Tesla Becomes a Trillion-Dollar Company

Tesla truly cemented its claim to be one of the tech giants this week with the news that it became a trillion dollar company. This came after the electric car company closed a deal that would see it supply 100,000 vehicles to the car rental brand Hertz. The move caused shares in Tesla to jump by 12.6% and maintain its position as the world’s most valuable car company.

Much of the focus will be on the brand’s figurehead, Elon Musk, who saw his 23% stake in Tesla rise up to give him $230 billion in the bank. It has taken the entrepreneur just 11 years to take Tesla from a budding project to an elite tech company. While Tesla’s global car sales are still tiny, its perceived value is immense and dwarves that of established manufacturers such as Volkswagen and Renault.

The deal marks a significant step forward for the electric car cause with Hertz putting down the largest-ever order for the eco-friendly vehicles. The following 14 months will see the rental car company paying Tesla over £4 billion to acquire 100,000 Model 3 cars. This would mean that electric vehicles would form just less than one-quarter of Hertz’ overall fleet.

Such a move would put pressure on Tesla to significantly boost its production capacities and there are already plans in motion for the brand to produce 20 million vehicles per year.

How Tesla defied the critics

Many investors had been cautious to take Tesla too seriously in recent months. This is largely due to the fact that the brand had continually failed to improve the production rate of its cars with many customers having to wait months for their paid-for vehicles to be delivered.

Such issues meant that Tesla lagged behind rivals such as Ford and GM who were able to produce more cars despite Tesla actually being more valuable. This has been coupled with a barrage of negative publicity for everything from problems with the brand’s Autopilot self-driving software to some of Musk’s more eccentric outbursts on social media.

However, the past 12 months have seen Tesla solving such issues and it became profitable for the first time. Concurrent to this is the fact that a Biden administration has made the US much more likely to equip the nation with the infrastructure necessary for electric vehicles to finally enter the mainstream. This should see more charging locations added across the country to help Tesla become much more of a viable prospect.

Who are the other trillion dollar companies?

Tesla is just the sixth company to have reached a trillion dollar valuation. Prior to this, only the likes of Apple, Microsoft, Amazon, Facebook and Google’s parent company – Alphabet – had hit this milestone. Other companies who are predicted to hit the trillion dollar mark by 2023 include the likes of Netflix, Nvidia and Comcast. Such news will prove that Tesla is much more than a car company taking advantage of a passing trend and instead represents a solid investment.

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