It’s a win for customers when more electric vehicles (EV) manufacturers enter the market and investing is a good idea. They have a variety of models to compare, unlike when one automaker was dominating the sector. It’s also bringing innovation and incentives.
On top of that, it means more offers in the stock market from EV companies. Two car makers with a stake in this sector are Tesla and Ford. They let you be more than a car buyer, offering stocks in the company.
You might wonder which car maker has better stock prices and whether it’s a profitable investment. Let us discover together as we compare and contrast these two automakers.
What You Should by Now about Tesla & Ford
The automotive industry is growing fast, launching new ideas and technology every so often. One such change is the increase in EVs. It’s bound to grow even more as other technology, like solar power, complements it. As some car enthusiasts keep up with EV prices and models to know which one is worth buying, other people invest in stock market offers from these companies.
So many factors affect stocks, from company reports to product recalls. For example, possible reasons for Tesla’s falling shares in late 2022 were the CEO’s Twitter takeover and the issues faced at the Chinese factory. On the other hand, Ford stocks fell, and the company associated the price change with inflation-related costs.
If you’re planning to invest in Tesla or Ford stocks, here’s what you should know about these two companies to make a better investment decision.
Tesla Facts
Despite its fame, Tesla is one of the newer brands, founded in 2003. Its IPO launched about seven years later, in 2010. This car maker’s production history shows steady growth from under 100,000 cars in 2016 to almost 400,000 toward the end of 2022. It means this brand hit the over 200,000 electric vehicles target a while back, so it doesn’t qualify for the government subsidy anymore.
To cater to the thousands of EV owners, it has over 4,000 supercharging stations. These stations have almost 40,000 supercharger connectors.
There have been reports of Tesla cars catching fire. However, it has a high safety rating compared to the national average. As such, Tesla reports one fire in 210 miles, while the national average stands at 19 million miles.
Pros of Investing in Tesla Stocks
Although Ford is attempting to catch up with Tesla, it has a long way to go. Tesla’s electric vehicles are more popular; hence, this car maker enjoys a high net worth valuation. The brand’s CEO is also a face many recognize, and he’s not shy about marketing this brand everywhere.
Its focus on electric vehicles ensures it allocates a larger budget to research and development. Hence, it’s not like Ford that has to maintain its existing range of regular cars while also growing in the EV market. As such, Tesla enjoys control and also benefits from other businesses complementing its EV range. For example, it invests in battery manufacturing, solar power, and autonomous driving.
Cons
It might be a bit difficult to evaluate Tesla’s ambitions financially. For example, it hopes more people will embrace solar energy and self-driving technology. Nevertheless, these aren’t segments that you can value until there’s more data to prove the market’s direction.
The company’s high valuation also means there is a high growth expectation. Hence, it’s a risk for investors if it doesn’t meet its growth target or its high value decreases.
Ford Facts
Ford joined the EV sector over a century ago, but those older car models weren’t the electric cars we know today. Henry Ford was in this field in the 1910s, announcing to the world that he was working on an EV in 1914.
Ford’s notable investment in EVs was in 2015 when it allocated over $4 to manufacture a variety of plug-in hybrids and other models. Two years later, it set up a new division to focus on EVs and self-driving vehicles.
Pros of Investing in Ford Stocks
Ford manufactures more cars; thus, it enjoys a high annual revenue. For example, it earned approximately $158 billion in 2022. On the other hand, Tesla recorded a little over $81 billion in 2022.
Another feature that makes Ford a better investment is its history in the automotive industry. As such, you’ll buy a stake in a company that has already weathered the storm and is exploring new markets.
For example, it upgraded existing cars, such as the Mustang and Transit, to draw EV enthusiasts. If it keeps up with that trend, it might upgrade more models. Hence, it’ll widen its market by targeting customers with different budgets. That’s different from what a luxury brand like Tesla can do, given the high cost of R&D.
Additionally, Ford isn’t in the EV industry only. It has other model ranges, which means it can survive market forces better than a company dealing in electric vehicles only.
Cons
Ford is as ambitious as Tesla. It hopes to pump about $50 billion into electric vehicle manufacturing in the next few years. Hence, Ford estimates about 600,000 cars will be on the market.
Consequently, two million EVs from Ford will be in circulation by 2026. Investors have to trust such reports while remembering the many times it made promises about its entry into EV manufacturing. It also abandons plans.
Final Thoughts
As an investor, there are two things you can’t ignore before you buy stocks. You want to know how profitable a company is now and its valuation. When you compare Ford and Tesla that way, you have one car maker having a higher valuation, which makes some investors shy away.
Additionally, it is the most profitable of all EV makers. That’s something every investor wants to hear. On the other hand, Ford already showed its resilience, given its history as a legacy automaker. Plus, it’s upgrading some of its cars to turn them into EVs. In summary, each company has a set of likable values every investor desires.
