Two-and-a-half years ago, Tesla was worth almost US$1-trillion more than Toyota, the world’s second-most valuable car maker. Lately, that lead has been shrinking fast.

Tesla’s edge over Toyota narrowed to about $83-billion before the start of regular US trading on Tuesday.

Tesla’s market value lead over Toyota peaked at $939-billion in early November 2021, just after a massive order from Hertz Global Holdings sent the EV manufacturer’s valuation soaring past $1-trillion for the first time. Hertz went on to buy fewer Teslas than planned and still got burned by CEO Elon Musk’s price cuts before starting to unwind its bet late last year.

Toyota has drawn criticism for biding its time on cars entirely powered by batteries and wagering that consumers will be more open to its petrol-electric hybrids. Its strategy has paid off in recent months as EV sales growth has slowed.

“Tesla has been a master of understanding that the market favours narratives over the short term,” said David Wagner, a portfolio manager at Aptus Capital Advisors. “But more recently, as the tide retreated, the company has started to show that the overall growth profile may not be as robust as originally thought.”

Toyota has been the world’s top-selling car maker for four years running, delivering 11.2 million cars and trucks in 2023. That’s more than six times the 1.81 million vehicles Tesla sold last year.