Ford Versus Tesla

Let us take a look at Ford Motors versus Tesla.

Elon Musk, CEO of Tesla, went on a verbal rant and dropped an f-bomb against the coronavirus shutdown during Tesla’s earnings call. Elon has continued to rail against the shutdown on twitter and had a weird tweet about Tesla stock price being too high. Ford Motors CEO Jim Hackett mused that “there is no future if we don’t have an economic system that is always on” during his earning call.

So what is the future of Ford and Tesla?

Ford Motor lost $2 billion during the first quarter and warned investors that losses will widen to about $5 billion during the second quarter. Ford is trading at $4.92. This means Ford is categorized as a penny stock (a stock that trades below $5 per share.) Ford seems on track to lose $7-10 billion in 2020.

Ford is delaying it electric Lincoln SUV and the electric F-150 is also delayed.

Ford has $34 billion in liquidity after raising $8 billion.

Ford will need to stop bleeding cash before they can spend a lot of money trying to launch electric vehicles.

Tesla had a small profit in the first quarter and was uncertain about the 2nd quarter. Tesla might only have 50,000 cars built in China for the 2nd quarter if the Fremont factory stayed closed. Each week Fremont is in full operation then they will have about 8000 cars per week. An early June opening would be about 32,000 cars. A late May opening would be about 40,000 cars for the second quarter. This would mean about the same financials as the first quarter.

Tesla automotive gross margin was 25% which is up from 22% last quarter.

Tesla has fixed expenses of about $1 billion per quarter. They made a slight profit on 88,000 cars in 2020Q1. They have car production capacity of 690,000 cars (Fremont and China) already when not closed. 350k cars per year to break even butthey make 340k more cars from current capacity. Auto revenue would go from $5 billion to $10 billion per quarter at the current full capacity. They would make $1.25 billion in profit per quarter. The extra revenue pretty much drops to the bottom line after paying the fixed costs. Full production of existing factories would make Tesla $5 billion per year. Price-earnings multiple of 40X or more because of 40-50% year over year growth.

China factory built in less than a year and getting expanded. I think it will have more than Fremont production by 2021. I see consumers in China going for Tesla instead of the other electric cars in China.

Model Y will have double the demand Model 3.

The German Factory is set to open in 2021. Tesla will soon announce a Texas gigafactory for Cybertruck and this would likely open in 2022.

In 2022-3, Tesla should have 2.5-3 million cars per year. (Fremont 500k-750k, China 1000k, Texas 500-750K, Germany 500k).

In 2025, Tesla should be making 4+ million cars.

Ark Invest makes the case that Tesla will grow margin based on Wright’s law. In Sept, 2019, Ark Invest predicted Tesla would grow auto gross margin from 17% to 30% in 18 months. Tesla is on track to achieving 30% automotive margin by the end of 2020.

According to Wright’s Law, the cost to produce a Model 3 should drop by roughly 23% as double the cars are made. Gross margins would grow again per that Wright law predictions. Tesla can use this increasing efficiency for more profit to cut prices to boost sales.

3 million cars per year would be 4 times the 690K cars.

Tesla could have $120 Billion in annual car sales ($40K per car) and $32 billion in profit in 2023. If they had a price earnings ratio of 40 this would be a $1.28 trillion market value.

Ford and GM are companies earning profits from parts and services, car loans and leases.

SOURCES- Ford, Tesla
Written By Brian Wang, (Brian owns shares of Tesla).

69 thoughts on “Ford Versus Tesla”

  1. I think the mobile phone was more a boom to bateries and eventually some car would ride on the same batteries in series, it happened to be tesla. With all subsidizing (not only his company grants, but also people buying ‘green’ cars), it came to mass production. No for example in the netherlands the tax benfit went off zero teslas were sold.
    So i think the momentum fades out, soon the mass of people want a cheap car, and nearby car service, low priced parts, bye tesla the hype is over.
    There are better greener designs (lightyear one), green small city cars VW Leaf, and many others. While oil went to an alltime low 🙂

  2. What passed quickly? COVID-19 has just started and the Spanish Flu was here for about two years. The breakdown of the victims is about 50-50. 50% over 75 and 50% below. About 7% of the US population is 75 and over. 7% is not a tiny fraction of the population and I think a majority of the US population will miss than 7% because its their parents and grandparents you are talking about.

  3. That’s not what I’m talking about the question of safety wasn’t even brought up but that of revenue. Tesla so far has a few cars and maybe soon a semi and a pick up. Ford has the massive truck market as well as others and is heavily entrenched. Thus I’m not going to judge the profits of a old well established auto maker and a new one based upon those circumstances.

  4. I think it’s important to remember that Americans are living under American lockdown, which like most US things rapidly oscillates between extremes with no attempt at a happy medium.
    So we should probably ignore what they are on about because it is nothing like the Australian regulations and attempting to relate their issues to ours is a waste of valuable drinking time.

  5. 2/3rds of our population is now urban; not as dense as NYC but dense enough that the ultimate result wouldn’t be much better, just taking a month instead of two weeks to hit peak. So I don’t think relaxing rural rules would have changed the ‘story’ much.

    I agree rural areas could have done without rigid social isolation – though once COVID19 was confirmed in a county it’d still make sense to lock-down local nursing homes, close socialization venues and recommend limiting private socializing.

    Nebraska relied on recommendations, I believe, and while their confirmed case rate per capita is higher than California’s, their death rate is lower. I’m guessing this is due to a difference in testing policy, despite their tests per capita being about the same. Otherwise we’d have to think Nebraskans are vastly hardier folk than Californians, or hiding their COVID19 deaths as China did.

  6. By “affected” I presume you mean “dead”, since we’re already far over that fraction who’ve been seriously ill, setting aside mild cases.

    US already has 70K dead. Not counting deaths still to come from existing cases. With a national post-COVID19 fraction somewhere around 5%-10% we’ve got around 10x that yet to go. So ultimately around 700K or 0.2% mortality rate in the US. Barring a treatment of course, which social isolation gives us time to work on.

  7. NYC has had a few problems largely unique in the context of the US.

    1) Extremely high reliance on mass transit, which as traffic declined they reduced the number of cars in service, maintaining a high density in each car. Almost a perfect recipe for spreading the virus.

    2) Nursing homes forced to accept people known to be infected, driving up the infection rate in the most vulnerable population. This really drove up NYC’s death rate.

    3) Late and lax social distancing. As late as mid March they were still encouraging people to visit Chinatown in a show of “non-discrimination”.

    4) Just generally insanely high population densities compared to even other cities in the US.

    There’s no question that social distancing reduces death rates from Covid-19, while ravaging the economy if over done. My point is that social distancing is largely redundant in much of the country, and should probably only ever have been selectively implemented in urban areas, with lesser measures such as encouraging frequent hand washing and mask use in most of the country, where “social distancing” is just a default state of life.

  8. So you are saying (and I agree) that lower density has a similar effect to social isolation for less densely populated states.

    And I believe you are arguing that lower density states would ultimately have significantly fewer deaths per capita than NYC. So that seems to also argue that social isolation must also significantly decrease the ultimate deaths from COVID19.

    So without social isolation, US case and death rates would ultimately be significantly higher. Which would bring US ultimate deaths closer to Spanish Flu levels. Possibly above, once adding the effect of no social isolation in high density areas like NYC.

  9. “the government can take away your rights with no legal process,”
    Yes and count yourself lucky, all they tell you to do is to stay at home.
    They could have sent you to Omaha beach, dropped you off north of the 38th parallel, make you spend an extended holiday in 1970s Vietnam or more recently some time in Iraq or Afghanistan.
    Of course nobody likes to be told what to do, me neither.
    The economic cost of the lockdowns will be staggering. We dont know what the alternative will cost either. Just because you are not in the critical age group doesn’t mean you are invulnerable. Lockdown rules are done by the states, next election show them that you were not happy the way it was handled.

  10. “Tesla is after all very important company for the future of humanity( electric cars, batteries, battery storage, self driving software,…)”
    Yes yes yes and Musk walks on water as well.
    Now just relax, make yourself comfortable in front of a TV re run from the 1950s when the good guys would still win the shootout and get to kiss the hot chick. The world will not end because Elon throws his toys out of the cot.

  11. Elon, dude, the pressure is getting to you. Don’t become a Howard Hughes. Go smoke a bowl.

  12. Just look at this likes/dislikes, it represents divided society, its all over the world the only reason every country is not at war is because the enemy is the same, when this changes.. oh boy

  13. Sorry to hear that, just keep moving forward mate, one must do what it must to protect what he loves

  14. I agree, but i think also because decisions were made to satisfy peoples belives, wich is made by sh1t media that only cares for profit, politicians just obey to the masses or get fricked in the as$ by media, the way of life u know

  15. What do you mean start with my family.. i never said that I didnt care, i just think that are waay better solutions than this quarantine, so many more people will die from not getting their health needs, etc, than from covid, and people should be aware of this!
    Also u are not good at judging people ahah

  16. Hundred year old companies go into liquidation fairly regularly. Age isn’t an indicator of safety.

  17. Could be.

    But if I’ve got a car, and I was planning on spending lots of money for a new one that was nicer to drive and didn’t cost me any fuel. But then my milage dropped by 75% and now I don’t care about fuel consumption (which is half the price anyway), then maybe I prioritise other things?

  18. Bored people stuck at home, 3D printers, CAD for submachine guns being available on the internet, … the death toll will be tremendous.

  19. Worst case scenario, 0.05% of worldwide population affected and we’re gonna risk societal collapse for this? It’s absurd.

  20. That makes sense. I’m a huge fan of Musk and wholeheartedly disagree with him on this one.

  21. Any government necessarily has this power to act in emergencies. The only question is whether it’s been appropriately used. In democracies this judgement is made by voters in future elections.

    The law is not a suicide pact. ANY authority worth the name will use any means up to lethal force to shut down disobedience in an emergency. Legal due process happens afterwards.

  22. Maybe who cares Ford has been around for what a hundred years and also is involved in damn near everything.

  23. ford Rockefeller and Edison were dead before you were probably born.
    ford and rock built single companies, Edison was an inventor
    ellison gates and google guy are all incredible visionary’s

  24. I read somewhere that Tesla is having problems fixing older components. The downside of constantly switching thing up and innovating. When Ford makes a small, expensive display they know that they are going to be supporting it for a decade and they commit to the the supply chain.

    So in conclusion: both approaches suck.

  25. If they only need one car and don’t drive it much (say on average 4 miles a day) then they will get a certified pre owned something.

  26. My hope is that once Musk gets on the gravy train of Starlink ISP service that he gets out of Tesla (after securing his billions in bonuses). Focus on the Moon and Mars, there is lots of work to do there and you don’t have to cozy up to the CCP.

  27. “Everyone stay at home and panic! .. Not you farmers. Or you meat packers. Or truckers. Or grocery store workers…”

    Social distancing is what Much of Middle America calls “Weekdays”. The scary pearl clutching is probably a result of Media headquarters being based in the NYC subway fueled hotspot.

    Was out in the neighborhood last night with the family, talking to the neighbors. People are done with lockdown, want to move on.

  28. Also the shutdown means that people will buy a new car every 25 years.

    I haven’t driven my car in almost two months.

  29. Plus, there was a lot of ‘wonder drug abuse’ during the Spanish Flu. Doctors were treating patients with what we now know were lethal levels of aspirin to bring down temperatures.

    NYC IS special. Very high population density, transportation management that seemed dedicated to providing an optimal environment for disease transmission by shortening trains and decreasing the number of trains insuring a densely packed badly ventilated environment … they couldn’t have done better if they’d tried.

    But sure, let’s treat the whole country like we’re as dense as NYC. Let’s ignore that the virus can’t stand more than five, ten minutes in direct sunlight. Let’s just cower EVERYWHERE and let the economy collapse.

    The philosophical question of “What’s the value of a single human life” is being played out. And the answer is ‘damn near the destruction of the world economy’.

  30. Fine, let’s start with your family if you care so little about them. Personally family is the most important thing in the world, and anyone or anything that puts them at risk is going to be treated like a threat. After your comment I can see your opinion isn’t worth …. well anything and just shows what kind of person you really are.

  31. 102 temps for me, with pretty bad chest congestion, not the flu something like a cross between the flu and a cold. I rarely if ever get sick, but after this I was very weak, barely able to pick up my son. I am a flatbed OTR trucker, not an office worker. My wife was sick for over a week, temps around 104, ended up in the hospital where they gave her multiple flu tests that were negative. Bad cough with acid reflex that would not allow her to keep food or liquids down, which is likely what brought on the premature birth. My son was also over 102 temps, with a lot of crusting around the eyes like pink eye. The doctors are the ones who could not figure it out and now believe it was COVID. They have her on the short list to get tested when they finally get some testing kits. If you think I’m that weak minded think again, if you met me you wouldn’t say that (more than once).

  32. “Even ‘half a Spanish Flu’ is probably worth flattening the curve long enough to figure out some treatment options. ”

    The big issue here is that NYC is very much a special case. Not just without social isolation, the city virtually embodies the opposite of social isolation. Is there any good reason to believe that most of the country would have ended up anything like NYC, even without such extreme measures?

    Lower population densities effectively “flatten the curve” without special measures, effectively people’s normal lives are a sort of social distancing outside dense urban centers.

  33. The scary thing is Singapore: previously one of the champions at getting the disease under control. They started opening up, the numbers spiked again, they clamped down even harder.

  34. Spanish flu killed 675000 in the US, with a population at the time of 103M, for a mortality rate of 6.5 per 1000. It’s estimated 1/3rd of the population had been infected, so maybe 20 per 1000 infected.

    We didn’t have a way to test for antibodies in 1918, so the estimate of 1/3rd of the population infected in 1918 might have missed a lot of mild cases. Before antibody testing, a fair estimate was ~6 mild coronavirus cases for every confirmed case, versus ~14 after antibody testing. So we might guess the Spanish Flu infected more like 2/3rds of the population. I.e. herd immunity levels, which makes more sense than ‘it just ended’. That would mean it had more like 10 deaths per 1000 infected.

    In NYC – the closest approximation we have to what COVID19 would be like without social isolation – antibody testing indicated 21% had had the virus by April 23, or about 1.7M. By that date there were 16000 deaths of COVID19 in NYC. So about 9.5 per 1000.

    Even ‘half a Spanish Flu’ is probably worth flattening the curve long enough to figure out some treatment options.

    Without that, we would still have had a massive disruption of the economy when hysteria set in as the disease reached it’s natural peak with roughly a quarter of the population sick at once.

    Oh, and imagine the wonderful racist behavior if in the midst of that hysteria, people heard that blacks were diagnosed with COVID19 2x-3x as commonly as whites. Somewhat like what China has been doing to blacks.

  35. Don’t assume the Tesla will be able to fill the big production lines that were planned before the epidemic, despite having a better product.

    We will see what financial headache that it will cause Tesla, as well as other car manufacturing companies.

  36. That is why the world is now in quarantine, people are just scared insted of using their brains, we have greater problems than eldery people dying, we should let natural seleccion do its job, millions of people are dying form wars, starvation and disease every year and we did NOT CARE before, why now?

  37. Everyone with a sniffle thinks they have coronavirus. It can’t be something else, since coronavirus is the only thing on their minds

  38. So, lock up your elderly relatives, and ideally not in NY homes where the government will send sick people to infect them.

    There was a window of time when it was reasonable to think Covid-19 was the next Spanish flu. It passed really quickly, and most of the shutdowns in the US began after it had closed. We know the age breakdown of victims, and only a tiny fraction of the population were ever at a big risk.

  39. Fair enough. I was thinking of the situation here in Australia where we are only a few weeks away from elimination. Unfortunately they are lifting lockdown prematurely.

  40. Very few people are immune at this point. Most States are likely less than 5%. At least as a result of infection with Covid-19. There might be many people immune just because they had some virus they fought off with some similarity to Covid-19, or or a live vaccine in the recent past:
    You can clear your cookies if it won’t load. NYT greed. Sure, ignore the water bill and get a NYT subscription.
    This Innate Immunity stuff may be why India and Parts of Africa are doing OK. Gates Foundation and others giving live vaccines for years to millions.

  41. Same here. I am almost positive I and my wife already had it as well as my 2 year old in mid February here in upstate New York. We were very sick from it, got tested for flu multiple times but it came back negative. I’m pretty sure that is why my twins were born prematurely at 28 weeks when my wife got sick; luckily they survived but it was very close, spent two months almost in the NICU and were just released. My grandmother is in her 90’s, my mom in her 70’s with past problems with pneumonia, my Marine combat veteran stepfather is older. Scary stuff to risk our entire elderly generation to people wanting to open too early. Well over 90% of deaths due to this virus were over 60 years old, so they’re the ones who will bear the brunt.

  42. Hey, now, lots of us have seen Charlie and the Chocolate Factory. I’ve had a perfectly rational fear of orange men since I was five years old. … That, and very large blue girls (there’s got to be another political joke in that one, too, but I’m currently too exhausted to dig for it lol).

  43. Sorry, Rick C. is right. Trump has put out a lot of very bad information. This isn’t propaganda, it was all directly from Trumps mouth and Twitter fingers. If he wins reelection at this point it is simply due to the well known Democratic Party ability to snatch defeat from the jaws of victory levels of incompetence. We desperately need new political parties to compete with our current two party monopoly.

  44. Something Trump would put out of his rear end. 2 months 60,000+. I doubt boredom will kill as many.

  45. Elon has $billions of reasons to want the economy to reopen. I just have a few for my reason that the re-opening to be carefully managed. They are my elderly relatives. Sad enough that they might died, worse it that we won’t be able to bury them properly.

  46. very capable engineer and incredible visionary.
    can you name a single person who has built so many companies and made so much money in as short a total time as musk?
    this isn’t by accident or luck.
    you MUsT have vision and balls the size of Pluto to pull it off.
    he is building, inventing, employing, re-investing and inspiring new generation should to take chances chances and risks.

    warren buffet doesn’t build anything other than wealth.

  47. It is reasonable Musk is upset. He worked his ass significant part of his life life for the company and now lockdown is damaging it. They should start the production with appropriate measures.
    Tesla is after all very important company for the future of humanity( electric cars, batteries, battery storage, self driving software,…) Without Tesla, development would take longer and we would get key techologies – which make some other interesting things possible much later.

  48. The lockdown will kill orders of magnitude more people than the virus. But the papers won’t show them because it won’t happen all at once like an “apocalypse.”

  49. That is NOT why you went in to lockdown. The goal was to “flatten the curve” and to not overwhelm hospitals. The curve is flattened so the goal of lockdown has been accomplished, now it is time to start intelligently opening up.

  50. At this experienced stage, most Americans now know, for the greater good of all, do exactly the opposite of what trump proposes.

  51. makes sense to me… tell everybody to dump the stock…. sell all properties worth half billion… use money to buy Tesla stock at discounted price… Use money to build more mars rockets..

  52. You go back to normal when the probability of viral transmission and death with no lockdown, is less than when you started the lockdown – or why lockdown at all? Looking at the new case numbers per day, the US has a along way to go…..

  53. The automaker’s(Ford) total revenue, which includes auto sales and financing, slid 14.9% to $34.3 billion in the first quarter.

    Was Tesla’s total revenue less than Ford’s decline in Q1 revenue?

  54. Between the two, whichever company makes the better EV, that’s the one I’d buy. Of course, there’s also long term support to think about. Will Tesla fix Ford EVs when they break, or vice versa? Probably not.

  55. Depends on where you are as to how dangerous that could be. Do I believe the CCP numbers? Nope. Do I believe numbers from New York? Yep. I don’t want to see that anywhere else. This does suck, though, I’ll say that.

  56. Whatever number of cars they can build is probably not so important at the moment. Just about everybody who buys a new car has a car already. If I were in the market for a new car I would rather wait and see. Fleet owners and hire companies must also be re assessing their needs and investments.

  57. Production capacity does not translate to actual production, especially not now…
    All car companies are going to suffer in this new age of working, studying from home and home deliveries and recession. The model of two cars per household gets increasingly challenged. 3rd grade multiplication cannot cover that.
    The Musk is nuts, a very capable engineer but a terrible visionary.

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