Ford vs. Ferrari? Or Ford vs. Tesla?

For anyone that has seen the Oscar nominated movie, Ford vs. Ferrari, you know how this tale worked out. Situated in the 1960s, Ford’s product line was called into question and their inability to compete on the racetrack was turned into motivation for what eventually created the GT40. If you have not seen it, well… we won’t spoil it for you as it’s a worthwhile Quarantine movie.

A few weeks ago, Ford announced that its CEO, Jim Hackett, will unexpectedly retire as their restructuring plan has failed to ignite the stock price. This comes shortly after the company launched their remodeled Ford Bronco, made famous by the OJ Simpson car chase on LA highways in 1994. While Ford’s momentum off the Bronco remodel & better than expected Coronavirus sales got more attention than this management change, we believe this might have other implications as they play catch-up with some next-gen technologies. Electric and Hybrid cars are going to play a major role going forward and Ford’s product lineup is again coming into question. There’s no reason they can’t go full throttle in beefing up their electric and hybrid offerings.

One notable outcome of the COVID lockdown is the rise of day-trading and surge in retail investors on platforms such as Robinhood. A stock that fits perfectly into this “retail euphoria” mold AND happens to be a potential Ford-crusher is Tesla. Tesla’s stock has seen a meteoric rise this year, largely due to hype that electric cars really are the future. We’re not convinced that legacy car companies like GM, Ford, Chrysler will be gone in ten or fifteen years from now and that gas powered cars will become a distant memory, just like we aren’t convinced Tesla’s stock price represents any sort of tangible underlying value today.

However, this shift to electric and more efficient cars, could be a foreshadowing of trends to come in the global automotive industry. We can agree that this is something Ford and GM have been slow to adopt, and other, new electric car companies have also shown newsworthy headlines. Nio was on 60minutes in 2019 being touted as the “Chinese Tesla”. Nikola, an electric truck company has seen a similarly valueless stock surge. One clear side effect of a “bubble” is that competitors with no profits, begin to try and coast on a leader’s success, and these companies fit that description well.

Time will tell whether Ford and other legacy car companies can come from behind and line up for the photo finish in what is a race towards a new frontier of car technologies.

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