WORLDVIEW: Tesla is the world’s no. 2 carmaker – why?

The Tesla share price has rallied strongly as the company has replenished its cash buffers and delivered a second consecutive quarterly profit on the back of record car deliveries. At one point, Tesla shares topped $960 – although they've since fallen back to around $730 – and with a current market cap above $100bn, Tesla is now the world's second-biggest carmaker by market cap (after Toyota with a market cap over $200bn).

Tesla has performed well since its difficult period early last year. Its sales have continued to grow, it has started to generate positive cash flows, and it has resolved the production issues that plagued the rollout of its mass-market Model 3 sedan. Its future line-up includes a promised Model Y crossover SUV, as well as a revamped Roadster, its proposed Cybertruck pickup truck, and the long-awaited Tesla Semi haulage truck. Further down the line, Tesla promises a fleet of self-driving robotaxis.

Some may argue that this performance emphatically refutes the naysayers who believe that Tesla is overvalued. However, there is plenty of reason to worry that Tesla's valuation is inflated. After all, while Tesla delivered a record 367,500 cars in 2019, VW sold almost 11 million, Toyota sold almost 10 million, and Renault/Nissan sold over 9 million.

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