Exxon Mobil’s market value surpasses Tesla’s as oil prices rise and electric vehicle sales decline

Tesla is down 41 percent in a tough start to the year marked by renewed growth concerns, widespread job losses and the first year-over-year sales decline since the early days of the pandemic. Meanwhile, Exxon has finally reversed a decade-long production slump thanks to booming oil developments in Guyana and the Permian Basin, maximizing the benefit of crude oil’s 16 percent gain this year.

The turnaround shows that the path to electrifying road transport is proving to be more challenging than many thought. Ford Motor Co. and Hertz Global Holdings Inc. are among companies rethinking their big bet on electric vehicles as market penetration slows due to the cost and difficulty of charging in public. Exxon’s rise, buoyed by record global oil demand, also reflects a fading ESG movement that has helped crush Big Oil’s valuations during the pandemic.

Tesla’s market value peaked at nearly $1 trillion versus Exxon’s in November 2021, as the stock was driven by growing deliveries, expansion into China and the promise of self-driving cars. Investors have since lowered their expectations for all three stocks.

Tesla fell 1.9 percent to $147.05 per share on Friday, making it the second-worst performing stock in the S&P 500 Index this year. Exxon rose 1.1 percent in New York trading. Tesla’s market cap at close was about $469 billion, compared to about $475 billion for Exxon.

Even after Tesla’s disastrous first-quarter results, the stock still has a high valuation that is well above oil and gas companies. It trades at about 53 times forward twelve-month earnings and does not buy back shares or pay dividends. Exxon trades at less than 13 times earnings and has returned $32 billion to investors by 2023, or about 8 percent of its year-end market value.

First print: April 20, 2024 | 7:51 am IST