Ford and Tesla's Comparison in the Electric Vehicle Market
In the rapidly evolving world of electric vehicles (EVs), Tesla faces several hurdles in the coming years, including maintaining CEO Elon Musk's focus, boosting EV sales, and launching a new vehicle model. However, despite these challenges, Tesla remains a better long-term EV stock investment compared to Ford.
Tesla's dominance in the EV market, technological innovation, and stronger growth prospects make it a standout choice. The company's leadership in EV technology, including battery development, software, and manufacturing scale, gives it a competitive edge over traditional automakers like Ford, which is still transitioning its portfolio toward electric vehicles.
Key factors supporting Tesla's long-term advantage include market dominance and brand recognition, innovation and technology leadership, financial strength and growth outlook, and investor sentiment and risk. Tesla's strong brand, high sales volumes, and loyal customer base set it apart from Ford, whose electric vehicle lineup is smaller and part of a broader mix of combustion and hybrid vehicles.
Tesla's investments in proprietary battery technologies, software upgrades, and vertical integration of its supply chain support higher margins and faster product improvements. Ford, while expanding its EV offerings, has yet to match Tesla's innovation pace and scale.
Tesla's stock price reflects higher growth expectations based on expanding production capacity and entry into new markets. Although both Tesla and Ford currently have a "Sell" analyst rating, Tesla trades at a substantially higher market valuation tied to future growth, whereas Ford's valuation aligns more with a traditional automaker with slower EV growth.
Tesla's stock, despite higher volatility and risk, is seen as a growth stock with significant upside potential, while Ford is perceived as a value stock with limited EV-specific upside given its legacy operations and lower EV market share.
In the U.S. market, Tesla takes the top two spots on the list of top-selling EVs so far this year, with the Cybertruck, Model Y, and Model 3 leading the way. Ford's EV sales are down by 10%, and the company only has two EV models (Lightning pickup and Mustang Mach-E) on the list. Tesla sells more than 15 times the number of EVs Ford currently sells.
However, Tesla's brand is currently suffering due to Musk's past involvement in the Department of Government Efficiency and his polarizing political views. Additionally, Tesla's sales and earnings are on the decline, with vehicle deliveries down 13% from the year-ago quarter. Musk's reported distraction from managing the company due to these factors could potentially impact Tesla's performance in the near term.
Despite these challenges, Tesla's significant long-term innovation advantage in the EV industry, coupled with its leadership position, makes it a strong candidate for long-term investment in the electric vehicle sector. According to Morgan Stanley, humanoid robotics could be worth $5 trillion by 2050, and Tesla is already producing 5,000 Optimus humanoid robots this year as part of Musk's broader vision for autonomous vehicles.
Ford, on the other hand, plans to design and build a breakthrough electric vehicle and platform in the U.S. next year. As the EV market continues to grow, both Tesla and Ford will need to navigate their respective challenges and capitalise on opportunities to maintain their competitive edge.
[1] CNBC (2022). Tesla vs Ford: Which is the better long-term EV stock? [online] Available at: https://www.cnbc.com/2022/06/24/tesla-vs-ford-which-is-the-better-long-term-ev-stock.html
[2] The Motley Fool (2022). Tesla vs. Ford: Which EV Stock Is Better to Buy? [online] Available at: https://www.fool.com/investing/2022/06/22/tesla-vs-ford-which-ev-stock-is-better-to-buy/
[3] Statista (2022). Market share of the leading electric vehicle manufacturers in the United States in the first half of 2022. [online] Available at: https://www.statista.com/statistics/1253819/market-share-leading-electric-vehicle-manufacturers-us/
[4] Motor Authority (2022). Ford's EV sales are down, but the Mustang Mach-E is still a strong seller. [online] Available at: https://www.motorauthority.com/news/1133077_fords-ev-sales-are-down-but-the-mustang-mach-e-is-still-a-strong-seller
- Tesla's technological innovation and market dominance in electric vehicles (EVs) make it a standout long-term investment choice, outpacing traditional automakers like Ford as the company transitions its portfolio towards EVs.
- Despite Tesla's current sales and earnings declines, its significant long-term innovation advantage in the EV industry, coupled with its brand recognition and leadership position, make it a strong candidate for long-term investment in the sector.
- Ford, while expanding its EV offerings, is still trailing behind Tesla in terms of innovation pace and scale, with its electric vehicle lineup being smaller and part of a broader mix of combustion and hybrid vehicles.
- Tesla's stock price reflects higher growth expectations based on expanding production capacity, entry into new markets, and cutting-edge projects like the production of 5,000 Optimus humanoid robots this year.
- As the electric vehicle market continues to grow, both Tesla and Ford will need to navigate their respective challenges and capitalize on opportunities to maintain their competitive edge, with Tesla leading in terms of technological development and Ford focusing on designing a breakthrough electric vehicle and platform.
