Tesla is the World’s Top Car Maker
TTesla is the world’s top carmaker on the back of a tech boost and huge Chinese sales.
It’s a sign of the times.
Electric car manufacturer Tesla became the world’s most valuable carmaker last week, overtaking Toyota, despite never having made an annual profit.
In the past 12 months, Tesla shares have surged over 400 per cent to reach a market value of $US210 billion (FJ$452.972 billion).
In July last year, its share price was $US233. Last week, it closed at $US1,208 (FJ$ 502.583).
According to the financial firm Refinitiv, Tesla is now trading at 69 times its estimated 2022 earnings. A broader improvement in the tech sector has helped.
A report that Tesla sold 11,095 Shanghai-made Model 3 vehicles in China in May, more than triple the number sold in April, has helped too.
But Tesla’s financial update last week was the spur.
It showed the company just achieved its best first quarter for production and deliveries in its history, despite the COVID-19 lockdowns.
Long-term forecasts for demand for electric vehicles would also be very supportive because they’re staggering.
According to BloombergNEF, global sales of new cars with an internal combustion engine, which run on oil and diesel, peaked in 2017 and are “in permanent decline”.
But sales of electric vehicles are forecast to grow dramatically in the coming decades.
It said electric vehicle sales could hit 10 per cent of global passenger vehicle sales by 2025, rising to 28 per cent in 2030 and 58 per cent in 2040.
Room for growth
There’s so much room for growth in electric vehicles it’s hard to fathom — just like the scale of the global transition to renewable energy generally.
In fact, the United Nations Conference on Trade and Development (UNCTAD) released a report on the topic last month, telling the world to prepare for electric vehicles.
It said a global transition was underway to decarbonise energy and transport systems, and as the importance of oil as a source of energy receded, demand for lithiumion batteries would grow rapidly. It said there was an “urgent need” to address them to ensure the transition to a low-carbon energy system was done sustainably and ethically. But the bulk of the 72-page report was spent explaining the economics of battery manufacturing and supply chains.
Social problems
It dedicated one page to the social and environmental problems associated with lithium-ion batteries. Nevertheless, the problems were serious.
“Most of the cobalt supplied to global markets originates from the Democratic Republic of the Congo (DRC), of which 20 per cent comes from artisanal mines where child labour and human rights issues have been identified,” the report warned.
“The children are exposed to multiple physical risks and psychological violations and abuse, only to earn a meagre income to support their families.”
This would create its own problems, it said, because the mining industries extracting the key materials needed for rechargeable batteries — lithium, graphite, manganese and cobalt — caused unique environmental and social consequences.
Children
That figure of 40,000 children came from a UNICEF report from eight years ago.
Lauren Armistead, an Amnesty International researcher, told the ABC in 2018 the figure was probably a severe underestimate now, given the rise in global demand for cobalt since then.
The UNCTAD report also failed to mention that tech companies have been put under scrutiny in recent years to clean up their supply chains.