Tesla Overtakes Volkswagen to Claim 2nd Place... Global Auto Industry Shaken Up

Market Cap of 120 Trillion Won… Second Only to Toyota

Stock Price Surges Over 30% This Year

Shift from Internal Combustion Engines to Eco-Friendly Vehicles

Through Localization Strategy in the Chinese Market

[Asia Economy Reporter Kwon Jaehee] Tesla has surpassed a market capitalization of $100 billion for the first time in history (as of the closing price on the 22nd), ranking second in the global automobile market after Toyota. Among the top five automakers by market cap, Tesla is the only American company. This is seen as a symbolic indication of the paradigm shift in the global car market.

On the 22nd (local time), Tesla closed at $569.56 per share on the New York Stock Exchange, up 4.09%. Based on the closing price that day, its market capitalization reached $102.66 billion (approximately 120 trillion won).

The Wall Street Journal (WSJ) evaluated that Tesla surpassed Volkswagen (approximately $99.5 billion) to become the second most valuable company in the global car market after Toyota (approximately $232.6 billion) by breaking the $100 billion market cap barrier. Daimler (approximately $53.5 billion) and BMW (approximately $50.6 billion) ranked fourth and fifth, respectively. Tesla is the only U.S. automaker to make it into the global top five. Tesla’s market cap exceeds the combined value of GM and Ford.

Tesla’s stock price began to rise after the Q3 earnings announcement in October and has surged more than 30% this year alone. The early start of operations at Tesla’s first overseas production facility, the Shanghai plant in China, ahead of schedule at the end of last year, rapidly began deliveries of the Model 3, which is believed to have positively influenced the stock price. Recently, plans to build the first European production facility in Germany have also acted as a positive factor.

Tesla’s rise is seen as signaling a major shift in the automotive industry. The decline of traditional American automakers GM and Ford coincides with the mainstream shift from internal combustion engines to eco-friendly vehicles. From the market cap leader Toyota to BMW, all have been quick to invest in electric vehicles.

Performance in the Chinese market is also considered to have significantly impacted corporate value. As the Chinese market entered a downturn, GM’s sales in China fell by 15% last year. Its profit size decreased by about 50% compared to the previous year. GM has experienced two consecutive years of declining sales in China. Ford is in a similar situation, with a 30% drop in Chinese sales in Q3 last year, recording losses for two consecutive years.

[Image source=AP Yonhap News]

In contrast, Tesla is aggressively driving its strategy to capture the Chinese market. Tesla announced plans to establish a new design and development center in China and to mass-produce the mid-size SUV 'Model Y' locally. If production proceeds smoothly, the Shanghai plant’s annual output of 150,000 units could increase to 500,000 units. Tesla’s localization strategy has allowed it to avoid high tariffs caused by the trade war and adopt a competitive pricing strategy. Last year, Tesla’s global deliveries reached 367,500 units, a 50% increase compared to the previous year.

Tesla’s achievements have exceeded even the most optimistic forecasts by Wall Street analysts.

Pierre Ferragu, an analyst at New Street Research, predicted, "Tesla will sell 2 to 3 million vehicles annually after 2025 and lead the industry in profits," adding, "Tesla’s stock price could rise to as high as $800."

As Tesla’s stock price soars, CEO Elon Musk’s performance-based compensation has hit the jackpot. If Tesla’s market cap exceeds $100 billion and maintains an average above $100 billion for one and six months, Musk can receive performance-based stock options worth $346 million (approximately 401.7 billion won). Musk does not receive a salary or bonuses but holds performance-based stock options tied to Tesla’s market capitalization and business performance.

U.S. President Donald Trump praised Musk at the World Economic Forum annual meeting (WEF, Davos Forum), calling him "one of the world’s great geniuses" and saying, "We must protect geniuses." Trump also compared Musk to Thomas Edison.

This content was produced with the assistance of AI translation services.