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What Could Be Driving Elon Musk’s Wealth

As Elon Musk’s wealth continues to grow sporadically, questions have begun to rise on how the CEO of Tesla has been able to generate and maintain a net worth of over $288 Billion.

Elon Musk’s biggest wealth has been traced to his investment in PayPal Holdings Inc., Space X, DeepMind, Tesla Inc. and The Boring Company Amongst all of Musk’s investment, Tesla has been the most profitable, accruing a market value of $1 trillion in the stock exchange market.

The primary driver of Elon Musk wealth is his stake in Tesla, The South African born business mogul owns a 20% stake in Tesla. Thus, with the market value of Tesla, it is only logical for his net worth to be at an exorbitant value.

 

Tesla’s Production & Revenue Capacity

Tesla Inc. currently has four operational facilities, three of the factories are in the USA, and one in China. In 2020 Tesla manufactured 509,737 electric cars compared to 473,136 electric cars in the first 8 months of 2021. Since 2009, Tesla has produced a total of 1.91 million vehicles. Notably, Tesla’s revenue in quarter one and quarter two in 2021 was a combined total of $22.35 billion.

YEAR

REVENUE

PERCENTAGE

2008

15,000,000

0.01%

2009

112,000,000

0.09%

2010

117,000,000

0.09%

2011

204,000,000

0.16%

2012

413,000,000

0.32%

2013

2,000,000,000

1.55%

2014

3,200,000,000

2.48%

2015

4,050,000,000

3.14%

2016

7,000,000,000

5.43%

2017

11,760,000,000

9.13%

2018

21,460,000,000

16.66%

2019

24,580,000,000

19.08%

2020

31,540,000,000

24.49%

2021 (Q1+Q2)

22,350,000,000

17.35%

TOTAL

128,801,000,000

100.00%

The majority of Tesla’s revenue was generated in 2020 during the COVID-19 pandemic racking up a 24.49% percentage contribution to the total revenue generated since Tesla was first incorporated, also note that Tesla has been able to generate $128,801,000,000 since it was founded.

The year 2018 was the period when income generated in Tesla Inc. started to transmute in the pattern. This was a result of an improved production rate. The firm defied expectations and increased production of its Model 3 sedan averaging a rate of almost 5,000 cars per week in the final quarter of 2018.

Elon Musk stated that “We will focus even further on cost improvements while continuing to increase our production rate” during the fourth quarter, the company said.

Strong demand for the Model 3 also bolstered the results. Musk told analysts on a call that demand for Model 3s was “probably on the order of anywhere from 500,000 to 1 million cars a year.”

Tesla deliveries have been on an increase since 2013, With Hertz Global Holdings Inc. recently ordering 100,000 cars yesterday, the demand for Tesla vehicles is projected to grow even larger. Data shows the 2021 delivery figure is likely to surpass the 2020 overall value of 488,353 cars.

How does Tesla Inc. Growth Drive Musk’s Wealth?

Elon Musk’s wealth is positively correlated to Tesla’s stock price, If the price rises his net worth will rise and vice versa. Tesla stock has grown by 40% this year, boosting the electric-vehicle company’s market capitalization to a record $1 trillion this week. Elon Musk’s net worth immediately surged by $36 billion. Because of the tech entrepreneur’s 20% ownership of Tesla, an intertwined relationship with his wealth and Tesla stock have become identical.

2020 was a good year for Tesla, despite the pandemic. After studying the automobile market, Tesla manufactured a Model Y compact SUV due to growing demand for the commodity.

Furthermore, the emission credit which is a credit earned by a company when it reduces air emissions beyond what is required by permits and rules was a big factor in Tesla’s turnover in 2020. The automobile company sold emission credit, leading to a rise of 26.4% in automotive gross margin for Tesla to date.

The software capabilities of the Tesla vehicle were also improved during that critical period. The company raised the price for its full self-driving software upgrade from $7,000 to $8,000 in July and again increased the price up to $10,000 in October.

All metrics show that the stock price of Tesla has a strong relationship with Elon Musk’s wealth. Thus, Musk has been able to take advantage of the market bullish sentiment to maximize his net worth over a short period of time. But we must also remember that the stock market is vulnerable and liable to crash.

News Source: Rate Captain

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