The Rise of Exxon and Challenges for Tesla in the Shifting Automotive and Energy Sectors

Exxon Mobil Corp. has done something surprising by becoming worth more in the market than Tesla Inc. This hasn’t happened for over a year. Tesla is going through some tough times with fewer sales and doubts from investors about electric cars catching on quickly.

On the other hand, Exxon has started producing more oil again after a ten-year decrease. And with oil prices going up, Exxon is doing well and changing how things work in the energy business.

Shifts of Stocks

Tesla has been facing problems since the beginning of this year, seeing its first drop in yearly sales since COVID-19 started. Its stock has fallen by 41%, making it one of the worst performers in the S&P 500 Index. Last Friday, Tesla’s shares were at $147.05, giving it a market value of around $469 billion.

ExxonMobil stocks
The ESG movement’s decline boosts oil giants, shifting investor focus to traditional energy stocks.

On the other hand, Exxon’s stock price has gone up by 1.1%, increasing its market value to about $475 billion. This growth is because of successful oil projects in places like Guyana and the Permian Basin, and the price of crude oil going up by 16% this year.

Exxon has turned around its declining oil production of the past decade by focusing on growing oil production in Guyana and the Permian Basin, taking full advantage of the 16% rise in oil prices this year.

The Road to Electric Cars Is Tougher Than Expected

The shift to electric cars in the auto industry is turning out to be harder than people thought. Big companies like Ford Motor Co. and Hertz Global Holdings Inc. are reconsidering their plans for electric cars because not many people are buying them yet.

Tesla faces challenges reigniting interest in electric cars amidst economic headwinds. (Credits: Morning Star)

One reason for this slow start is that electric cars are expensive, and there aren’t enough charging stations in public places.

Tesla’s sales going down show that this isn’t just a problem for them; it’s a bigger issue in the car market. People are still not sure about switching from regular gas cars to electric ones.

Even though Tesla’s value was once almost $1 trillion, higher than Exxon’s, things have changed. Investors aren’t as hopeful because Tesla isn’t growing as fast as expected, especially in places like China, where it’s facing problems.

The Shifting Influence of ESG and Market Forces on Exxon and Tesla

One reason Exxon is doing better is because the Environmental, Social, and Governance (ESG) movement isn’t as strong as it used to be. ESG was a big deal before, and it made oil companies like Exxon seem less valuable.

Exxon offers lower earnings multiple and substantial returns, attracting investors. (Credits: iStock)

During the pandemic, ESG was a major concern. Investors wanted to put their money into companies that cared about the environment and social issues. But now, as the world economy gets better and people need more oil, investors are paying attention to traditional energy companies again.

Exxon doesn’t just look better compared to Tesla in terms of how much money it makes, but it also gives a lot of money back to its shareholders. In 2023 alone, Exxon gave $32 billion to shareholders, which is about 8% of what the company was worth at the end of the year.

The changes happening between Exxon and Tesla show how complicated things are in the energy and auto industries. Exxon is benefiting from high oil demand, while Tesla is struggling to get people excited about electric cars again, especially with economic problems and changing consumer preferences.

This shift in the market is a reminder that industry leaders can change quickly, and the market is always changing because of economic, environmental, and technological factors.

Sajda Parveen
Sajda Parveen
Sajda Praveen is a market expert. She has over 6 years of experience in the field and she shares her expertise with readers. You can reach out to her at [email protected]
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