A weird thing happened to the global auto industry during the pandemic: Its valuation roughly tripled to about $3 trillion. Roughly a year on, a lot of other weird stuff has happened, most notably the head of the world’s most valuable automaker trying his hand at running a certain social media platform. The concurrent collapse in Tesla Inc.’s valuation explains a big chunk of the retracing in the industry’s value, just as it did on the way up — but not all of it.
The great bubble of 2021 is no more. But the great rally of 2020 remains, if reapportioned. The electric vehicle wunderkinds aged rapidly. Even with some new faces having arrived, the electrics are actually worth less today than at the end of 2020. Traditional automakers also sold off last year. Having not charged up to the same degree, their decline has also been far gentler. Even now, Old Auto is valued 23% higher than at the end of 2020.
On the electric side, Tesla went down and took all the mini-Teslas in its wake. Plain old reversion to the mean, along with Elon Musk’s Twitter Inc. fiasco and dumping of his own Tesla stock, sank Big EV. But the drama obscured a more pernicious, if banal, development: Tesla’s pressing need to gin up demand and refresh its product line, just like any old carmaker. Including plug-in hybrids, China’s BYD Co. Ltd. surpassed Tesla to become No. 1 in terms of EV units sold last year.
