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Ford And Tesla, Not Ford Or Tesla

May 22, 2023 7:00 AM ETFord Motor Company (F)TSLA153 Comments
Christopher Robb profile picture
Christopher Robb


  • The auto manufacturing business is a particularly tough one with high barriers to entry, high capital intensity, and fickle consumers.
  • A difficult industry has become even more complicated by a massive shift to Battery Electric Vehicle. Legacy Auto has varying strategies.
  • Ford has consistently made wise bets that show CEO Jim Farley is a visionary and understands how to stay relevant in future mobility.
  • Of all legacy autos, Ford's product portfolio and balance sheet give it the most realistic prospects of maintaining solvency as it reaches EV goals.
  • Ford's deep connection with its customer base and shrewdness in product and brand is complemented by a deep sales infrastructure.

Ford Recalls 2 Million F-150"s Over Seat Belt Issue That Causes Fire

Scott Olson/Getty Images News

It's easy to look at the landscape of the EV market as a monolith. But we plan to be surgical about where we play and how we win with the right products, the right cost structure, and the right price points. - Jim Farley

This article was written by

Christopher Robb profile picture
I was Senior Writer and Vice President at Fundstrat Global Advisors for over 2 years. Prior to that, I was Senior Research Analyst at Dentons, now the world's largest law firm. I focus on company management, fundamentals, earnings, contrarian investing, and the effects of geopolitical developments on risk assets.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (153)

Actionable Conclusion profile picture
"Ford And Tesla, Not Ford Or Tesla"

The author was prescient.

Ford is now partnering with Tesla and adopting Tesla engineering, and charge network. Farley is trumping Mary... and this is one more example.

In the near future, expect Ford to consider licensing Tesla's software and FSD too.

When it comes to legacy auto leadership.... Farley is a rare gem among a lot of turds.

Farley gets it.
Risk Advisor profile picture
@Actionable Conclusion

Can you use a better word than trumping?
@Actionable Conclusion on the other hand the giant and deep Ford couldn't lead the way. May be a good business decision but what does it say about the technical leadership of a 100 year old company. Too much DEI and not enough merit and ability.
I bought a Ford Tempo in my day and it was the worst thing I ever did. FIX OR REPAIR DAILY.
@Paul6661 i had an 85, wasn’t bad, all cars sucked in 85.
Investor since ‘73 profile picture
@Paul6661 Do you imagine that any one tiny part of your Tempo that was built about 40 years ago is in any vehicle F builds today? ALL cars are much more reliable and long lived than cars built in the 80’s.
Risk Advisor profile picture
@Investor since ‘73

Would you also agree that because the pressure to deliver the cars to market is so intense that almost all the manufactures are experiencing record recalls?
Et20 profile picture
The chart and __insert random auto maker__
Look to Europe. Way better quality and prestige brands. Tesla’s time is fading, but Ford has its place in the market
BYD is the leader in China, and VW is the leader in Europe. USA will soon proves that Tesla is in car business, just like in China and Europe.
Ramon_13 profile picture
Tesla - Absolutely Yes
Ford - Hell No
Good analysis. Ford is the leader in auto manufacturing and will outcompete Tesla over time as they ramp up EV production. This is a solid buy today with a safe solid dividend and the Ford family standing behind it. Remember in the early 19th century only a few auto companies survived ford being the leader
Actionable Conclusion profile picture
Ford is facing falling unit sales, union issues, quality issues, fractured politics and infighting, difficulty developing tech, difficulty building pure EV's at a profit, while servicing a mountain of debt.

This defines most of legacy auto out of Germany Detroit and Japan.

You think Ford is trending up? ... wait till you get a load of the F150 inventory building up on dealership lots.

RAM, Jeep and GM face the same truck inventory tsunami. It's the news that media don't want to discuss... for ad revenue drives media narrative.
RickJensen profile picture
@Actionable Conclusion
That's the scared Tesla shareholder talking.
Actionable Conclusion profile picture

What has Ford done to strike fear in Tesla shareholders? I can't think of one thing Ford has done that impacts Tesla. Please share.

On the other hand....

Tesla has a 4 year to 7 year lead over legacy auto in:

Electric motors
High voltage electronics
Thermal mgt systems
ADAS systems
Battery tech
Chip design
Computer circuits
On board tech
Over the air updates
Body castings

This according to Sandy Munro at Lean Design. The same Sandy Munro that use to crap on Tesla cars for how poorly they use to be built.

PS. It pays to keep an open mind, and maintain flexibility of thought. For investors in the auto sector its imperative.
RickJensen profile picture
@Actionable Conclusion
Fear is palpable.
China and prices.
Losing market share.
Sales dropping off.

The water you are in isn't warm, it's almost boiling.
Investor since ‘73 profile picture
I couldn’t agree more with the author’s take. F is still my largest position but I have been nibbling at Tesla since the price came down to Earth. It’s still only about 1/4 of what’s in F but my goal is to eventually have a 50/50 split and will sell bits of F opportunistically to shift into Tesla. All of my F dividends have gone into Tesla.
Christopher Robb profile picture
@Investor since ‘73 smart strategy!
Actionable Conclusion profile picture
"Ford has consistently made wise bets that show CEO Jim Farley is a visionary and understands how to stay relevant in future mobility."

The statement above is delusional. Reality:

Ford takes a $2.7 billion hit as it drops efforts to develop full self driving.

"Of all legacy autos, Ford's product portfolio and balance sheet give it the most realistic prospects of maintaining solvency as it reaches EV goals."

The statement above is one of hope. Reality:

EPS YOY -72.96%
2017 = 6,4 M vehicles sold.
2022 = 4M vehicles sold.

"Ford's deep connection with its customer base and shrewdness in product and brand is complemented by a deep sales infrastructure."

The statement above is no longer the case. Reality today:

Ford ranks among worst in JD Power customer service survey of 2020-22.

Ford is Most Unreliable Manufacturer in the U.S., According to Google Data.

PS. Where is the Mach E? Tesla Model Y and Ford Mach E debuted in 2020. 3 years later Tesla Model Y brings in more revenue than any other car on earth. Mach E... Crickets. And the F150 Lightning? Quality and reliability is like a unicorn at Ford.
RickJensen profile picture
@Actionable Conclusion
"Ford takes a $2.7 billion hit as it drops efforts to develop full self driving."

Now ANY manager knows when to say when. Or they can keep burning 2B in cash like gm is doing, and maybe never see a cent in profit.

You give yourself too much credit for defining other people. We also understand that you are a Tesla guy and are really scared seeing what F is going to do to Tesla.
Actionable Conclusion profile picture

You are correct sir, wise of Farley not to fall prey to sunk cost fallacy.

As for credit? We're here to make money and avoid big investing mistakes... credit has nothing to do with it.

Yes Rick, I'm a Tesla guy. But I wasn't always a Tesla guy.

Some five years ago I figured Tesla was destined to go belly up. Then I explored the engineering and innovation genius that Tesla had in their DNA. And the pace of innovation. So in March 2020 I changed my mind on Tesla. I bought shares.

At the same time it became clear that legacy auto was losing ground and falling further behind with every passing day.

Since 2020 my narrative has been the same.

Avoid legacy auto, buy shares of BYD and Tesla anytime they fall near 52 wk lows.

But hey, maybe I got it wrong. Maybe China and Tesla aren't the future of auto, Maybe Ford is.

Place your bets.
RickJensen profile picture
@Actionable Conclusion
I'm really happy with my F @ 4.30 shares.
Best of luck.
Do what you do best. Ford was born on building affordable cars for the masses. EV is not affordable or practical, follow the science. Ford crashes whenever they hire a Foreign CEO.
RickJensen profile picture
F will very likely have a 20-25K EV PU in the next year. Telsa won't know what hit them.
@GDAmerican ahhh, Farley’s grandfather was one of the first 350 employees hired at Ford, at the old Highland park facility, this is where the moving assembly line was born. I understand the Toyota pedigree you speak of but he’s as domestic as they get. These days, especially with the political equation thrown in, no OEM can afford to NOT be in the EV race. Too risky.
Risk Advisor profile picture

Mr. Farley has stated that Blue Oval City will have the capacity to produce 500,000 vehicles per year. Is ford facing an over capacity problem, or do you believe they can actually sell that many in the first year of production?
Great tortoise and hare analogy Christopher. I've had two auto stocks in my portfolio, Ford and Tesla. Now I understand why so much more clearly. Very well written.
Add to the naysayers for Ford and Jim Farley commenting above, remember Ford and Tesla are the only two manufacturers who haven't filed for bankruptcy.
@Xspencec1 the bankruptcy talk is just noise. Ford got lucky. Give up the bankruptcy talk already.
RickJensen profile picture
F planned and executed. It wasn't luck. They leveraged the entire company. And they went from 25B in the hole to 45B. That's 65B they created.
That's not luck.
@bobfy68 A company's ability to foresee and withstand economic downturn and continue to thrive is invaluable skill and knowledge. Ford has survived for 120 years. That's not luck, my friend.
Poldarkfan profile picture
"Of all legacy autos, Ford's product portfolio and balance sheet give it the most realistic prospects of maintaining solvency as it reaches EV goals." This says it all.
Christopher Robb profile picture
@Poldarkfan owns the tortoise and the hare friend. I'd still bet on legacy auto over new entrants like Fisker or Nio, right? So, if you're thematically investing you've got to own the guys who are selling tens of thousands of cars in addition to Tesla, don't you?
Actionable Conclusion profile picture
Ford moving like a tortoise to fix their poor quality issues.

Mach E sales are also moving like a Tortoise.

Ford is not always slow afoot. When it comes to abandoning Europe and China... Ford has moved swiftly.
ronald61239 profile picture
@Actionable Conclusion ---Mr. Farley flat out stated. Ford Pro. will double its earnings this year. That is the way Ford is going at a rapid pace.
ronald61239 profile picture
When reading what Mr. Farley had to say, I think he plans for Ford to sell autos as a specialty type auto Co. Not go head to head with Tesla with crose overs or SUV's. Instead sell EV Truck, Vans, Broncos & I believe low cost autos.
Trucks & Vans EV's sales could out sell Tesla's products in the U.S.
There is no doubt Ford is now going in a new direction. To me it makes much sense. The question is, can they execute it ???

Yes it is all posable & Mr. Farley has stuck his neck out. I hope he succeeds it will be to my benefit.
Risk Advisor profile picture

Ron--Can they execute?

Here is how Jim Farley described himself at the Morgan Stanley Sustainable Finance Summit Conference where he spoke last week:

Jim Farley’s dream job? Be a product planner for a car company. To be like the person who invented the product concept. Still doing that work. It drives my team nuts, actually. I think we need this. No, my son likes that or my daughter likes that. But – no, yes, I just love – I actually get as excited on a minivan, as I do on a Ford GT or a Raptor.

I just love seeing – I was a product planner, came up with the idea of a unibody lightweight crossover for women and combined it with a great dealership experience called the Rx 300 or Lexus in 1992. So, I always love finding a [hole] in the market that others can't see because in our business, it's a big advantage. That's what I love. Product planning, yes.

Seems as if he failed to mention his skills at execution
ronald61239 profile picture
@Risk Advisor ---"Can they execute ?"
In thinking about your comment. Myself & others have asked can Mr. Farley execute ??
As CEO his job is to give DIRECTION by seeing the future & leading the Co. I think it fair to say that has been done. I know I have been very critical of him , by calling him a salesmen.
Now it's his people that need to perform. He has brought in new personnel to take charge & run operation.
Now investors will wait to see if Ford is going in the correct DIRECTION. By watching the bottom line.
Compared to Tesla, these are the things Ford has navigate in the EV market:
1.) Dealerships...how do they eliminate the margin loss by having to sell through them compared to Tesla.
2.) Vertical manufacturing...how do they own the womb to tomb and remove all the margins on a 5 or 6 tier manufacturing system (10% per layer) and drive the short cycle innovation that is needed to compete.
3.) How would they ever catch up on the artificial intelligence that is in every Tesla to allow your car to drive itself along with all the other software differential that exists?
4.) Unions drive cost in, even if the wages are the same, costs are higher due to work rules they impose. They will always be incombered.
5.) How do they streamline the bureaucracy in a layered slow moving organization?
6.) How do they catch up on battery research and manufacturing?
7.) How do they catch up on manufacturing processes, such as the GIGA press molding with reduces so many parts and cost?
8.) How do they manage the cost structure on the gas cars and trucks as the volume continues to go down? Diminished sales will increase the overhead costs per vehicle.

I can go on and on. Ford market share and profitability will erode.
Christopher Robb profile picture
@KeithlScahfer, these are all great reasons for owning Tesla. I said you should own both stocks, but given the fundamental unpredictability in the auto industry, I think it also makes sense to own Ford for the reasons I outlined. It also makes sense for a lot of risk-averse investors who want to insulate themselves from Tesla's price volatility, but still own Tesla, to own both.
For 2022, top 10 world-wide sellers were:
- Tesla with 2 models for a total of ~1.25M EVs.
- BYD (China) with 6 models for a total of ~1.62M.
- VW (Germany) and Wuling Hong (China) each with 1 model.
Ford didn't make the top 10.
Ramon_13 profile picture
@LEE64 Tesla and BYD rule the EV world.
"Farley is a visionary". Stopped reading after this. What are you smoking?
Christopher Robb profile picture
@bobfy68, your attitude is exactly my alpha. That's what makes a market, friend. Being a visionary at a 120 year old company is not at all the same thing as being a visionary at a start-up. God bless you and the family. Not smoking anything, good sir.
RickJensen profile picture
In a year from know, you will be gone and we will be here. That's my vision.
@bobfy68 I definitely got my laugh for the day……I think an article like this should deal with Farley’s inability to execute. Two years into his tenure by his own admission costs are out of control Vs. their peers, quality is in the tank and the culture is screwed up again. Farley hasn’t made any discernible progress to date on any of the issues. Betting on poor management is always a bad idea….
Thanks for the Interesting article. Long Ford!
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