Here's a related question... Why is Elon Musk demanding a massive cash salary from the board rather than typical CEO compensation of stock and performance bonuses?

Likely, he understands that the company is massively overvalued due to his hype machine. He is cashing out before it fails.

As a plus, by manufacturing animosity between himself and the board, he is preloading the ammunition for when the company fails and discards him. When he leaves, the hype machine leaves with him. The stock will "crash" which really means returning to a sane market valuation. He can easily claim that the failure was due to the board interfering with his genius. The board members either know this, or are his lackies (or both). They will ride the wave along with him as long as they can.

In essence, we are witnessing the largest pump and dump scheme in history, and it is being done in the open.

You assume market cap is a metric that would be used to determine if a company is doing well.

When really market cap is just the share price times the number of shares.

What gives the shares value? The expectation that someone else will purchase it at a price it is being offered at.

Investors are every bit as vulnerable to hype, marketing, and just plain poor understanding of tech as the general public is.

The price of very large publically traded companies is set entirely by supply and demand. Yes, those shares do represent a tiny share of ownership in the company, which means a share in the profits and assets of the company. But there is no law tying them together. Tesla's market value is so high because there are more buyers than sellers, it's as simple as that.

It's a bubble.

Tesla is overvalued, but the valuation is for more than cars.

Tesla owns its own battery production facilites, allowing it to branch out into other sectors of the market.

Tesla's charging has become the standard for North America, making its charging stations valuable as the new gas stations for electric vehicles.

Tesla also has a significant solar energy production and deployment business. It makes some solar panels and a lot of other solar energy equipment. It also installs and manages that equipment.

Just a guess, I think it's just general stock market shit. Electric cars is a growing market while combustion engine cars is a shrinking market. So the expectation is that electric car manufacturers will increase in value while others will shrink. That makes investors invest and actually make the value go up.

Same reason as bitcoin

Established car makers have businesses that are easier to predict. They’ve been operating for a long time and you have a pretty good idea what “doing well” or “doing poorly” would look like for them. A much newer company like Tesla, which is based on emerging technology, does not have so well-understood of a future. There’s a lot more unknown about how big it might become.

Most times, this is seen as big unknowns and risk, therefore investors are wary. But Tesla has had enough real world success to be encouraging, yet is still new enough to enjoy “we don’t know how big this thing will get” speculation. Basically a lot of people think it’s a reasonable bet that Tesla will be huge in the future. Therefore their stock has high demand.

Its still not justified, but SpaceX is also "included" in the valuation even though SpaceX is privately held

People saw potential in the company and wanted to get in before other people drove up the price.

If later on it looks like Musk can't deliver on that potential then peotare going to start selling Tesla stock really quickly.

VW has ~$80 billion cash on hand, they could buy 6% of the shares