Every new EV is compared to Tesla. General Motors CEO Mary Barra even stated that her company would sell more EVs by 2020 than Tesla. Rivian and Lucid are “Tesla Killers.” Henrik Fisker appears to be particularly concerned about Elon Musk. He quit Twitter in the hope of owning it. Tesla’s challenge is not to the auto industry. It’s far more than that.
Volkswagen Group, one of the most intelligent EV companies, is deliberately avoiding direct competition with Tesla. The Porsche Taycan is a very close competitor to the Tesla Model S and has outsold it for some time. However, most of the new EVs coming from Volkswagen Group’s VW Group, Audi, Skoda and Cupra brands aren’t. They have every right to not pick a fight with Tesla. Musk’s company isn’t trying to eliminate them; it is just forcing them to change.
Journalists, including myself, are complicit with this narrative that Tesla is at war against the traditional auto industry. While Tesla has seen a rise in sales, other industries have been suffering more from shortages. This would suggest that Tesla is winning the conflict. While there will be some losses from the rise in EVs, traditional businesses will have to hedge their bets while they ramp up production of EVs. But nobody wants a world in which every car is a Tesla, even Elon Musk. Musk wants to see a shift away from the internal combustion engine. Companies that make this transition successfully can survive alongside Tesla.
Elon Musk made the most telling statement on Twitter (naturally).
He stated that Tesla’s market capital for sustainable energy products will surpass Aramco’s market cap for producing fossil fuels. “You know the future is good for Earth when Tesla’s market value exceeds Aramco.”
This dream is still far away. Saudi Aramco’s market cap was $2.431 Trillion in May 2022. Tesla’s was $786.98 billion – less that a third of the same. It’s been higher, more than $1 Trillion in 2021. Tesla is currently the 6 highest valued company by market capital. It is also fascinating that all of the companies between Tesla & Saudi Aramco (Apple/Google, Microsoft, Alphabet/Google, and Amazon) are digital. However, Tesla’s shares are likely to drop in recent years and it will be many years before they reach the top spot.
Musk’s statement proves that Tesla isn’t a car company. It’s a sustainable energy company with a lot of cars. How many automakers sell home chargers, solar panels, and domestic batteries? Tesla is rumored even to be looking at entering the energy supply industry. This is what it already has with its utility-scale batteries, such as the South Australian storage facility.
Tesla’s interiors and innocuous exterior design have been criticised. These cars are definitely not for everyone. This isn’t a problem because cars aren’t the end in and of themselves, but they can be used as a means to an end. Traditional manufacturers can continue to create beautiful interiors and attractive exterior designs. You can put them on electric vehicles instead of internal combustion cars. You can have a Tesla, or not. But you must make sure you get one if you don’t.
It will be a powerful message to the rest of the world if Tesla can increase its market capitalization to surpass Saudi Aramco. This is the message Tesla has been trying to send, which is that, while it is possible to save the planet from climate catastrophe by restricting people’s access and stopping them having the things that cause the problem, there is another. To achieve the same goal, you can innovate in a way that makes it attractive and profitable. Green doesn’t need to be a restriction. You can make a difference that is both inspiring and financially rewarding.