiative.
Should we assume a 50% operating margin for Tesla’s new venture, it could yield an additional $80 billion in operating income, adding to the $7.1 billion earned last year.
Even then, for Tesla to reach a valuation of $15 trillion with a projected net income nearing $100 billion, it would suggest a staggering price-to-earnings (P/E) ratio of 150—an extraordinary figure. Tesla currently trades at a ratio that reflects similarly high expectations due to the possibilities of autonomous driving.
Is the $15 Trillion Goal Achievable?
Over time, it’s conceivable that Tesla might achieve a $15 trillion valuation. After all, it was only a few years ago that no companies had a market value over $1 trillion, and now there are nine in the U.S.
However, Musk’s dream of Tesla surpassing the combined worth of the next five major companies appears overly ambitious. Historically, no single company has maintained such dominance, making it unlikely that one entity could control that much of the stock market’s total worth.
While Musk’s vision for autonomous vehicles carries potential, investors should approach his estimates with caution. It’s prudent to focus on solid metrics and keep track of the real-world developments in autonomous technology. Tesla may still be years away from achieving a breakthrough significant enough to positively impact its financial results.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia, Tesla, and Uber Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
