Tesla Lithium Lead at Risk As Rivals Make Supply Deals
Despite the success of its Model S and Model X electric vehicles, Tesla’s lead in the lithium ion battery market is at risk as rivals make supply deals, according to a recent article published by Bloomberg News. While Tesla’s market capitalization still surpasses the combined market value of General Motors and Ford, Elon Musk’s ambitious targets for mass-production of its own lithium-ion batteries may prove unrealistic, according to the article.
EV sales should easily top 1.8 million cars this year
EV sales should easily exceed 1.8 million cars this year, according to CleanTechnica’s sales chart. This is the first time that global EV sales have reached this level. And if this trend continues, we could be on the verge of an industry revolution.
In the last five years, global EV sales have increased at an average annual rate of 89%. This momentum is set to continue through the 2020s and beyond. We expect to see plug-in electric car sales make up 23% of new passenger vehicle sales by 2025. EVs are a major lynchpin in the future road transport market.
China will account for half of global EV sales in 2021. While Tesla holds the top spot, there are plenty of other contenders. GM plans to deploy $35 billion in EV investments by 2025. In addition, Ford is spending $50 billion to accelerate its EV business.
BYD, the world’s largest EV maker, has quadrupled sales to 641 000 in the first half of 2022. The company’s Model Y remains the bestselling EV in the world. The company has also launched new models such as the MG4 ELECTRIC, a compact electric vehicle built on a new MSP platform. This vehicle features zero thermal runaway and active safety systems.
Elon Musk is unlikely to hit ambitious targets for Tesla to mass-produce its own batteries
Earlier this year, Tesla CEO Elon Musk set an extraordinary goal for Tesla to mass-produce its own batteries. His aim is to cut battery costs by at least half.
The goal came despite a slowing economy, rising competition, and supply chain risks. But production problems have hit Tesla in the past, and it’s unclear if Tesla can meet its ambitious targets.
In the third quarter, Tesla’s production was down a significant 25%. And the company missed a target to deliver 5,000 Model 3s per week by December. Tesla said it was “working to increase the capacity” of its plants in Austin and Berlin. It also plans to build two new factories in Germany.
Tesla plans to boost its Supercharger stations in the United States and Asia. But the company’s production of solid-state batteries, which offer higher energy density and endurance, has been stymied by the lower conductivity of solid electrolyte and interface instability issues.
Tax credits for Tesla Lithium
Despite the hype, there are a number of factors that have to be considered in order to qualify for the $7,500 electric vehicle tax credit. It will depend on whether the vehicle is new or used, the total cost of the car, and the size of the car.
The new law will help accelerate the EV industry’s quest for a reliable domestic supply of battery cells. The Inflation Reduction Act, or IRA, also contains a $35 per kilowatt-hour credit for battery cells made in the U.S., and an additional $10 per kilowatt-hour credit when the module is manufactured in the U.S. Specifically, the new law requires at least half the battery components to be manufactured in the U.S.
The Inflation Reduction Act also requires the EV industry to source a minimum percentage of critical minerals from North America. This requirement starts in 2023 and ramps up to 80% in 2027.
Tesla’s market capitalization exceeds the combined value of Ford and General Motors
Despite its growing presence in the auto industry, Tesla still has some ways to go before it can match the market value of the “Big Three” automakers in America. It needs to grow by about ten percent to match Ford’s $49.4 billion market cap, or by about five percent to match General Motors’ $37 billion market cap.
But there’s still a growing gap in investor optimism over Tesla’s future. Among Wall Street analysts, 11 are optimistic about the company, while 13 are negative. And one analyst believes that Tesla’s market value may peak this year.
While the two automakers have been the biggest beneficiaries of the past few boom years, they’ve both made significant efforts to change their operations. Ford has added jobs to accelerate its transition to self-driving vehicles, while G.M. has sold money-losing European divisions. They’re also working with the Trump administration on regulatory reform.
Meanwhile, Tesla’s shares have surged more than 10 percent in the last year. That has increased its market value by about $2 billion. That puts the company in the company of other tech companies such as Microsoft, Alphabet, and Amazon.