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Tesla's market cap versus Toyota's production might

It's quite bold to compare Tesla and Toyota, given their distinct business model, yet we must. Toyota dwarfs Tesla in production, producing 9.23 million vehicles in 2023, against Tesla's 1.85 million. Yet, Tesla boasts a larger market cap of $550.90 billion, versus Toyota's $329.06 billion. How does this add up.

Let’s try to justify this contradiction.

Tesla's valuation rides on its EV sector dominance, direct sales, significant infrastructure investment like its supercharger network and diverse revenue streams, including advanced tech like autonomous driving. Essentially, Tesla is perceived not just as an automaker but as an electric innovation frontrunner that’s developing the electric vehicle infrastructure of the future.

However, Tesla's stock hasn't matched up to Toyota's in the past year, which you can see in this data visualisation below, published on Monday. A global EV surplus has seen Tesla slash prices to move inventory, signalling an oversupply. Competition, especially from Chinese EV manufacturers, and pressure from traditional automakers venturing into EVs has further strained Tesla. Additionally, reliance on costly battery materials and supply chain risk impacts its cost efficiency.

Conversely, Toyota's stock has thrived alongside a buoyant Japanese market, reaching highs not seen since 1989. This resurgence contrasts with Tesla's challenges, closely tied to its specific sector and market pressures. In short, Tesla woes and Toyota gains might prove temporary.

Source: Eeagli

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