The value of Tesla's shares jumped more than 10% in the after-hours session on Monday in response to the news.
The Bloomberg Billionaires Index put Musk's estimated net worth at $102 billion at the end of Monday.
Up about 450 percent in 2020, Tesla has become the most valuable auto company in the world, by far, despite production that is a fraction of rivals such as Toyota Motor Corp., Volkswagen and General Motors.
The company that Tesla is replacing on the index will reportedly be announced at a later date.
A milestone for Tesla Tesla which has a market cap of $390 billion will officially join the benchmark index prior to trading on December 21, the S&P Dow Jones Indices said in a statement.
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The California-based automaker will join the broad-based market index on December 21, S&P Dow Jones Indices announced Monday, prompting another wave of affection for Tesla stock. Tesla will sit just ahead of Visa Inc., and just below Warren Buffett's Berkshire Hathaway on the US benchmark.
"Potentially one of the pushbacks on adding Tesla to the S&P was the elevated stock price", Credit Suisse analyst Dan Levy wrote in a note.
S&P Dow Jones Indices said Tesla would be one of the largest companies added to the S&P 500 in the past decade. The Q3 revenue of Tesla rose to $8.7 billion against the Wall Street expectations of $8.2 billion.
Because of Tesla's large market capitalization, S&P Dow Jones Indices is considering splitting the addition of the company's stock into two "tranches". Because of the potential for additions and deletions to the index to shake up the markets, the selection process is carefully guarded, which could help to explain the S&P committee's reluctance to include Tesla during its initial consideration of the company. The company also ended the quarter with a new record of $14.5 billion cash position in the bank.