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Lately, the auto industry is deeply busy with Tesla (NASDAQ:TSLA) and its works. Everywhere you go, when the topic is cars, Tesla always gets mentioned. Even though the company has a very limited marketing budget, it gets mentioned on TV channels and newspapers on an almost daily basis. Some of the giants in the auto industry took notice of Tesla and decided to come up with their own defenses. For example, GM (NYSE:GM) put together a team of specialists to study Tesla and it announced that it would attempt to create an affordable electric car with decent range. German car companies like BMW and Volkswagen are also working on their own version of electric cars and they will be soon joined by Nissan, which is in the process of improving its Leaf model. Yet, during this period of Teslamania, Ford (NYSE:F) remained relatively quiet. Many people wrongly think that Ford is "left behind" but this is not the case at all.

Ford's Only Electric Car

Currently, Ford has one electric car and several hybrid cars. So far, Ford's only electric car is Ford Focus, and this car sells for $35,000 in the US. According to Ford, the car is powered with a 23 kWh liquid-cooled lithium-ion battery. Its top speed is 84 miles and its gas-free range is around 76 miles. While these numbers may seem weak compared to Tesla's specifics, keep in mind that Tesla's flagship car sells for nearly $90,000 and Ford Focus Electric provides a good experience for those who are looking for a commuter car.

Ford is improving its existing cars

Having said that, Ford's main focus (no pun intended) is in developing gasoline and hybrid cars. Ford's patented Ecoboost technology allows it to create cars that are highly fuel-efficient. Usually, Tesla bulls keep talking about how gasoline cars are "yesterday's technology" and electric cars are "tomorrow's technology" but they keep forgetting that gasoline cars keep getting improved. While Tesla spends money and resources on improving its cars, companies like Ford don't just sit there and watch. These companies also make a lot of progress.

Let's take a look at the regular Ford Focus, for example. In 2000, Ford Focus was getting 22 miles per gallon in the city, 28 miles per gallon in the highway. If we say that the average gas price is $3.50 per gallon and someone uses their car 15,000 miles per year (half in the city half in the highway), their annual gas budget will be roughly $2,200. The 2014 version of the same car gets 27 miles per hour in the city and 38 miles per hour in the highway. Under the same conditions, the same user would have spent $1,700 on gas, which is $500 less than the older version of the same car. If the average lifespan of a Ford Focus is 15 years, the newer model saves its users $7,500 through its lifetime compared to the older model.

Ford's small SUV Escape was getting 16 miles per gallon in the city and 22 miles per gallon in the highway. In the aforementioned conditions, this car's annual gas expense would have been $2,900. The latest version of Ford Escape gets 23 miles per gallon in the city and 32 miles per gallon in the highway. Under the same conditions, the annual gas expense of this car is $2,000.

Tesla isn't the only one innovating

Obviously, as the technology gets better gas mileage of regular cars keep improving, just like battery range of electric cars. Many Tesla bulls make the mistake of thinking that gasoline cars will not improve at all while electric cars take advantage of a rapidly improving technology. Since electric cars cost far more than regular cars, the gas savings of these cars should justify the price difference. As gasoline cars get more fuel-efficient, less people are inclined to make the jump to electric cars. Let's face it, if an electric car will save me $10,000 in gas expenses but it costs $15,000 more to purchase an electric car, I will not buy an electric car. Just to give an example, Ford's Fusion Hybrid gets 47 miles per gallon (city and highway combined) and a user of this car would spend $1,100 on gas annually if he or she were to travel 15,000 miles in this car each year. As of 2013, no electric car in the world is cheap enough to become a better deal than this car. If hybrid cars can get the job done, why should Ford dump billions of dollars on making electric cars that may or may not sell?

Will oil industry go to sleep?

Also, keep in mind that the oil industry is one of the largest and most powerful industries in the world. If the world starts converting to electric cars in large numbers, oil companies won't just sit there and watch. These companies can always drop gas prices to keep more people in gasoline cars. Tesla bulls always talk about how the battery costs will come down 5%-10% every year as the battery technology improves itself. Well, that may be true but the battery technology is not the only thing that keeps improving. Oil technology is also improving. The large oil companies are innovating to find more ways to extract oil in more efficient ways. It is fair to expect that oil supplies will increase for the foreseeable future. The demand for oil might also increase as the countries like China and India use more oil. However, as cars get more oil-efficient, oil demand will reach a plateau at some point.

Gasoline cars still rule the roads

Currently, 99% of all cars sold are gasoline cars and this is not going to change for the foreseeable future. If the trend looks like it will change, many large car companies including but not limited to Ford will be acting on it. I know, Tesla has the "cool" factor but so do BMW and Mercedes and an average American can't afford one of those cars. Besides, American cars keep getting cooler every year (even though this is a subjective call). Compare Ford's and GM's 2014 models with their 2005 models and you will see huge differences in the way these cars look, feel and drive.

Conclusion

Ford is currently working hard on improving its existing patented technologies such as EcoBoost rather than getting caught up in Teslamania, which is good for the company and its investors. Keep in mind that I am not saying that Tesla will fail or anything. The company could still be successful, but that doesn't mean "gasoline cars are yesterday's news" or "Tesla will bury them alive." Reaching profitability and selling several thousand cars per quarter could be defined as success for Tesla and the company doesn't have to kill any competitors to become successful. I just find it funny when I see Tesla articles or comments talking about gasoline cars as if they are horse going obsolete soon. I've even seen some commenters talk about how Ford and GM are like horse sellers in 1900s who suffered huge losses because they couldn't see how cars would replace horses in the next several decades. I can assure you that companies like Ford are not sleeping and they will not get caught off-guard if the "electric car revolution" comes true.

Source: Why Ford Isn't Caught Up In Teslamania

Additional disclosure: I am also long TSLA straddle (owning the same amount of calls and puts at the same time with the same strike price) expiring in 2015.