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Tesla vs. Ford: Analyst weighs in on the better buy

Posted on
August 12, 2022
by
Peter McGuthrie

As the emerging electric vehicle EV industry continues to grow, legacy automaker Ford is one of many companies investing tons of money into zero-emission cars and trucks to catch up with Tesla. For investors playing the long game, it can be tough to know whether Tesla or Ford is the better buy — especially in a set of markets that are still relatively new.

Above: Tesla and Ford logos. Photos: Austin Ramsey and Yunus Yildiz / Unsplash

Earlier this month, The Motley Fool’s Luke Meindl looked at whether Ford or Tesla was the better buy for investors ahead of substantial EV market growth. While Tesla remains the dominant force in the early EV industry, Ford’s quick release of the F-150 Lightning pickup and the Mustang Mach-E are just the beginning of the legacy automaker’s ambitions.

Market Research Future data shows that the EV market is estimated to be worth $957 billion by 2030. This forecasts a total compound annual growth rate (CAGR) of 24.5 percent starting in 2022, likely to be a good sign for all EV manufacturers.

Tesla reported a 41.6 revenue increase year over year to $16.9 billion in Q2, despite still being riddled with supply chain issues and a lengthy production shutdown at its Giga Shanghai factory. During this time, production and deliveries grew 25.3 percent and 26.5 percent year over year, respectively.

In the last year, Tesla has delivered around 1.1 million vehicles to its buyers. Tesla’s Elon Musk also predicted the automaker will become the most valuable company in the world at the automaker’s yearly stockholder’s meeting.

Alternatively, Ford’s EV production ramp-up is slow going, but it’s already got its hand on the pulse of the EV pickup market with the F-150 Lightning. Ford only sold 15,527 EVs in Q2, and its ambitions include sizeable investments into electrifying its lineup.

Ford saw revenue grow 50.2 percent year over year in Q2 to a total of $40.2 billion. The automaker is looking to produce 600,000 EVs by 2023 and as many as two million by 2026. Ford also plans to invest over $50 billion into its EV lineup through 2026, which, while ambitious, could convince investors to consider the automaker’s stock.

As to which stock is the better buy, Meindl reports that Tesla is his favorite of the two. While it’s impossible to say which company’s shares will perform better in the coming years, Tesla’s continued focus beyond the auto market — including the Optimus robot, clean energy, self-driving and more — may be part of what makes it so popular amongst investors.

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Source: The Motley Fool

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