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This is my take as well and I actually have the largest percentage of my stock portfolio invested in them (also have a decent % in GM). Ford makes huge profits
by dkrich 10y ago
This is my take as well and I actually have the largest percentage of my stock portfolio invested in them (also have a decent % in GM). Ford makes huge profits and sells hundreds of thousands of vehicles a year, including the F150, which is has been the best-selling vehicle in the US for some time (and quite profitable too). They're also a very innovative company despite reports to the contrary.
Tesla's stock price accounts for lots of assumptions about the auto market that still remain to be seen. One other thing that I think people discount is brand loyalty, which is stronger in the auto market than in most industries.
People who like a brand tend to buy most or all of their cars from that manufacturer, and that's a very difficult thing to overcome for a new market entrant. Every time Tesla releases a brand new vehicle it's an enormous risk. Market demand for cars is pretty predictable for well-known brands, which is why major car manufacturers have continued re-releasing new generations of the same models for decades. Each model has its own brand that is worth millions (in some cases, billions). A brand new model has to build that demand from scratch. A new version of an existing model already has a huge market that already know about and want that car.
- MegaButts 10y agoWhat's your take on GM vs Ford?
- dkrich 10y agoI view them both very similarly- both are very well-run with great leadership teams and produce great products at nice margins. I personally like Ford a bit more because I think the valuation at the current price is a little better and because they sell the F-150 which is arguably the most valuable car model in the world. But at the current valuations I like both.
- MegaButts 10y agoI am not an expert in the traditional automaker space, but I think about it more about where they're heading. While I certainly take into account the subprime auto loan issue, I'm more curious how each company is adapting to the future. GM is focused on competing directly with Uber with their acquisition of Cruise and rolling out the Bolt (they could use almost any car, but having a great EV already in production certainly helps). Ford is focused on competing with more traditional public transportation by acquiring Chariot and investing $1 billion in Argo.ai, and hope to have autonomous fleets ready to deploy in 2021. I actually feel like they're going to become more unique moving forward. I think Ford will likely have an easier time working with cities and using Chariot as a new form of public transportation. I think GM will have an easier time (hopefully) dominating the more traditional ride-share program. I feel like there's more upside for GM, but it's riskier. I'm also very confused by how Ford structured Argo.ai, but maybe it'll work the way they intended. I guess we'll find out in ~5 years.