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December 8, 2020 03:30 am

Electric-Car Companies Now Comprise Half the Worth of the World's 10 Most Valuable Automakers

An anonymous reader quotes a report from Bloomberg: Electric-car companies are suddenly worth half of the total market capitalization of the world's 10 most valuable automakers. That's because money managers sized up the convergence of government policies and people's preferences combating climate change and made alternative energy their biggest bet. Much was achieved by Tesla Inc., the Palo Alto maker of the S, X, Y and 3 model vehicles, giving it a market capitalization of $539 billion, or more than Japan's Toyota Motor Corp., Germany's Volkswagen AG and Detroit's General Motors Co. combined. Tesla was barely 26% of Toyota's value at this point last year. None of the industry's Top 10 exclusively manufactured EVs in 2015; this year the list included Shanghai-based Nio Inc. and Guangzhou-based XPeng Inc., EV upstarts in the world's largest market. Tesla and its Chinese competitors accounted for only 8% of the value of the Top 10 in 2019 -- still a huge leap from zero percent in 2016. The three EV makers reported annual sales of $30.5 billion, or about 3% of total sales for the 10 largest companies, according to data compiled by Bloomberg. Commentators and short sellers, who profit when a security's price declines, predict that the companies' shares will plummet before long because the companies' values are far out of proportion to their more modest profits and revenues. Since its initial public offering in June 2010, Tesla revenue increased 241 times as revenue for the rest of the industry rose 19%, according to data compiled by Bloomberg. Tesla shares appreciated 170 times when the comparable figure was three times for global peers. None of which persuades numerous Tesla detractors, who insist the company will fail as soon as the legacy automakers determine that EVs are profitable. That moment arrives this month when Tesla joins the S&P 500 as its record-breaking largest new member. In China, where EV incentives are part of the government's goal to become carbon neutral by 2060, Nio's annual revenues have tripled since its September 2018 IPO. Nio shares surged 665% during the same period as global peers were gaining 47%, according to data compiled by Bloomberg. XPeng's 2020 third-quarter revenue is 4.4 times the amount during the same period a year ago. After the company's August IPO, the shares rose 269% when global peers gained 29%. These unprecedented valuations come at a point when the fossil fuel industry is reporting record losses, including Exxon Mobil Corp.'s $20 billion write-down this month. The market for zero-emission electric vehicles, meanwhile, is poised to become explosive, according to data compiled by Bloomberg. In 2019, 2.1 million cars, or 2.5% of the cars sold worldwide were electric. By 2030, 26 million EVs will be sold, or 28% of total sales worldwide, according to analyst estimates compiled by Bloomberg. By 2040, 54 million EVs will be sold, or 58% of the global market, the analysts predict.

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