HyperChange: Tesla Will Be The World’s Biggest Company
HyperChange’s Gali Russell (aka @GFilche on Twitter) released a video on why he thinks Tesla will be the world’s biggest company. Just last month, Elon Musk tweeted that there was a >0% chance that Tesla could become the biggest company, as an obvious joke, and later deleted it. However, Gali wanted to make the point that Tesla really could become the world’s largest company, and I agree with him. (Note I’m a small shareholder in Tesla and fully believe in its mission.)
“Tesla is poised to be the world’s largest company. It’s not an exaggeration. I’m not joking. I truly think that is about to be what’s gonna happen,” Gali said at the beginning of his video. Gali explained that although you see a few Teslas in every city, in a couple of years it’s going to be a combination of the 3, Y, and a cheaper “Model 2” which could also be a robotaxi.
He also mentioned the Tesla ridesharing app, where you will be able to request a “clean swag sustainable ride wherever you go,” if all goes according to plan.
“This is going to be an absolute game changer for many cities in the economy and unlock trillions of value for Tesla.”
Gali explained how a $45 billion run rate in revenue justifies $5–20 trillion within the next few years. “Tesla has two mega financial tailwinds,” he explained.
1. Tesla is producing its vehicles at a rapid pace that is compounding from 1 million this year to what Gali estimates will be 10 million in about 5 years.
2. Tesla’s profit per vehicle can go from around $10,000 to a range of $50,000 to $70,000.
Gali pointed out that this is a double trifecta — not only are vehicles produced going up quickly, but also the profit per vehicle produced is increasing significantly. “This is just the FSD, robotaxi business that we’re talking about,” he pointed out. Gali believes that this financial tailwind will take Tesla to $30–50 billion in earnings extremely quickly and noted that the math justifies itself. As proof, Gali mentioned Tesla’s Q4 2020 figures. In that quarter, Tesla was selling FSD (Full Self-Driving) at $10,000 and Tesla delivered over 500,000 EVs. (Remember that impossible milestone?)
“We’re looking at a $2 billion operating cash flow in a single quarter. That’s $12 billion a year,” he pointed out, adding that he thinks Tesla will not just double or triple that but actually multiply that by 10 times. In a nutshell, Tesla will within the next 5 years be building 8× as many cars and be 4× as profitable per car produced. Gali also noted in the video that Tesla’s annual operating cash flow run-rate could go from $12 billion (Q4 2020) to $420 billion at around or less than 10 million cars per year.
One of the largest things in the market that people do not understand is that Tesla’s FSD and robotaxi plan is such a big deal — or just don’t believe in it. “The fact that FSD exists, it’s in the wild. People can use it. They’re training it and making it better every single day,” Gali explained.
“There’s 2,000 that have this software, but they’re on the cusp of rolling it out to a million vehicles and I think this why Elon let it slip that Tesla might become the world’s most valuable company, because the bottom line is once people realize this game-changing feature is not some pie in the sky thing, it’s not insanely far away but it’s literally here — you can literally self-drive your Tesla today — they’re going to roll this out. This is going to immediately justify a price increase of FSD from $10,000 to — I think — $25,000 is what I would say it’s worth right now with the FSD at the current level assuming it doesn’t get better.”
Comparison: Tesla vs. The Oil & Gas Industry
In the video, Gali showed a document that detailed the revenue in 2019 of state-owned oil companies and noted the peak oil revenue for 2019 from the world’s nine largest state-owned oil companies was $1.5 trillion.
These nine companies that are listed in the document (in the video) are:
- Sinopec Group — $443 billion.
- China National Petroleum Corporation — $379 billion.
- Saudi Aramco — $330 billion.
- Rosneft — $96 billion.
- Petrobras — $77 billion.
- Indian Oil Corporation — $69 billion.
- Petronas — $58 billion.
- National Iranian Oil Company — $19 billion.
- Petróleos de Venezuela — $23 billion (2018).
Gali explained why companies like Ford and GM have only $50 billion market caps. “They don’t really extract a lot of the value. A lot of that’s going to part suppliers. A lot of that’s going to dealers. A lot of that’s going to the oil companies.” Automakers, in comparison to Tesla, are not making that much money on each vehicle sale.
Tesla, Gali explained, is vertically integrating — charging for both energy creation and energy consumption, among other things. Tesla has its own Supercharger network and does not have dealerships. “Tesla’s soaking up the market capitalization of not just automotive companies, but truly all sorts of energy companies.” When you add up the revenue of all of this, it’s trillions of dollars in revenue.
“Being the propulsion technology of humanity is multi trillions of dollars in revenue.”
Gali points to what Tesla is doing in Texas. Instead of having a peaker plant to supply energy to the grid in Texas, Tesla is using its battery technology to do it better and cheaper while making it financially viable.
Gambit Energy Storage, a subsidiary of Tesla, is working on a massive energy storage project near Houston which will have a capacity of 100 megawatts — enough to power about 20,000 homes — and should go into operation this June. You can read more about that here.
“This is just the start of another multi-trillion dollar problem that Tesla’s going to fix. Because once we’re charging 8 million Teslas on the grid, the grid’s going to break. It’s already super unstable. Gali explained that much like what is happening in the financial markets, everything is going into this decentralized future (think Bitcoin) — the energy markets are going from centralization to decentralization as well.”
This is just the first half of Gali’s video. I encourage you to watch the full thing for yourself. It’s exciting to think about the future and know that clean energy and sustainability are the focus of that bright future. You can watch Gali’s video here or via the embed above.