Wall Street’s current love for Tesla (TSLA) has lifted its shares to a level never before achieved by a US automaker. Tesla shares, which are up more than 160% since hitting a 52-week low last June now have market value of $86.5 billion. That gives the electric car-maker the distinction of being the most valuable US automaker in history.
This is certainly an incredible achievement for a company that was founded a 100 years after the Ford Motor Company and less than two decades ago. What is most striking is not only the gigantic valuation, but that Tesla has proved that new entrants can achieve leadership in what has been historically a difficult sector to disrupt. In fact, the global traditional automotive sector is well on the course for significant disruption, to include: a reinventing of the value chain, in particular the route to market to customer, the paradigm shift in technology i.e. electric vehicles and autonomous driving, last but not the least, consumers change in engagement with the concept of mobility i.e. personal ownership to sharing schemes.
Tesla is not the only recent entrant in the global automotive sector. The industry is filled with small to medium-sized companies determined to challenge incumbent players. It is not fanciful to state that within the next 10 years the automotive sector will be unrecognizable. The only question is who will survive? Our view is that some of the strongest companies over the past 100 years may not survive to to see another few decades. We know wait with bated breath for Tesla to break the US$ 100 billion valuation threshold.
New fines for breaches on CO2 limits will clash with clash with Britons’ taste for higher-emission SUVs. Carmakers could pull models from the UK, the automotive industry has warned, as Britain’s taste for polluting vehicles clashes with difficulty of meeting post-Brexit carbon dioxide limits.
It is indeed good to note that auto manufacturers may well be forced to curtail the sale of inefficient and higher polluting SUVs in the UK. However, it is a pity that only at ‘crisis point’ are automotive companies contemplating the reduction of the sale of polluting internal combustion engine (ICE) SUVs in the UK. They have had many opportunities to improve the average and overall CO2 emission of their respective portfolios but have done very little.
But it is not only about curtailing the sale of higher polluting vehicles that is important, but equally imperative is the introduction of lower emission cars and vehicles in their respective model portfolios. In particular, the introduction of battery-electric vehicles (BEVs) or plug-in hybrid electric vehicles (PHEVs).
Though the current predicament is best described as ‘too little too late’, we encourage auto manufacturers to urgently rectify their sales strategy, such that, they introduce and market as many ultra-low-emission vehicles (ULEVs) as possible.
The government should scrap VAT on electric cars, ministers have been told. Radical change was needed because too many drivers were still put off green cars by high buying prices, it was said. The AA said that ministers had to go further than the present £3,500 grant offered to motorists to help them to buy the cars.
We couldn’t agree more. It is not only important to offer generous incentives but also to offer visibility for the long term. As of today, there is little known about the plug-in car grant (PiCG) incentive from the UK government post March 2020. However, in successful EV markets like Norway, the incentives are clear till end 2021. The UK government can learn much from the example of Norway.
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