Is Tesla the New Ford or SunEdison and SolarCity the New Exxon?

The intriguing comparison between Tesla and Exxon

The question of whether Tesla is the new Exxon has sparked significant debate in the energy and automotive sectors. While there are superficial similarities, the underlying dynamics and market positions of Tesla and Exxon are fundamentally different. Let’s delve into what Tesla represents and identify its unique characteristics, contrasting it with Exxon's operations.

What is Tesla and What is It Not?

Tesla, Inc. is a multifaceted corporation primarily recognized as a manufacturer of electric vehicles (EVs) and energy storage systems. Its operations encompass:

Manufacture of energy storage systems for cars and buildings. Distribute vehicles through numerous global sales networks. Not a primary energy provider; Tesla generates and distributes electricity through its Supercharger network.

Exxon: The Traditional Giant of the Energy Sector

Conversely, Exxon, the long-standing multinational oil and gas company, operates primarily in the exploration, extraction, and distribution of fossil fuels. Its activities include:

Exploration and extraction of fossil fuels like oil and gas. Creating, distributing, and retailing lubricants, particularly for vehicles. Distributing and retailing gasoline via its Esso chain.

While both companies are engaged in distributing energy, their primary businesses differ. Exxon is a vertically integrated energy company, whereas Tesla is a vertically integrated transportation company with an expanding role in home battery storage.

Points of Intersection between Tesla and Exxon

The key intersection between Tesla and Exxon is in the transportation sector. As the sales of Tesla's products grow, they are directly impacting Exxon's revenue streams, specifically in retail gasoline and lubricants. Furthermore, Tesla is diverting energy demand for transportation from fossil fuels to electricity through its EVs and renewable energy services.

This shift presents a significant threat to Exxon's value chain, although it is currently minor. However, in the future, the impact of Tesla could be more substantial. As EV adoption grows, the demand for fossil fuels will likely decrease, impacting Exxon's core business.

Tesla vs. Ford and SunEdison vs. Exxon

Another intriguing comparison is between Tesla and Ford. While both companies are major players in the automotive industry, Tesla operates in a different market paradigm. Still, SunEdison and SolarCity could be more accurately compared to Exxon, as they both represent significant shifts towards renewable energy generation and distribution.

SunEdison and SolarCity, once acquired by Tesla, were primarily focused on renewable energy and energy infrastructure, similar to Exxon's historical focus on fossil fuels. However, SunEdison and SolarCity represent a move towards sustainable, renewable energy solutions on par with Exxon's pivot towards cleaner energy options.

Comparing SunEdison and SolarCity to Exxon is more apt because they both represent a shift from traditional energy sources to renewable and electric energy options. This shift can be broadly likened to Exxon's gradual move towards cleaner energy, particularly natural gas and renewable energy alternatives.

Conclusion

The comparison of Tesla to either Ford or SunEdison and SolarCity to Exxon reveals the evolving nature of the energy and automotive industries. While Tesla's impact on Exxon is a significant development, it is only the tip of the iceberg. The future will likely see a more pronounced shift as the transition to renewable and electric energy sources continues to gain momentum.