Are Elon Musk and Tesla the next bubble waiting to burst?

Elon Musk is now the world’s richest person, edging out previous title holder Amazon’s Jeff Bezos. His rocketing fortune is due to the booming share price of Tesla, the maker of electric vehicles and clean energy technologies.

In the past week Tesla’s share price surpassed $US880 — 10 times its March 2020 low of $US85 — giving the company a market capitalisation (or total value) in excess of $US880 billion — more than Toyota, Volkswagen, Daimler, General Motors, BMW, Honda, Hyundai and Ford combined.

That’s an extraordinary amount for a company that only last financial year made its first full-year profit since being founded in 2003; and that profit was relatively modest. It gave Tesla a price-to-earnings ratio — a standard measure…