Tesla, Stock Splits, EVs and the Environment

On August 12, 2020, the American Electric Vehicle manufacturer and megacorp Tesla Inc. announced its 5-for-1 stock split. Stock splits are a means of making shares of a company more affordable to average investors. This process does not change the value of an investor's total holdings of a company. It only grows the number of shares they own. Tesla reached its record high on August 27, 2020 (and baffling many stock analysts) at $2238.75 a share. That is a lot of money. For just one share. Of an electric vehicle company. Even after the split on August 31, when the shares were set to open for trading, they continued to increase from an expected $448 (do the math!) to an impressive $498 a share. This was preceded by Tesla surpassing Toyota to become the world's most valuable automaker by market capitalization, with a valuation of $206 billion (whew!).

There are many competitors to Tesla in the electric vehicles business. BMW, Ford, Porsche, GM, Audi, etc. to name a few, are all racing towards going electric. None of these companies has their individual stock prices floating around thousands of dollars. And also their CEOs don't have significant clout like Elon Musk. It must be noted that Tesla makes only electric vehicles. Yet it is leading way far ahead of its IC-engine friends. The fact that Tesla is so successful after a mere 7 years after breaking through in the market, and just one year after announcing $862 million in losses in 2019 is as preposterous as it is awe-inspiring. And if it holds itself steady in the coming years, then conventional cars would soon be history.

It is not just Tesla that is charging the electric revolution. Many leading electric and hybrid vehicle manufactures have promising plans for the future of on-road transportation. This was propelled by the increased restrictions on vehicle emissions and added regulations on fuel-efficiency by many countries around the globe (not in the US though!). Automakers are starting to layout compelling plans and timelines and flourish the market with electric vehicles. Toyota plans to achieve half of its global car sales from electrified vehicles by 2025. Volkswagen invests $30 billion into developing EVs. Ford has promised 40 new electric and hybrid vehicles in its 2022 model lineup including a fully electric F-150. And well, Tesla is just doing its thing.

I will not be surprised if in the next 10 years (or 20) electric cars become the norm. And they should be. I am not diving into the details of the impact on the environment of generating the electricity to run these vehicles. That is a story for another day! But it would certainly be one step towards achieving environmental sustainability. And by this, I do not desire for completely shutting down the $3.3 trillion oil and gas industry. It won't. I guarantee it. We all know that global warming is caused by greenhouse gases. And these greenhouse gases are 100% caused by humans. This is indefensible. This problem cannot be fought and reversed in a day. Just like it didn't take a day to get so messed up. It will take years, decades to fix and mend, and the little steps we take today will echo into the new era of humankind on our planet.