Underestimating Tesla and Elon Musk has indeed proven to be a significant mistake for many investors. Here is a detailed answer explaining why:

1. Disruptive Innovation: Tesla's electric vehicle (EV) technology has revolutionized the automotive industry. While traditional automakers initially dismissed the potential of EVs, Tesla's relentless focus on innovation and superior battery technology propelled them to become the market leader. As a result, Tesla's market capitalization surpassed that of traditional automakers like Ford and General Motors.

2. Market Dominance: Tesla has established itself as a dominant player in the EV market. Despite increasing competition, Tesla's Model 3 became the best-selling electric car globally in 2019 and 2020. Their ability to consistently deliver high-quality vehicles, expand production capacity, and build a strong brand has allowed them to capture a significant market share.

3. Gigafactories: Tesla's ambitious Gigafactory projects have been instrumental in scaling up production and reducing costs. These massive manufacturing facilities enable Tesla to achieve economies of scale and improve its competitive advantage. For example, the Gigafactory in Shanghai played a crucial role in Tesla's success in the Chinese market, where it became the top-selling EV manufacturer.

4. Energy Storage: Tesla's foray into energy storage through its Powerwall and Powerpack products has further diversified the company's revenue streams. The deployment of large-scale battery storage systems has gained traction globally, with Tesla leading the market. For instance, Tesla's Hornsdale Power Reserve in South Australia is the world's largest lithium-ion battery installation, providing stability to the region's electrical grid.

5. Autopilot and Full Self-Driving: Tesla's Autopilot feature and the pursuit of Full Self-Driving (FSD) technology have positioned the company at the forefront of autonomous driving. Despite skepticism initially, Tesla's continuous improvement of its Autopilot system has gained recognition for its advanced capabilities. This has led to significant advancements in FSD, attracting both consumers and investors.

6. Stock Performance: Tesla's stock price has skyrocketed over the years, resulting in substantial gains for early investors. Despite periods of volatility, Tesla's market capitalization has soared, making it one of the most valuable companies globally. Those who underestimated Tesla's potential missed out on significant investment returns.

References:

• Tesla Annual Reports: https://ir.tesla.com/financial-information/annual-reports
• Tesla's Market Cap Surpasses Ford and General Motors: https://www.bloomberg.com/news/articles/2020-01-08/tesla-surpasses-ford-s-market-cap-to-become-second-most-valuable-automaker
• Tesla Model 3 Best-Selling Electric Car: https://www.cleanenergywire.org/news/tesla-model-3-best-selling-electric-car-2019
• Tesla's Gigafactory in Shanghai: https://www.tesla.com/gigafactory-shanghai
• Tesla's Hornsdale Power Reserve: https://www.tesla.com/en_AU/blog/tesla-powerpack-enables-large-scale-sustainable-energy-south-australia
• Tesla Autopilot and Full Self-Driving: https://www.tesla.com/autopilot
• Tesla's Stock Performance: https://www.cnbc.com/2020/12/31/tesla-shares-finished-2020-up-743percent.html