Elon Musk has undoubtedly helped change the face of the automotive industry.
In less than 20 years, Tesla (TSLA) which he co-founded, has become the benchmark to which all other car manufacturers aspire and compare themselves.
Old car manufacturers like Ford (F) General Motors (GM) and Volkswagen (VLKAF) have made Tesla and its charismatic and capricious chief executive their main rival.
Startups like Rivian (RIVN) and Lucid (LCID) want a hand in the situation by disrupting the main disruptor that is Musk and the company he runs. Ambitious Chinese manufacturers NIO (NIO) and BYD (WILL) know they have to beat Tesla to dominate the highly lucrative domestic market for green vehicles.
Musk fans will tell you that the present and future of the car is Tesla. Many investors seem to agree, judging by the Austin company’s market capitalization — $954 billion at last check, again approaching the landmark $1 trillion mark. Last October, Tesla became the first carmaker to surpass a market value of $1 trillion.
For comparison, Volkswagen and Toyota (TM) the world’s two largest automakers by sales volume have market values of $100 billion and $200 billion, respectively.
Musk writes Obit about gasoline cars
Ford’s market capitalization is $62.4 billion and GM’s is $61.3 billion. The two American manufacturers still sell several million vehicles a year, compared to almost 1 million units in 2021 for Tesla. The EV leader is currently the sixth largest company in the world based on valuation, just behind Apple (AAPL) Saudi Aramco, Microsoft (MSFT) Alphabet (GOOGLE) and Amazon (AMZN) .
This market confidence in Tesla stems from the financial community’s view of the company as a leader in the EV market at a time when environmental issues have become a key priority in many countries.
Tesla also appears to have a head start on autonomous technologies, with its fully self-driving driver assistance system, which is designed to enable vehicles to drive themselves. Full self-driving hasn’t reached that point yet — but Tesla’s relatively quick rise to dominance and overall market position give Musk the credibility and standing to predict how the auto industry will develop.
And the serial entrepreneur just predicted the imminent death of gasoline vehicles.
“It won’t be long before we see gasoline cars the same way we see steam engines today,” the world’s richest man said on Twitter on September 12.
In less than 24 hours, the tweet had received more than 142,000 likes.
Two hours after this dark prediction, the billionaire sent another message, putting another nail in the coffin of gasoline cars.
Scroll to Continue
“The residual value of gasoline cars bought today is going to be a lot lower than people think,” added Musk.
The numerous comments that these two posts prompted make it clear that many Twitter users share the opinion of the mogul.
“The ultimate gas car destination 😩,” commented one Twitter user.
“But this should be due to competition in a free market, not government coercion,” said another user.
“Once electric cars are widely accepted, I believe the value of gasoline cars will drop,” one user argued.
Complete victory for EVs is still far away
Against steam and electric vehicles, the gasoline internal combustion engine was put into operation at the beginning of the 20th century, thanks to its practicality and market incentive. It enabled the automotive industry to develop and grow for more than 100 years.
But new environmental standards set around the world will deal a fatal blow to this technology, many experts say.
From 2035, for example, it will no longer be possible to trade a new CO2-emitting car in the European Union. The average lifespan of a car is 15 years and the deadline is part of the prospect of achieving carbon neutrality in Europe by 2050.
California recently decided to take internal combustion engine vehicles off the road in 13 years. This prospect does not seem crazy.
To be sure, sales of electric vehicles are growing, but for now they remain a small part of the market. In the second quarter, sales of electric vehicles accounted for 5.6% of the total market, up from 5.3% in the first quarter and a record, according to the latest data from Cox Automotive. The share of EVs in Q2 2021 was 2.7%.
And mass adoption of electric vehicles still faces major hurdles, particularly affordability. Consumers are wondering if electric vehicles will ever be cheap; currently, few of them sell for under $30,000.
And the industry still faces the big problem of range and charging stations. Currently, charging an electric vehicle is a challenge if you don’t have a charger installed at home or at work. And recharging EV batteries takes much longer than filling a tank of gas, a particular problem when you’re on the road.
Electric vehicle drivers can recharge at about 50,000 public charging stations in the U.S., but industry experts say that’s not enough. President Joe Biden’s administration has proposed a multibillion-dollar spending spree to build a nationwide electric vehicle charging network.