How Tesla Can Become Bigger Than Apple and Aramco Combined - Just From Selling EVs and Megapacks

In a bold vision of the future, Elon Musk made a statement last month that he believed with excellent execution, that Tesla could become bigger in market cap than Apple and Aramco combined.

This article goes over how Tesla can surpass the current titans, Apple and Aramco, purely through its electric vehicles (EVs) and Megapack sales. Nothing else is taken into account, such as FSD, Tesla Bot, Tesla Insurance, Suprecharging Profits, and more.

Achieving this monumental feat would not only mark a significant milestone for Tesla but also signify a transformative shift in global energy and automotive landscapes.

This article delves into the strategic roadmap and the staggering numbers Tesla would need to hit in terms of sales and profits to turn this vision into reality.

The Grand Vision: Tesla's Market Cap Ascent

To surpass the combined market cap of Apple and Aramco, which currently stands at an astronomical figure exceeding $4 trillion, Tesla would need to amplify its market capitalization significantly.

Today, Tesla is at a market cap of 581 billion. Tesla needs to increase this by about 8 times today - and in the future, this could be more, at about 10 times, as Apple and Aramco grow.

This would entail a multi-faceted approach focusing on scaling production, enhancing profitability, and expanding its market presence globally.

I will use conservative margins on both EVs and Energy in order to come up with the numbers needed. I will also use a P/E of 20 and 30, which is in line with most tech companies on the market.

Electric Vehicle (EV) Market Domination

Tesla's EV sales are the cornerstone of its initial growth strategy. To reach the desired market cap, Tesla would need to drastically increase its annual vehicle production and sales.

With a compact and sub-compact car in the mix, Tesla can get to an average sale price of $20,000 for each vehicle and make a profit of $3,000 on each, at a 15% net profit margin. Keep in mind, Tesla made $8,279 per car in 2023. I believe this will go down with lower cost cars.

This won't happen until toward the end of this decade, so Tesla will not reach this market cap milestone in the next few years, I'm sorry to say.

Let's look at the net income and vehicle amounts needed for this.

If Tesla reaches its 20 million per year vehicle run rate, which I think it will once the compact and sub-compact car are in volume production, you get:

$3,000 * 20,000,000 = $60,000,000,000. That's $60 billion a year in profit/net income. At a P/E of 30, that gets you a 1.8 trillion market cap from EVs. At a 20 P/E, you get a 1.2 trillion market cap.

20 million vehicles per year is a significant leap from its current production rate, which stood at around 1.8 million vehicles in 2023.

Let's give EVs an approximate 1.5 trillion market cap at full ramp.

Megapack: Powering the Renewable Revolution

The Megapack, Tesla's flagship utility-scale battery product, is pivotal in the company's energy sector ambitions. Assuming each Megapack sells for around $1 million with a similar net profit margin of 15%, how many Megapacks would Tesla need to sell?

Each Megapack is about $150,000 in profit for Tesla. Let's take a look at the numbers now.

Tesla will get to about 80,000 Megapacks per year once two of its factories have ramped fully: Lathrop, and Shanghai. This equals about: $150,000 * 80,000 = $12,000,000,000. That's $12 billion in profit from two ramped Megapack factories.

At a P/E of 30, that's $360 billion of market cap. It's clear from these numbers, that two factories is not enough. The world needs to be flooded with battery storage, so I see Tesla ramping well beyond 80,000 Megapacks per year. I believe Tesla will get to 1 million Megapacks per year in factories around the world. This will take many years to come, and it won't happen in the next few years.

1,000,000 Megapacks per year * $150,000 profit = $150,000,000,000. That's $150 billion in profit for a year. At a P/E of 30, you get $4.5 trillion in market cap. At a P/E of 20, you get $3 trillion in market cap.

Let's give energy an approximate $3.75 trillion in market cap.

This would not only require a massive scaling of production capabilities, but also a surge in global demand for energy storage solutions, driven by the renewable energy transition.

Combining Both

If you combine both EVs and energy, you have three scenarios:

Using my approximations (between 20 and 30 P/E), you get EVs at 1.5 trillion and energy at 3.75 trillion, for a total of 5.25 trillion in market cap.

At a P/E of 20, you have EVs at 1.2 trillion and energy at 3 trillion, for a total of 4.2 trillion in market cap.

At a P/E of 30, you have EVs at 1.8 trillion and energy at 4.5 trillion, for a total of 6.3 trillion in market cap.

For Tesla to surpass Apple and Aramco, it is going to have to show the growth in the future to warrant a P/E of 30 or more and get to a 6.3 trillion in market cap. Elon Musk's statement on excellent execution needed is very true.

That's the best chance for Tesla to surpass Apple and Aramco with just EVs and energy.

Of course, everything else is a "call" option and extra, such as any AI as a service (Dojo), FSD and robotaxis, and the Tesla humanoid robot.

It certainly doesn't look like it today, with all the FUD around Tesla and how its stock price has tanked, but the potential is still there as always as Tesla scales up manufacturing and continues to innovate. I think Tesla with just EVs and energy can one day be bigger than Apple and Aramco.

Strategic Imperatives for Tesla

To get this big, Tesla is going to need to grow and innovate in several different areas:

• Manufacturing Scale-up: Tesla would need to continue its aggressive expansion of manufacturing capabilities, including building new Gigafactories and optimizing production lines, to achieve the required scale of vehicle and Megapack production.
• Innovation in Battery Technology: Advancements in battery technology that increase energy density, reduce charging times, and lower costs are crucial. Tesla's ongoing research into new battery chemistries and manufacturing techniques would play a pivotal role.
• Global Market Expansion: Tesla would need to penetrate new markets and strengthen its presence in existing ones, tailoring its offerings to meet diverse consumer preferences and regulatory environments.
• Infrastructure Development: Expanding the Supercharger network and energy infrastructure to support the growing fleet of Tesla vehicles and energy products would be essential for customer adoption and satisfaction.
• Strategic Partnerships: Collaborations with governments, energy companies, and other stakeholders could open up new opportunities for large-scale deployments of Tesla's energy solutions.

I see Tesla as still being in the very beginning of its growth and opportunities. This is how I see it with just EVs and energy, getting bigger than Apple and Aramco.

What do you think about Tesla being bigger than Apple and Aramco just from EVs and Energy? Is this possible?

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Hi! I'm Jeremy Noel Johnson, and I am a Tesla investor and supporter and own a 2022 Model 3 RWD EV and I don't have range anxiety :). I enjoy bringing you breaking Tesla news as well as anything about Tesla or other EV companies I can find, like Aptera. Other interests of mine are AI, Tesla Energy and the Tesla Bot! You can follow me on X.COM or LinkedIn to stay in touch and follow my Tesla and EV news coverage.

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