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Every month we look at stunning statistics from the world of sustainability. What do they mean? What is the impact for investors? Today: Tesla is now worth more than traditional carmakers.
Remember the fuss when internet companies had higher market values than the titans of traditional industries? Now the electric car maker Tesla has gone one step further by overtaking both Ford and General Motors in stock market value.
The moment came on 28 March when Tesla’s stock market value hit USD 45.5 billion, above that of Ford’s USD 45.4 billion for the first time. On 10 April, it overtook General Motors with a market value of USD 51 billion, above GM’s USD 49.3 billion.
The move shows how a start-up company can become worth more than a traditional one within the same established industry, backed by a trend – in this case, the drive (literally) to replace cars powered by fossil fuels with more environmentally friendly electric models. It forms part of wider moves to combat climate change through decarbonization.
All three companies are named after 19th century pioneers. Nikola Tesla (1856-1943) was an electrical engineer who invented the alternating current electricity supply system, while Henry Ford (1863-1947) founded the car company that bore his name. General Motors was founded by entrepreneur William Durant (1861-1947) in 1908, originally as the Durant-Dort Carriage Company, and went on to fund the development of the first consumer refrigerators.
Electric cars are part of a wider trend as automakers gradually change their business models to make less polluting cars, say Robeco’s sustainability and trends experts.
“We believe the business models of car makers will need to adapt to the potentially wide-ranging use of electric vehicle batteries, along with the rise of shared mobility solutions,” says Sylvia van Waveren, senior engagement specialist at Robeco.
“The move to more environmentally friendly cars is a major trend, as electric cars particularly appeal to younger people and millennials who want to improve society while also driving a new car,” adds Jack Neele, portfolio manager of the Robeco Global Consumer Trends Equities fund.
“It also forms part of the wider trend for start-ups to disrupt traditional industries by embracing new technology and methods.”