Tesla Shares Soar Past Toyota to Become the Most Valuable Carmaker

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 Tesla Shares Soar Past Toyota to Become the Most Valuable Carmaker
                                 

Summary

  • Market capitalisation of Tesla has surpassed the market capitalisation of Japanese automobile giant, Toyota.
  • Tesla offers the most energy efficient EVs as compared to its peers, and the company is progressing towards developing a unique battery recycling system at Gigafactory Nevada.
  • EV maker would be disclosing second-quarter delivery and production numbers soon.

On Wednesday, 1 July 2020, Tesla shares hit a high of $1,135.33, taking its market capitalisation to around $210 billion. By the close of session, its shares settled at $1,119.63 with a market capitalisation of $207.55 billion. At a market capitalisation of around 22.11 trillion yen, it implies a market value of around a tad over $200 billion for Toyota.

Tesla is a high growth company with an exciting future, as perceived by investors. Conversely, Toyota is a matured carmaker with a footprint across the world. The Japanese automaker sells significantly more automobiles than Tesla. However, Tesla is not just an automobile business.

Tesla is also present in the segments of solar energy and storage systems. The American company is a one-stop shop for clean energy needs. Disrupting the renewable energy space, Tesla calls itself a fully integrated sustainable energy company.

Since its humble beginnings in 2003, the company has come a long way to become the most valuable carmaker in the world, but again Tesla is not just a carmaker.

Most Energy Efficient Vehicles

In its impact report, the company notes that its vehicles come with the highest energy efficiency. During the Model S production, Tesla was able to clock an energy efficiency of 3.1 EPA miles/kWh. Presently, Tesla Model 3 Standard Range Plus (SR+) has an EPA range of 4.8 miles/kWh.

Model Y AWD has 4.1 EPA miles/kWh, which makes the vehicle most efficient electric SUV. Tesla believes that energy efficiency of its vehicles would continue to increase over time consistently with improvement in technology and powertrain efficiency.

Moreover, its high-mileage products, including future Robotaxis, would be designed for maximum energy efficiency due to relatively less focus on speed, acceleration and handling, which would allow the company to lower the cost for customers and reduce carbon footprint per mile driven.

Battery Recycling

Lithium-ion batteries are recyclable unlike fossil fuels. Use of petroleum in the vehicle emits harmful gases to the atmosphere, that are not recovered or reused. Battery materials are processed and stacked in a cell and remain in the cell throughout the battery life.

At the end of battery life, valuable materials in batteries could be recovered and reused multiple times. However, it was highlighted in the report that extension of battery life is a better option than recycling valuable battery materials.

Prior to decommissioning a battery and setting it for recycling, the company seeks to extend the life of the battery. Customers who are not satisfied with the performance of their battery visit Tesla service centres.

The company has developed batteries to outlast its cars. Tesla estimates that the average life of an ICE vehicle in the US is around 17 years with about 200k miles in the odometer. From its data of more than 1 million Tesla vehicle fleet, those vehicles that were driven between 150k miles and 200k miles had battery packs degraded by an average of 15%.

Since its battery packs are made to outlast cars, the company receives a small number of batteries for recycling. Most of the recycling needs come from R&D and quality control. Its scrapped lithium-ion batteries are sent to landfills and are fully recycled.

Battery packs that are received from consumers mostly include taxi-like vehicles. Tesla expects to take some time for large-scale battery recycling requests since the company has only produced Model S for the past eight years.

Currently, the company only uses high-value elements from recycling that are introduced into the supply chain. As technology improves, Tesla anticipates sending more elements from the recycled stock to commodity markets.

Metals constitute over half of the battery that makes recycling process efficient. Rest of the material contains plastics, organics and other materials that are difficult to recycle. Presently, the company works with third-party recycling organisations for responsible disposal.

At Gigafactory Nevada, the company is developing a battery recycling system that would process scrap batteries and end-of-life batteries. It seeks to maximise the recovery of metals that could be used again in its supply chain.

The company is targeting to develop a recycling process with high recovery rates and low cost. Over the long term, efficient recycling of batteries would provide savings to the company, as it would lower the need for procuring new materials.

Related: Nikola Corp, the New Kid in the Block with Zero Revenue Valued at $22.71 Billion

Tesla Would Be Disclosing Delivery Numbers Soon

This month, the company is expected to disclose delivery and production numbers for Q2 2020. In China, the company has been witnessing strong demand for its vehicles, and it has set up a manufacturing plant in Shanghai.

In the first quarter of 2020, Tesla produced more than 102k vehicles and delivered over 88k vehicles. From its Shanghai factory, the company had expected to hit a run rate of approximately 4k vehicles/week by mid-2020.

Due to COVID-19, the numbers for second quarter might not be the same as first quarter. Its US factories had started to operate again after lockdown, but the recent increase in number of new infections pose further risks.

Good Read: Electric mobility: Adoption and reforms

(All currency in US, unless or otherwise stated)

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