In spite of being one of the youngest automakers on the market, electric car
maker Tesla
has a market valuation that dwarfs its competitors. Tesla’s $1 trillion market valuation is actually higher than the next 10 largest carmakers combined, but how does Tesla justify such a lofty valuation with its comparatively modest sales? Tesla has spent the past few years scaling up at a rapid clip, but the EV manufacturer only produces about 2% of vehicles made worldwide. Still, Tesla has a bigger market cap than auto OEMs which produce 80% of combined annual vehicle output. This is because, according to CEO Elon Musk, Tesla is “really a dozen or more startups.”
While this stance is controversial, Musk isn’t exactly wrong, either. Firstly, market valuation is based on potential rather than past sales. Tesla is also one of the most vertically integrated automakers in the world currently. Read on to see just what else happens under the hood at Tesla.
Tesla is leading the way in vertically integrated automaking
While many other automakers outsource parts, especially those in the EV area, Tesla has made huge strides towards vertical integration wherever possible.
In such uncharted technological territory for such a relatively young brand, it has been a risky move for Tesla to pour so much of its startup funds into manufacturing components of its cars in-house, but it appears to be paying off in more ways than one.
For example, Tesla not only makes its own battery packs in-house but has a hand in every part of the electric drive train from the motor to the power electronics. Tesla has even begun experimenting with making its own batteries
, which are currently outsourced to Japanese supplier Panasonic. Tesla has also been at the forefront of making its own automated driving software, setting a goal to be the first to create a real self-driving car. The EV maker also makes its own sound systems and car seats for its vehicles, along with other components that are typically outsourced.
Tesla’s other ventures
Outside of making electric cars, Tesla has offshoots in robotics, mining and artificial intelligence. The company is developing an humanoid AI-powered robot named Optimus, and even plans to use robots on the production side in its new Austin, Texas-based headquarters.
The extraction process for lithium is very labor-intensive as well as expensive, and many companies, Tesla included, have come under fire in the past for alleged unethical practices surrounding the mining process. Tesla plans to handle this by entering into the mining industry itself to develop methods for sustainable lithium extraction and refinement.
At present, it’s unclear whether Tesla will live up to its lofty potential, but CEO Musk has yet to shy away from a high-risk high-reward venture.
MORE: California Driver Fails Road Test Because of Tesla's Automated Features
Tesla also offers insurance
According to Musk, Tesla Insurance tracks your driving in real time, and is able to offer lower rates based on how safely you drive. But you don’t have to own a Tesla to start saving on car insurance. Download the Jerry
app today. Jerry is a car insurance broker super app. In the time that it takes you to fill out the introductory form, you’ll be connected to instant insurance savings sourced from 55+ major providers and their policies in less than a minute.
Jerry even contacts your insurance company to get the details of your current coverage, so you get all the best prices and coverage with none of the legwork. Nervous about the hassle of changing plans? Jerry will even help you cancel your old policy. Jerry customers save an average of over $800 per year on car insurance!
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