Tesla's Musk: Tesla market cap will reach Apple's level in 10 years

Tesla Motors Inc. Chief Executive Elon Musk thinks that the company’s market capitalization could equal the one of Apple Inc.’s in 10 years, says MarketWatch.

Musk made the comments on a conference call with analysts following Tesla’s unexpected quarterly loss.

Recently, Apple became the first company to reach $700 billion in market cap. Tesla’s current market value is roughly $27 billion or less than 4% of Apple’s.

Musk said his positive estimate was based on “back of the envelope” calculations.

The comments on Telsa’s future market cap came in response to a question about infrastructure spending at the electric-car maker. Musk said: “We’re going to spend staggering amounts of money on capex ... for a good reason, and with a good ROI [return on investment].”

Tesla is spending significantly on building charging networks and on the construction of a massive battery factory in Nevada to supply its upcoming vehicle models.

Musk’s estimates include continued double-digit revenue growth and a price-to-earnings ratio of 20. If the projected numbers prove true, “our market cap would be basically the same as Apple’s is today ... on the order of $700 billion,’ Musk said, adding that “obviously that’s going to require some significant capex.”

Musk raised eyebrows last week when he said sales in China had been poor, as China sales had been hurt by the perception there that it’s difficult to charge up Teslas. “I’m confident by the end of this year, we’ll be in good shape in China,” Musk said.

This year the firm plans to deliver 55,000 vehicles, including its Model X, expected to debut this summer. Musk said that target could be achieved even with no sales in China.