Tesla Nears $1,000 a Share. How Did We Get Here?
[Feb. 5, 2020]
For years, Tesla was one of the most contentious stocks on the market, with both the bulls and bears making their cases for why the company was dramatically over-or-under-valued. If you’re a long-term holder of the stock, and were fortunate and prescient enough to “back up the truck” at the stock’s IPO in 2010 at around $17 a share, you’re quite pleased at the developments of the past few weeks. Even going from $17 to the $200-ish per share price for much of the last several years, you’re doing quite well.
I want to preface the rest of this column with the caveat that I’m not a stock or financial analyst, and my perspectives are purely that of a EV and Tesla enthusiast (as a vehicle owner, and a very small-quantity shareholder) and an observer of industry trends as an automotive journalist. So what exactly has happened over the last several years, and more specifically, over the past few weeks to throw proverbial gasoline on the fire?
I think we’re starting to see a convergence of factors that are tipping the automotive market in favor of EVs, and accelerating the trend faster than many projected. Love her or hate her, there’s little denying that student environmental activist Greta Thunberg has had an influence on government and corporate policy toward the environment. In less than two years, Thunberg has gone from holding a simple cardboard sign outside the Swedish parliament in August 2018, to now being a nominee for the 2020 Nobel Peace Prize.
Symbolic gestures aside, natural events, and large-scale actions by companies and governments, like the U.K. moving its ban on ICE car sales up to 2035, are what truly move the needle of the investor community, and on that front, we’ve seen Tesla and Elon Musk confound and amaze (depending on what side of the short/long spectrum you’re on) investors building a plant in China from green field to fully operational in less than a year.
Although inadvertent and unplanned, governments’ relentless treatment of Volkswagen’s emissions cheating has resulted in major changes within the company, and at least publicly, Volkswagen has become one of the leading advocates for EV development and adoption.
The number of billion-dollar climate events in the U.S. was higher in 2019 than any year in the past 40 years, with the exception of 2011 and 2017. The Australian wildfires that started in September 2019 and devastated the country and continent are now estimated by some to cost more than $70 billion (U.S.) for full recovery. I am far from a parade-leading environmental activist, but in the face of overwhelming evidence of man-made climate change over the last several decades, it’s becoming increasingly indefensible to make a rational case that human activity has had no measurable effect on climate and severe weather events.
Even uber-capitalist Jim Cramer (who is now a Tesla convert) was recently quoted as saying “I’m done with fossil fuels,” and that oil companies are now “on the wrong side of history.”
Add to that the prime-time exposure the upcoming Ford Mustang Mach-E and GMC Hummer EV received during this year’s Super Bowl, and it sure seems like electric cars have breached a critical awareness threshold among the general public.
GM is promising a significant number of new EV debuts starting in 2021, and that long term, its strategy is an all-electric future. GM put its money where its mouth is with a $2.2 billion investment in its Hamtramck Assembly complex to make it its first plant fully dedicated to EVs.
Admittedly, some Tesla and EV “fanboy” sites have been breathless in their advocacy of EVs and effusive in their praise of Musk and Tesla. Even I have rolled my eyes at their unbounded, seemingly naive enthusiasm. But looking over the last several years, and now the last few weeks and days, there has been a palpable change in the zeitgeist around EVs. The question now is “Where do we go from here?”
Stay tuned to as we continue to cover the journey ahead.
(Image courtesy Tesla)
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