Prediction: 1 Stock Will Be Worth More Than Tesla 10 Years From Now
Toyota already generates three times more revenue than Tesla and produces superior cash flow from operations.
At the same time, Toyota trades at just 7.2 times earnings, compared with Tesla's P/E ratio of 183.
If Tesla loses its ultra-premium valuation and gets priced like other automakers, its market cap advantage would evaporate quickly.
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Electric vehicle maker Tesla (NASDAQ: TSLA) has taken Wall Street by storm in the past six years. Starting from a stock price of $17 and a $46.2 billion market cap in July, 2019, Elon Musk's empire made electric cars cool and expanded into a broader alternative energy business with a side gig in literal rocket science. Today, Tesla has a trillion-dollar market cap and a stock price of $332 per share. Early shareholders enjoyed a 1,830% return so far.
However, Tesla doesn't dominate the newfangled category of electric vehicles anymore. Other carmakers have joined the eco-friendly transportation market, and Tesla's skyrocketing sales growth has fizzled out. At the same time, classic auto giant Toyota Motor (NYSE: TM) is adapting to the revamped car market, applying its decades of engineering know-how and ultraefficient operations to new issues.
Tesla's market value is about five times Toyota's right now. Believe it or not, but I think Toyota will have a larger market footprint than Tesla again -- probably before 2035.
Toyota is already a giant
Here's the thing. Toyota is already larger than Tesla in many ways. The Japanese company boasted $315 billion of global sales in fiscal year 2025, which ended on March 31. Tesla's sales stopped at $95.7 billion in the same period.
And it's not just top-line sales. Toyota's full-year cash from operations were $24.3 billion versus Tesla's $16.8 billion, for example. It's really just the stock that looks small in the context of Tesla's intimidating presence.
Now, you should know that Toyota is more than just a car maker. The company is a proper Japanese Keiretsu, with market-leading operations spanning many industries. The resulting conglomerate includes auto parts suppliers, a banking division that accounted for 8% of Toyota's total sales last year, and more.
Toyota had 585 subsidiaries and 165 joint ventures at the end of fiscal 2025. It's a sophisticated business empire with global scale and innovative ambitions. These days, the company is restructuring itself into a mobility company. The idea is to help people transport themselves, their physical goods, various types of information, and energy, all under the Toyota brand.
Innovative long-term plans
The company is humming on every cylinder right now. Sales have grown in all four of its geographic segments for the last three years. Its vehicles may not be as flashy as a Tesla Cybertruck, but Toyota's products are renowned for their quality and reliability in a wide range of driving conditions.
The company was an early player in hybrid cars, introducing the Prius way back in 1997. Toyota is now building battery and electric vehicle factories around the world, focusing on its largest markets in Japan and North America.
But that's not the only alternative fuel system up Toyota's sleeve. It is also doing heavy research and market development for fuel cell vehicles, aiming to make hydrogen-powered cars a common solution with a full-fledged refueling infrastructure. At this early stage, most of Toyota's fuel cell efforts focus on heavy vehicles, such as trucks and buses. Passenger cars and SUVs should join the party over time.
Toyota will climb out of Wall Street's bargain bin someday
So Toyota is ready and willing to compete in the increasingly electric car industry of the 2020s and beyond. This effort will continue in the long run, cementing Toyota as a world-class designer and manufacturer of eco-friendly transportation tools -- or mobility solutions, as the company likes to think of its four new target segments.
Meanwhile, Toyota's stock trades at low valuation ratios such as 7.2 times earnings and 0.7 times sales. Tesla shares, on the other hand, are still market darlings with a P/E ratio of 183 and P/S at 11.2. Again, Tesla is a much smaller business than Toyota and its formerly impressive sales growth has slowed down dramatically in recent quarters. If that trend continues, Wall Street will probably cancel Tesla's sky-high ratios and start treating the company like any other carmaker.
If that level playing field ever develops, Tesla's stock will look small next to Toyota's -- just like Toyota's financial figures already outclass Tesla's today. None of this will happen overnight, of course. But unless these companies make drastic changes to their business models, I expect Toyota's stock to be worth more than Tesla's by 2035. And Toyota should be a serious supplier of gas-free vehicles by then.
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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
Prediction: 1 Stock Will Be Worth More Than Tesla 10 Years From Now was originally published by The Motley Fool
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