Shares of Tesla (TSLA +2.45%) have shot up by nearly 15,000% over the past decade as the disruptive company established itself as the leading player in the electric vehicle (EV) space.
That remarkable upward run has brought Tesla's market capitalization to $930 billion as of this writing, making it the sixth-largest public company in the world. Apple (AAPL +0.30%), meanwhile, is the world's largest company with a market cap of nearly $2.7 trillion. Tesla has a long way to go if it's going to catch up to the iPhone maker. Could the EV leader manage it by 2030?
NASDAQ: AAPL
Key Data Points
Tesla is growing at a faster pace than Apple
Starting from a far smaller base, Tesla's market cap has increased at a much faster pace than Apple's over the past decade.
AAPL Market Cap data by YCharts
The eye-popping growth of Elon Musk's company isn't too surprising as it operates in a market that is still taking off. Apple, on the other hand, reaps nearly half of its revenue from selling smartphones, the market for which has already matured.
For instance, in 2021, sales of EVs doubled year over year to a record 6.6 million units, according to the International Energy Agency. The impressive growth has continued in 2022, when 2 million EVs were sold in the first quarter alone -- a 75% jump over the prior-year period. On the other hand, according to research firm Gartner, smartphone sales increased by 6% in 2021. On the one hand, that small increase brought unit sales to 1.43 billion devices. On the other, the industry has run into trouble in 2022, with sales down 9% year over year in the second quarter due to a combination of oversupply and inflation.
The respective health of the EV and the smartphone markets is naturally reflected in Tesla's and Apple's latest results. Tesla's total revenue shot up 43% year over year to $16.9 billion in the second quarter. Adjusted earnings jumped 57% year over year to $2.27 per share, driven by fatter margins. Tesla's non-GAAP operating margin was up 358 basis points over the year-ago quarter to 14.6% thanks to an increase in the average selling price of its vehicles.
Apple's growth was nowhere near that rapid, but that's not surprising given its massive scale. For its fiscal 2022 third quarter, which ended June 25, Apple's revenue increased 2% year over year to $83 billion. That was nearly five times Tesla's revenue. With a sales base that huge, even a multibillion-dollar top-line gain would translate into a small increase in percentage terms.
But at the same time, it is also worth noting that the pace of growth in Tesla's end market is far greater than is occurring in Apple's end markets. That's where Tesla's advantage lies.
Can the EV specialist eclipse the world's largest company by the end of the decade?
Sales of EVs are expected to grow at a rapid pace through 2030. AlixPartners estimates that a third of all vehicles sold by 2028 will be EVs, with the proportion increasing to 54% by 2035. That would be a big jump over the first quarter of 2022, when EVs accounted for 10% of global vehicle sales. With overall vehicle sales expected to jump to 122.8 million units in 2030 from 85.3 million units in 2020, Tesla's addressable market is set to increase rapidly.
NASDAQ: TSLA
Key Data Points
Meanwhile, the global smartphone market is expected to clock 7.6% annualized growth through 2030. That pales in comparison to the 29% annualized growth expected in EV sales through the end of the decade. Tesla, therefore, is in a solid position to grow its revenue and earnings at a faster pace than Apple through 2030.
Not surprisingly, analysts expect Tesla's earnings to grow at an average of 45% annually over the next five years, a pace that it could sustain beyond that given the market opportunity ahead of it. Apple is expected to clock annual earnings growth of 9.5% over the next five years. This explains why The Future Fund, an Australian wealth fund, anticipates that Tesla's market capitalization will hit $4 trillion in 2030.
All this indicates that Tesla could keep growing its market capitalization at a faster pace than Apple over the next eight years as it has done in the past, and that could make this electric vehicle play more valuable than the iPhone maker by 2030.
