Tesla vs Ford Stock: Which Is Best?

Tesla’s [NASDAQ: TSLA] stock took a hit from the coronavirus, but it’s still posting strong profits. This relatively new car manufacturer is worth nearly twice its competitors Ford and GM combined. Its competitors aren’t taking things lying down though – GM just introduced a new electric vehicle and Ford is growing its EV line by reintroducing the iconic Bronco.

By the end of the first quarter in 2020, a bear market was in full force, and the 10-year forecast of these companies shows two different tales. Tesla is a disruptive media darling, while Ford is one of America’s oldest car companies, founded in 1903.

It’s time to check out Ford vs Tesla stock to determine which is the better auto stock investment.

Ford vs Tesla Stock: Pros and Cons

Ford is a massive global company, employing approximately 190,000 people as of February 2020. By comparison, Tesla has 45,000 employees, according to the most recent estimates. Both underwent several rounds of layoffs in the 2010s in response to growing pains in the automobile sector.

The U.S. motor vehicle parts and manufacturing industry is valued at an estimated $752 billion, with approximately 3 million cars being produced domestically each year. Electric vehicles only account for approximately 2 percent of all cars sold as of March 2020. Still, there are nearly 1.2 million EVs on the road today, and it’s a growing market.

Changes in 2018 to the North American Free Trade Agreement (NAFTA) also increase reliance on domestic manufacturing. At least 75% of a car’s components must be manufactured in North America to avoid tariffs. On top of this by 2023, 40% of the car will need to be made by workers earning at least $16 per hour.

Global electric vehicles are expected to grow to a $567 billion by 2025, with a projected 18.7 million EVs on the road by 2030. Tesla won a massive following in the wake of the auto Troubled Asset Relief Program (TARP) bailouts from 2008-2011. Ford, on the other hand, took a $5.9 billion in taxpayer money to retool its manufacturing plants to create more fuel efficient cars.

This pushes some consumer sentiment toward Elon Musk’s buzzing company, so let’s look at how Tesla performed in the 2010s and 2020s so far.

Is Tesla Stock Better Than Ford?

Tesla has been on an upward swing from the beginning, despite never having a fully profitable year. In fact, it posted net losses for nearly every quarter until 2019. While the full year of 2019 was technically profitable, it did post losses for the first two quarters.

With giga factories built around the world, Tesla is a vertically integrated company that keeps at least 80% of its manufacturing in-house. It specializes in renewable energy, focused on more efficient solar power generation and battery storage. The company even bought SolarCity, through which it developed its solar roof tile design. When combined with a Powerwall and Model S, Model 3, Model X, or Model Y car, you have a strong foundation for a sustainable lifestyle with a lower carbon footprint.

Tesla also ended the 2010s with announcements of development on electric commercial trucks, including the heavily memed Tesla Cybertruck. Its prospects appear bright with half a million pre-orders. Analysts are split straight down the middle on the future of Tesla’s stock, however.

Musk is constantly making headlines, and they’re not always positive. Battles over leadership and the possibility of the Cybertruck failing to meet expectations can both hamper the stock’s price. It is on a downward swing from highs closing out 2019, but is Ford doing any better?

Should You Invest in Ford vs Tesla?

Ford has had a rough time since the bailout. The stock lost over half its value between 2015 and 2020, despite paying dividends to its investors. Although Ford Motor Company is older than Tesla, President and CEO Jim Hackett as only been at the helm since 2017. His plan was to immediately restructure the company.

In 2020, it’s introducing a redesigned F-150 truck, reintroducing the famous Bronco SUV and even promises a zero-emissions Mustang Mach-E. The company has long been a leader in the truck industry, and its Explorer, Escape, Super Duty, and Ranger all have impressive sales figures. In addition, the Ford Transit Connect is a popular urban transport vehicle.

Ford also owns the Lincoln brand, but its other brands have gone either defunct or independent. At one point, it owned Mazda, Volvo, Jaguar, and Land Rover, among others.

Much of the company’s redesign is toward an EV future that puts it in direct competition with Tesla. In addition, it’s testing self-driving autonomous cars to determine potential applications. While it allowed Tesla to gain market share in the 2010s, Ford is making it clear that it has no plans to lose the war.

Even its gas-powered cars are much more fuel efficient. Its Ford Sync 3 platform brings a ton of navigation, entertainment, and diagnostic options to its vehicles.

Ford is also making strides toward a more connected future, with plans to launch wireless connected car technology in its new vehicle models by 2022. This direct communication technology could change how the cars interact with toll roads, radars, and more.

Ford vs Tesla Stock: The Bottom Line

Both Ford and Tesla stocks took some hits in the beginning of 2020 due to coronavirus concerns. However, each company has a strategy to remain profitable well into the future. Both hinge mostly on electric vehicles and sustainable energy.

Modern automobile makers are more than just manufacturers. These vehicles are ground zero for a variety of advanced technologies, from the Internet of Things and 5G to artificial intelligence and autonomous cars.

While Ford focuses mostly on vehicles, Tesla also wants a connection with our homes. Its residential solar applications create a way to live a sustainable lifestyle. Its brash co-founder and CEO may make missteps that are covered by Ford however. Both are acceptable investments, but it’ll be interesting to see how they fare by 2030.

---

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.