The Atlantic

Will Tesla Do to Cars What Apple Did to Smartphones?

The company’s fate rides on the answers to three unresolved questions about the auto industry’s future: driven or self-driving? Electric or gas? Private or shared?
Source: Stephen Lam / Reuters

As Tesla surged past Ford and General Motors last week to become the most valuable car company in the United States, here was the brusque assessment of Bruce Greenwald, a professor at Columbia Business School: “It’s nuts.”

And, in a way, it is nuts. Particularly, if you ignore the Elon Musk mythology and look at the numbers. Tesla sold 80,000 cars last year. GM sold 10 million, meaning it exceeded Tesla’s annual vehicle sales every three days, on average. Despite the fanfare, Musk’s company lost $780 million in 2016. Ford made $11 billion.

But Tesla is a mountain of superlatives, as the auto industry’s most successful upstart, run by the “greatest living inventor” selling the greatest story of any publicly-traded tech company. Stock prices are, like everything else in life inflected by psychology, more about expectations of the future than about present circumstances. And that’s the metric where Tesla is beating its rivals into the ground. The company’s sales are growing 70 percent annually while the domestic car market has plateaued.

Tesla’s valuation isn’t nuts if

You're reading a preview, sign up to read more.

More from The Atlantic

The Atlantic3 min readPolitics
Trump Supporters Don’t Make Chants About Men
Where the president’s fans once called for a female opponent’s imprisonment, now they are longing for another woman to be literally banished from the country.
The Atlantic6 min read
The Blind Spot of Beyoncé’s Lion King Soundtrack
The singer’s musical accompaniment for the new CGI remake neglects to include any artists from the region that inspired the film—a curious lapse in narrative fidelity.
The Atlantic3 min readPolitics
The Atlantic Politics & Policy Daily: Getting Heated (Again)
July 2019 is on track to be the hottest July ever recorded. Plus: To be reelected in 2020, Trump has to win over this subset of voters, but his rhetoric isn’t helping.