It's not.
Enterprise value of Toyota: $318B
Enterprise value of Tesla: $205B
Enterprise value of Toyota: $318B
Enterprise value of Tesla: $205B
Toyota Market Cap: 171.994B
Tesla Market Cap: 205.619B
> Market capitalization, commonly called market cap, is the market value of a publicly traded company's outstanding shares
> Market cap is given by the formula MC = N * P, where MC is the market capitalization, N is the number of shares outstanding, and P is the closing price per share
> A more comprehensive measure is enterprise value (EV), which gives effect to outstanding debt, preferred stock, and other factors
Basically, Toyota has more debt, therefore its future earnings are assumed to be greater, because the market is valuing it at the current price, even knowing its debt burden. (Though there is alot of problems with this analysis based on how debt is accounted for, especially given companies like Toyota that have large financial units attached to them for loans).