One of the biggest headlines of the last week was that Tesla TSLA’s shares had hit over $1,000, pricing its market capitalisation at over $185 billion and therefore making it the most valuable car company in the world. This made it worth more than Toyota, and perhaps more significantly, of greater market value than Ford, GM and Fiat Chrysler put together. How did this still relatively new company get so far in a mere 16 years that it has overtaken vehicle manufacturers with decades more history?

A couple of days after the record high, the share price had dropped a little and Toyota was back on top, but that doesn’t detract from the fact that Tesla has come a long way in a short space of time, and almost single-handedly changed the nature of the car industry forever. Of course, there have been contextual issues why it has thrived–the increasing worry over climate change and metropolitan pollution being the main ones. But this wasn’t so obviously a driving factor 16 years ago, so Elon Musk’s bet on EVs can be seen to be a bit more audacious and inspired.

There are no agreed reasons why Tesla’s share value hit its most recent high, but I have some theories. There has been a lot of talk recently about Tesla’s “million-mile” battery being announced at the company’s Battery Day. Since then, Chinese company CATL has claimed that it’s ready to manufacture a battery capable of up to 1.2 million miles, although without confirming that Tesla would be its customer. However, Tesla is readying a significant push into China, and has been in talks with CATL already, so it seems likely.

One of the key necessities for EVs to become ubiquitous is for battery prices to drop past the magic $100 per kWh barrier, below which electric cars are expected to start becoming cheaper than those with internal combustion engines. The most significant factor in battery price is just how much cobalt is used. Cobalt is a rare earth metal, and the fact that the Democratic Republic of Congo has the largest reserves of it in the world is highly problematic, with serious issues around how child labour is used to mine it.

Cutting out the cobalt will reduce battery costs dramatically, and Tesla recently achieved Chinese governmental approval to build its Model 3 in China with lithium iron phosphate (LFP) batteries. These contain no cobalt and can support up to ten times as many recharges as the lithium ion batteries used in most EVs. On the downside, they also store about 40% less energy per kg, so EVs using them instead of lithium ion will either need to be heavier, or have significantly shorter ranges, even if they will be a lot cheaper.

However, an interesting Tesla patent for the possibility of the million-mile battery was also revealed recently. One of the reasons why current battery technology can only manage a bit over 1,000 charge cycles (usually quoted as 1,300 on average) is that the crystalline structure of the cathodes degrades. The patent by Dalhousie academic and lead of the Tesla battery research team Jeff Dahn is for cathodes using larger crystals, which thereby support 4-5,000 charge cycles. Considering that current Tesla batteries are considered to have a useful life of around 200,000 miles, this new cathode technology could provide the much-vaunted million-mile benchmark.

Tesla has been pushing the envelope on battery usage since its inception. The 2008 Roadster was the first highway-legal production car to employ lithium ion batteries, and thereby the first to manage a range of over 200 miles. Although Nissan’s 2010 Leaf is perhaps the vehicle that proved an EV could be an everyday driver for the masses, Tesla has been the company that has made the EV desirable beyond those who are environmentally friendly early adopters. The Model S wasn’t a car people bought to save the planet, but because it was an order of magnitude faster than anything else in its class.

Tesla has caught traditional manufacturers napping in true Californian digital “disruptive” fashion, in a similar fashion to Apple’s iPhone. Now the Model 3 has targeted the premium executive market, hitting the German trio of BMW, Mercedes-Benz and VW right in their sweet spot of small and midsized luxury vehicles. In America, the Model 3 outsold every model BMW sells put together in Q2 2019 in this class as well as everything from Mercedes and Audio too.

Of the German trio, VW is in the best position to fight back. Thanks to being hit early by dieselgate, the company was forced to reinvent itself for the EV future and has just released its initial salvo in the shape of the ID.3. This is still a bit costly for the mainstream at a £33,000 ($41,000) starting price but was designed from the ground up to be an EV. It’s the first in a complete range of EVs based around a shared platform, which is a necessity for viable production scale. Tesla already uses a shared platform for the Model S and X, with another platform for the Model 3 and Y.

BMW and Mercedes are still mostly shoehorning electric drivetrains into car designs previously meant for petrol and diesel engines, which isn’t a strategy with a future. BMW showed promise with the i3 and i8 but is still focusing on plug-in hybrids (PHEVs) for most of its ranges, and Mercedes has so far only released the EQC alongside its PHEVs.

So how did Tesla become, for a couple of days at least, the most valuable car company in the world? It made an early bet on EVs and continues to drive the market with innovation. It was the first with lithium ion batteries and looks like being the first to drive battery costs down with technologies that change the design for greater durability and don’t use cobalt. Having challenged the luxury executive market, the next challenge is the full mainstream, and there are already plans for a small Tesla for the Chinese market. So Tesla’s status as the most valuable carmaker is unlikely to be a solitary blip on the stock ticker readout; it’s probably going to happen again soon.