Wall Street is trying to get Ford and Tesla right
Ford’s outperformance of Tesla on Wall Street will have been a surprise to electric car fans who think that traditional automobile makers are on the way to extinction, to be replaced by modern electric vehicle makers like Tesla."A combination of a beat-down Ford bouncing back on trade deal optimism and concerns regarding Tesla's demand that recently pushed the stock lower have resulted in the current situation,” says Thibault.
Then there’s conventional economics, as was discussed in a previous piece here. Like the old “law of diminishing marginal productivity of labor,” which has caught up with Tesla feverish growth, causing delays in quarterly delivery of new vehicles. And the economics of scale and scope. Ford is an established company with $158.72B revenues—close to 8 times the revenues of Tesla, which is a new company—see table.Tesla by contrast is a small new company with roughly $22.59 billion in sales coming from a narrow portfolio of sedans and sport utility vehicles.
Scale and scope have given Ford a cost advantage over Tesla, as reflected in the profit margins of the two companies. As of July 5, Ford’s profit margin was 1.95% compared to -4.29% of Tesla.
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