Tesla is doing something we haven't seen since the early 20th century — rapidly building up a new industry. Here's how.

REUTERS/Aly SongElon Musk dancing at an event at Tesla’s Shanghai factory in January.
  • The early 20th-century was a period of rapid innovation.
  • 120 years later, innovation has given way to consolidation: the automobile, the aeroplane, and stuff like nuclear power and computers are valued as legacy investments.
  • Tesla isn’t. The company’s value confuses everyone because they’re trying to think of the firm in 2020 terms.
  • They should be thinking of Tesla in terms of the radical innovations of the early 20th century.
  • Visit Business Insider’s homepage for more stories.

One of the more vexing developments for Tesla critics is the company’s stock-price surge of nearly 350% over the past 12 months – and more than 30% since the beginning of the year, as the coronavirus pandemic has ravaged auto sales worldwide.

General Motors, for example, has seen its shares decline 30% since the beginning of 2020. But the carmaker has actually turned in better-than-expected sales, thanks to the durable popularity of big (and profitable) pickup trucks.

For roughly the past five years, as Tesla’s stock has fluctuated wildly, plunging to $US150 but rocketing to more than $US1,000, the debate about what’s going on has typically been framed as Tesla-the-tech-company vs. Tesla-the-car company.

Numerous bulls argue that Tesla is, in fact, an innovative tech firm – a new Apple – that merits a Silicon Valley valuation. Bears counter that Tesla is, at base, a car company and should, someday, be valued accordingly.

I used to be in the latter camp, but the past year and a half has changed my mind. I don’t, however, think that Tesla is a tech company. Instead, Tesla is a throwback – but a throwback squarely aimed at the future. For various reasons, we can’t figure Tesla out because what it’s doing is reminiscent of the nascent businesses of the early 20th century.

Tesla isn’t mining tech or automotive – it’s creating a new industry. The markets have figured this out and are pricing the company’s stock accordingly.

Here’s how Tesla is doing what hasn’t been done for over 100 years:

The 19th century was defined by transportation technologies that revolved around the horse …

William Thomas Cain / Getty Images

… Railroads …

Associated Press

… And the transition from the age of sail to the era of steamships, ocean liners, and later ships powered by oil.

RMS Titanic, Inc.

Speaking of oil, “black gold” was worthless before the arrival of 20th-century technologies that spurred the development …

Nick Oxford/Reuters

… Of the automobile (Thanks, Henry Ford) and a wide array of modern technologies, including …

Getty Images

… Plastic!

Toru Hanai/Reuters

The 20th century also gave us powered, human flight, in 1903.


The pace of innovation was staggering. Less than a century after the Wright Brothers’ flight, we had Boeing 747 jumbo jets.

AP Photo/Wally Fong

We also had nuclear power …

REUTERS/Mike Blake

… nuclear weapons …

US Department of Energy

… and a man on the Moon.


Tesla’s beginnings were rather humble. Until 2012, it was selling exactly one all-electric car, and not very many of them.

Rebecca Cook/ReutersTesla CEO Elon Musk is pictured in front of an original Tesla Roadster.

But by 2019, Tesla has sold over 250,000 vehicles and dominated the EV market worldwide.

ReutersTesla Model 3 sedans rolling off the assembly line in Shanghai, China.

Tesla also sold power-storage technologies …

Reuters/Patrick Fallon

… Solar roofs …


… Autopilot semi self-driving systems …


… And the company was constructing new factories at an industry-leading rate.


Tesla’s grand ambition was to achieve CEO Elon Musk’s goal of accelerating humanity’s exit from the fossil-fuel age.

Maurizio Pesce / Wikimedia CommonsElon Musk and a Tesla Model S.

And just in case, he’s also running SpaceX, with the objective of colonising Mars to make humanity “multiplanetary.”

Getty Images / Handout

When you add it all up, Tesla is more than the sum of its parts. It’s a means to an end, and that end is as visionary as what happened 120 years ago with the first automobiles and aeroplanes.

REUTERS/Aly Song/File Photo

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