The automobile market has been under pressure in recent times. This is due to macro worries such as the looming recession and the fed hiking among the investors. The continuous supply chain disruptions and the rising commodity prices have caused Tesla and Ford prices to dip.
Both Ford and Tesla are ambitious in the electric vehicle industry that is experiencing growth. Their stocks and strategies are distinct from each other. Read this article to the end to understand whether to buy Ford or Tesla.
Ford stock important metrics
In 2021, Ford Motor Company reported a profit of $17 billion, which was higher than that of Tesla. Rivian’s initial public offer towards the end of 2021 led to a one-time gain in Ford. The price decline of Rivian at the beginning of 2022 is likely to cause Ford to record a one-time loss later in the year.
Ford disposed of about $3.9 million in vehicles in 2021, which was about four times as many as its competitor Tesla. The low average selling price made Ford’s revenue shoot up to over two times above that of Tesla. The wider model line-up of Ford and its failure to pay attention to the premium segment is the key reason for Ford’s weaker margins.
Tesla stock metrics
Tesla is a leading player in the EV industry, with over 900,000 vehicles sold in 2021. This was a higher sale than that of Volkswagen and BYD. However, BYD experienced a faster growth rate than the other companies in the same period.
Tesla’s small model line-up and the focus on electric vehicles explain the ability of the company to generate high margins. Despite selling a few units in 2021, Tesla is still quite profitable. The net profit of the company in 2021 amounted to $6 billion, although the cash flows were generally weak.
Ford’s and Tesla’s profitability
When investing in the stock market, you need to be keen on profitability. In 2021, Ford generated significantly higher profits compared to Tesla. However, the one-time items disported the profitability comparison. Whether to buy Ford or Tesla depends on the profitability estimates for future profit estimates.
Tesla is estimated to generate a profit of $20 billion against Ford’s $16 billion. Tesla seems that it may be more profitable than Ford in 2022. Tesla’s dependence on the Chinese market and the issues in China may negate that. Ford generates most of its profits from the American market, so it can feel the impact of the supply chain issues.
Which stock is a better buy?
The EV industry is said to be the future of the automobile industry. Besides being the most consolidated, Tesla is the largest dealer of electric vehicles with a large market share.
Recently, Ford managed to separate the ICE and the EV businesses. ICE forms the bulk of the company’s business, and this is expected to continue until at least 2030. The company believes that at least half of its sales should be from EVs, and it is looking to be a key competitor to Tesla.
