Moody's gave Tesla the highest score in its carbon transition assessments. It seems Elon Musk’s electric car company has shifted the auto industry’s future from oil to sustainable energy since the rating agency advised the rest of car manufacturers to invest and change. 2020 seems to be the time to turn over a new leaf.
The combustion engine is out, and electric motors are in, says Moody's. As such, the rating agency conducted carbon transition assessments on 20 leading car manufacturers in the industry. The tests were meant to determine which automakers were ready for the transition to low carbon emissions. Moody's rated several leading carmakers from a scale of CT-1 to CT-9.
Unsurprisingly, Tesla received the highest score, CT-1. The grade means the all-electric car company is fully prepared to meet low carbon emission standards worldwide and will not have problems during the transition from oil to renewable energy.
Other manufacturers who scored lower than Tesla, but still received high grades from Moody's include, Beijing Automotive Group, BMW, Geely, Honda, and Toyota. So Tesla isn’t alone in its goal for a sustainable car industry.
According to Moody's, half of the carmakers it assessed are not ready for the low carbon transition, even though it is coming. Based on global trends, Moody's advised car manufacturers who haven’t prepared for the shift to start investing. The 10 companies that scored at the lower end of the scale would have to increase their capital spending so that 25 percent of their fleet is comprised of full-electric vehicles and plug-in hybrid cars, stated the rating agency.
Moody's suggested for those car manufacturers to move fast because 2020 seems to be a decisive year for the shift. Next year could make or break automakers who stick to the combustion engine.
"Our new assessment gives us a way of monitoring progress in aligning with the low carbon transition. 2020 is set to be a critical year for automakers proving whether they can deliver electric vehicles at scale to achieve compliance in Europe and China,” stated James Leaton, Vice President and Senior Credit Officer at Moody's.
Tesla has championed sustainable energy since its inception, and it’s no surprise it aced Moody's test. According to French analyst Pierre Ferragu, Tesla has become a leader in the renewable car industry, and a score of CT-1 proves it.
“I think nobody’s close [to Tesla] to be honest…Today in what manufacturers have on the road or have announced, nothing is matching the 2012 Tesla Model S, and the Model S today is actually 40 percent better than 7 years ago. So that’s how Tesla turn[ed] from being a disruptive innovator 7 years ago to actually an industry leader,” he said.
Tesla isn’t stopping at low carbon emissions either, it is helping clean the air with its hospital-grade filter and Bioweapon Defense Mode. The company’s tech is definitely next-gen, but what sets it apart is its goals.
The Elon Musk-led company’s goals are in line with the world’s goals. Throughout the globe, countries are setting aggressive targets to lower carbon emissions and adopt other practices to maintain and reduce the Earth’s temperature to 2 degrees Celsius or more optimally, 1.5 degrees Celsius, as per the Paris Agreement, stated National Geographic.
Europe and China are among the countries who are fervently trying to reach their self-imposed goals. Europe wants to reduce greenhouse gas emissions (GHG) produced by vehicles and other sectors of the country by 40 percent by 2030 and 60 percent by 2050. China’s goals aren’t timid either. To reduce GHG emissions, the Chinese government is promoting electric cars. It wants to reduce its reliance on oil imports. To reach its goal, China plans to have 5 million EVs on the road by 2020 and 80 million by 2030.
Based on Europe and China’s future plans to reduce GHG emissions, gasoline-only car manufacturers may need to wake up and take Moody's advice. The world has spoken, and it says the renewable car industry is here to stay.
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