Reflecting the global shift towards a more sustainable way of life, Tesla has overtaken Toyota to become the world’s most valuable carmaker. Tesla initially exceeded Toyota’s market value in early July posting a valuation of $206.5 billion – over $4 billion more than the Japanese giant, and three times the value of its domestic competitors, General Motors and Ford combined. It marked the first time Tesla had reached pole position, and it didn’t seem likely to relinquish it soon. That proved true as Tesla’s share price skyrocketed over $2000 per share giving it a market cap of $375 billion as of August 24, 2020. This move is made even more interesting considering Tesla’s electric vehicles (EVs) have been largely unprofitable until recently – yet it perfectly illustrates the global transition towards sustainable development. The American technology company has long been the only large-scale EV manufacturer in the world, and has been credited with helping popularize their use over the past decade.
Tesla’s climb comes as no surprise as experts predict a sharp increase in the sales of EVs in the coming years, leading many auto manufacturers to announce a transition away from internal combustion vehicles (ICEV) towards electrification. EVs have become the next big commodity, evident in the continually rising sales of electric vehicles worldwide, bolstered by China’s booming EV manufacturing industry. Major investments across all parts of the EV supply chain has spurred competition between nations seeking to secure access to the valuable resources that will form the basis of the transition towards a sustainable future – namely lithium. Tesla’s vehicles have served a blueprint for other manufacturers, showcasing the value of lithium-ion batteries in both EVs and large-scale power storage and promoting their use across the world in a range of settings.
However, not all experts are sure that the tech giant will be able to keep the top spot in the long run, as Cowen analyst Jeffrey Osborne explains, “We continue to be cautious on Tesla, but anything EV related is red-hot for investors now and there is a scarcity of ways to invest in the theme, thus we see the stock continuing to ‘work’ near-term despite our caution on competitive positioning over time and valuation.” The company has been known to have unpredictable stock swings, but unless other auto manufacturers find innovative changes in EV design, they will be playing catch-up to Tesla’s well-established position in the EV market. Tesla has been ahead of the curve throughout the past decade and has continued to innovate while creating demand for its products.
A Competitive Future
While there is mounting uncertainty as a result of the current pandemic gripping the world, Tesla has not revised its projected vehicle sales, expecting to still sell 500,000 new EVs in 2020. Only time will tell whether they are able to reach those numbers, however there is one certainty: sustainable development will continue to be a major global focus. The technology that Tesla has helped pioneer will definitely define the coming years and decades, and the company’s success has proven to be a catalyst for innovation across the industry. Tesla being able to take the auto manufacturing crown serves as a reminder that sustainable design and innovative technology are the keys to a better future from both an industrial and broader, academic perspective.
A transition towards EVs, large-scale lithium-ion batteries, renewable energy, and overall environmental sustainability will have been inspired in some way by Tesla’s continued pioneering, as Musk put it in a 2017 interview: “Tesla cannot die. Tesla is incredibly important for the future of sustainable transport and energy generation. The fundamental purpose, the fundamental good that Tesla provides, is accelerating the advent of sustainable transport and energy production.” Governments, companies, and individuals are now more than ever in favor of safeguarding the planet’s natural resources and environment for future generations – and Tesla surpassing Toyota is one of the first signs that the transition is truly underway.