Tesla Inc’s market value has surpassed Exxon Mobil Corporation, a signal that investors are increasingly betting on a global energy transition away from fossil fuels.
Elon Musk’s Tesla, now with a market capitalization of $201 billion is surging on optimism that the electric car maker can avoid a second-quarter loss.
Exxon, whose market capitalization dropped to $185 billion, is reeling from the worst crude-price crash in history.
Tesla is also on the verge of eclipsing Toyota Motor Corp. to become the most valuable automaker in the world by market capitalization.
The company topped Boeing Co in March to become the most valuable industrial company in the U.S and its reached the No. 2 spot among automakers in January by passing Volkswagen AG.
What is driving the trend?
By 2025, there could be 4.5million units of electric cars on the road indicating that the world may shed over 2million barrels per day crude oil out according to forecasts by the UK-based McKinsey and Paris-based International Energy Association.
The cost of electric vehicles, formerly a deterrent is also falling.
According to Bloomberg New Energy Finance, the industry average price of a lithium-ion battery pack fell to $208 a kilowatt hour in 2017 from about $800 in 2011, and batteries constitute about 42 percent of the total cost of an electric vehicle.
It is projected to fall by 62 percent by 2030 as technological advances and ramped-up production push costs ever lower.
While countries in Europe and States like California are giving generous rebates to consumers for EV purchases, demand is also ramping up in fast growing emerging markets.
India and China who currently buy the bulk of Nigeria’s oil are ramping production of electric cars.
In China alone, there are 487 electric car makers and according to JPMorgan Chase & Co.’s 2025 EV Outlook report, robust global growth through 2025 would see China accounting for 12 per cent of the total EVs produced, from 2.3 per cent market share in 2017.
India electric car demand is also increasing with heightened interest from many automakers such as Hyundai Motors Co., Maruti Suzuki India Ltd., Tata Motors Ltd., Mahindra & Mahindra Ltd., Ashok Leyland Ltd. and BYD Co set to open plants in the country.