Elon Musk has officially overtaken Bill Gates to become the second-richest person in the world.

According to the Bloomberg Billionaires Index, Musk saw his net worth increase by around $7 billion to $128 billion on Monday, as Tesla's market cap is approaching $500 billion.

Last year, he estimated that the self-driving Teslas, which is still a work in progress, will raise the market cap of the automaker to $500 billion. Its market cap was under $45 billion at the time of Musk's prediction.

The rise in Musk's wealth places him second to Jeff Bezos, who with a net worth of $182 billion, is actually the world's richest individual.

Musk and Gates had a conflicting year already as they clashed repeatedly on everything from coronavirus to electric vehicles. The public disagreements started when Gates said he purchased one from Porsche, even though he felt Tesla had helped push innovation in electric cars. Musk also called Gates a 'knucklehead' for opposing his attempts to perform coronavirus antibody studies separately.

The value increase of Tesla has been powered by a range of good news recently for the first time since 2017, from its inclusion in the exclusive S&P 500 index and Morgan Stanley upgraded its stock to "overweight".

Goldman Sachs predicts that next month, when it will enter the index as one of the 10 most valuable members on December 21, a tidal wave of large-cap mutual funds tracking the S&P 500 will fuel another rally for the automaker.

In pre-market trading on Tuesday, Tesla shares were up 2 percent, and its stock is up almost 730 percent this year.

The net worth of Musk is not exclusively due to a significant stake in Tesla, but also to his other firms, the SpaceX space exploration group and The Boring Company infrastructure and development business. He said earlier that he wouldn't take any Tesla cash salary until it crosses a market cap of $100 billion. "His vast wealth does not suggest that he is a wealthy spender: he claims he doesn't want to own physical property or own a home." He also sold two of his mansions in California.