It's certainly speculative, but I don't think it's absurd. Toyota's revenue is around $280 billion, while Tesla's is around $25 billion, so Tesla will need to

It's certainly speculative, but I don't think it's absurd. Toyota's revenue is around $280 billion, while Tesla's is around $25 billion, so Tesla will need to grow by a factor of 11 to hit Toyota's revenue. Other manufacturers also generate/sell credits, so it's not like Tesla is alone there. Tesla being able to expand in a segment where most manufacturers only build compliance cars to avoid fines speaks to how effective they are at building EVs compared to everyone else, which is expected because they're the only manufacturer designing EVs from the ground up. The scale of Tesla's production could be another reason for their valuation. If they're hitting roughly a tenth of Toyota's revenue with 3 factories, all of which are incomplete, that could speak to how efficiently they're using capital. For comparison, Toyota has 50+ factories they own and another ~20 contract/licensed/joint factories. https://en.wikipedia.org/wiki/List_of_Toyota_factories https://en.wikipedia.org/wiki/List_of_Toyota_factories The Q2 sales figures aren't great if we examine them superficially, but their largest factory, Fremont, was closed for half the quarter too. https://www.usatoday.com/story/tech/2020/07/22/tesla-makes-104-m-profit-q-2-despite-plant-shutdown-coronavirus/5490228002/ https://www.usatoday.com/story/tech/2020/07/22/tesla-makes-1... Even approaching Q2 2019's production figures means Shanghai was able to take up most of the slack from Fremont sitting idle for ~1.5 months, and Shanghai only broke ground at the beginning of 2019. Their production capacity by 2021 should be about double what it was when they sold a few hundred thousand cars in 2019. Production of the semi, cybertruck, expansion of the Shanghai factory, and completion of their factory in Germany should all increase production and revenue significantly. The biggest question mark IMO is whether they can manufacturer their own battery cells. If they can pull that off, I don't see any technical hurdles to them approaching Toyota's $280 billion in revenue in the next 5-10 years. Don't get me wrong, they're valuation is still very speculative, because they need to execute on these new factories/products/production lines, but like I said, I don't think their valuation is absurd.