OT: Ford hits 100 billion market cap for first time
So there' s a ton of articles out today as Ford crossed the 100 billion threshold in market cap for the first time ever. I knew they were doing well but this really snuck up on me. Their stock is up 269% since Jim Farley took over in October 2020 and aggressively pushed the company towards electrification.
Do you guys this is all just Ford taking the lead for the Big 3 on electric cars or the high profit margins? With the Toyota, Honda, and Stallantis largely sticking their heads in the sand on electrification it Seems Ford has a huge opportunity here. Besides Ford, only really VW and Hundai/Kia are going all in (in my opinion) on electric cars and I think the market sees this as a big advantage for Ford.
What do you guys think? I'd love to hear from all the gear heads people who work in the industry.
Full Disclosure: I don't own Ford stock but I do own a Chevy Bolt.
January 13th, 2022 at 3:11 PM ^
That is approximately 10% of Bitcoin’s market cap - what a strange world we live in
January 13th, 2022 at 3:41 PM ^
Ford's market cap is still about 5x higher than the total value of all NFTs! There's still some "logic" out there!
(that "logic" may get blown out of the water quickly though. NFT's are even more bizarre, at least to me, than Crypto).
January 13th, 2022 at 3:11 PM ^
There are way smarter people on this board than me, but Tesla's market cap just crossed the $1T threshhold, so I'm not sure what any of this says about anything.
January 13th, 2022 at 3:13 PM ^
I'm convinced that economic constructs like stock price and market cap are like the points on "Who's Line is it Anyway?"
January 13th, 2022 at 3:25 PM ^
Yes. There are some stocks whose value is based on things like P/E, EBIT, dividends etc. And there are some stocks whose value is based on things like feelings and potential future revenue streams assuming the company gains a 75%+ future market share. You can probably guess which company falls into which category.
January 13th, 2022 at 3:46 PM ^
Tesla is priced as a tech company with car manufacturing and energy infrastructure services. Their market cap on the car manufacturing will likely decrease as more big time players get into the EV game but I think their valuation sustains because of the software and supercharging infrastructure they are developing and building. Watch for super charging stations to become the new gas station. The charging abilities of competitors like ChargePoint are not comparable. Minutes compared to hours in terms of charging times.
January 13th, 2022 at 4:12 PM ^
Tesla energy is going to end up being the big winner. Besides the fact that they are installing enormous GW utility battery projects around the world it's the auto-bid utility side they have gotten into recently where they're going to make a killing. When they are controlling Tesla Powerpacks, Tesla car batteries, and Tesla utility batteries and can pump out power into the grid and undercut peaker plants that's going to be a goldmine for them.
January 13th, 2022 at 4:24 PM ^
I want a powerwall to avoid dealing with power outages, but you have to buy the solar roof to get one
January 13th, 2022 at 7:06 PM ^
There are lots of non-Elon endorsed whole home battery systems that can be installed for backup or peak-hours shifting purposes without requiring solar
January 13th, 2022 at 3:53 PM ^
Ford and Tesla are the only two North American car companies that have never filed for bankruptcy. #TheMoreYouKnow
January 13th, 2022 at 5:08 PM ^
Ford did not have to file for bankruptcy because its inept management brought the company to its knees before the Great Recession hit and there was available credit to bail Ford out. When GM/Chrysler went down for the count, private credit had dried up and structured bankruptcies were the only option Don't even get me going on the supplier side of the problems that Ford did not escape.
Ford's 100 B valuation is about 1/30 that of Apple. I believe Tesla has considerably more upside on several fronts than Ford. Many of the car companies are late to the EV party and it is going to take years to catch up to Tesla, particularly with respect to software and charging infrastructure. EV's have very different service models than do ICE cars and this is going to impact dealerships in a big way, although it will take some time for EV market share to eclipse ICE cars,
January 13th, 2022 at 6:13 PM ^
1/30? Ford is $100B, Tesla $1T.
Ford is, however, roughly 1/30th Apple.
January 13th, 2022 at 3:53 PM ^
IMO, Tesla valuation is where it is for a few reasons. Originally, nobody thought a new company could break into the automotive market and be a major player, due to the extremely high (read:costly) barriers to entry. They had a lot of manufacturing issues early on, but after overcoming those and combined with some of the political winds, the stock really exploded.
I think part of that valuation is that many investors, from retail to institutional, truly believe Tesla is 10-15 years ahead of everyone else in electric vehicles because they are calculating from when Tesla started making viable cars. In reality, other automakers already have many things Tesla didn't at the start (manufacturing plants, supply chains, armies of engineers with decades of experience making cars) so they are probably more like 2-5 years behind depending on which company you are talking about.
TL:DR- Tesla is massively overvalued, but no, I'm not going to short it because the market can stay irrational far longer than someone trying to outsmart it can stay solvent.
January 13th, 2022 at 4:21 PM ^
They're tremendously vertically integrated too. Their battery pilot plant in Fremont is the largest American owned battery factory in the world as far as capacity output. Their battery plant in Texas opening this year is going to be 10-20X the size. They were able to largely avoid chip shortages this year because they write the software and the firmware for the electronics and were able to pivot in a matter of weeks to using different chips. They're also getting into mining and refining of minerals used in battery production. They're a more agile company and they've done a great job building up their brand, especially in China.
January 13th, 2022 at 4:29 PM ^
These are all good things, and a great direction. I think Tesla is an incredible company and could be an Apple-like company. Right now, all of that does not add up to Tesla being worth more than the entire rest of the industry like they were at one point in late 2020, again - my opinion. They still build and sell a small fraction of the cars in the market, and agility tends to drop as companies get bigger.
January 13th, 2022 at 4:57 PM ^
Once you get past that they aren't a care company but rather a tech company you'll see why their valuation is so high. They're opening up their US Supercharger network to all cars with CCS chargers. They have a ton of tech in battery and power management they can license. On the cars side they should sell around 1.5 million cars in 2022 after hitting 950k last year. That puts them squarely in the top 15.
January 13th, 2022 at 5:38 PM ^
I think this is where the big divide amongst investors is occurring. Do you see Tesla as a car manufacturing company or a tech company that makes cars. Their current valuation looks absurd when you compare them to companies like Ford but seems reasonable if you consider that they are also a software company and an energy company. Imagine if Ford had started making cars while at the same time building gas stations and gas pipe lines. Fast forwarded to today and Ford would not only owned a substantial market share for vehicles but also owned a substantial market share of gas energy. They'd likely be one of the largest companies in the world (essentially combining their current market cap with BPs). And that doesn't even factor the autonomous driving software development, which they have a head start on already and will likely be the future of driving. I understand the sentiment in thinking Tesla is bloated right not but it's a big mistake to be comparing them to the likes of Ford and dismissing their market cap as simply hype.
January 13th, 2022 at 3:13 PM ^
Let me google market cap and get back to you.
January 13th, 2022 at 3:15 PM ^
# of shares * share price = market cap(italization)
January 13th, 2022 at 3:17 PM ^
Ah. That's a lot of money. I think they're doing a good job.
January 13th, 2022 at 3:37 PM ^
Nicely done Cam!
January 13th, 2022 at 3:14 PM ^
Sweet. They can afford to sell the Lions.
January 13th, 2022 at 3:38 PM ^
Wish I could upvote this a million times.
January 13th, 2022 at 3:19 PM ^
Kind of sickening stock decision I made(I know nobody asked).....But I flagged to buy Ford at $4.00 during the beginning of Covid. Well, it hit $4.01 and then headed back up. Bought at $12, but still a tough scene!
January 13th, 2022 at 3:22 PM ^
I got greedy at the beginning of Covid and lost out on a lot of similar opportunities. Sounds like you're still solidly in the black though.
January 13th, 2022 at 3:37 PM ^
I did something very similar with a limit order on a different company at the beginning of covid and had similar remorse as it took off over 400% after failing to execute by mere pennies. For every one of those there are usually multiple dogs that you avoided, but it's human nature to think of the gains you missed out on. That's why I usually just buy index funds (mostly VTI)!
January 13th, 2022 at 3:21 PM ^
I think we are about 5 years from market saturation on electric vehicles due to most of your average citizens having little or no interest in changing over to a car that does less and costs more.
Once that happens there is going to be a race to the bottom on price and the whole business case will collapse.
That is, unless the Feds mandate electrics, which could happen.
January 13th, 2022 at 3:30 PM ^
If you have a house or condo with a garage an electric car is much more convenient for almost all use cases. Electric cars are also 2-3 times more reliable and an ICE car. Certain segments like high hp cars and trucks EVs are either at parity or cheap since it's so cheap to upgrade to power electric drive train versus the same on an ICE. Another cool thing is that if the power goes out with most new EVs you can power your house for a week with the battery capacity in your car.
There's going to be use cases like hauling, towing, long trips in the wilderness where it just doesn't make sense to use an EV a lot of the old use cases where it didn't are quickly changing with higher capacity batteries and 350kw charging becoming the new standard.
January 13th, 2022 at 3:36 PM ^
Agree with it or not but California already mandated EVs starting by 2035. Most average folks aren't going to by an EV simply because they can't afford it. I'd love to by an electric F-150 or Tacoma but there's no way I can afford a 75-100k vehicle either. If saturation happens and the price goes way down then I think you'll see a lot of folks buy in.
January 13th, 2022 at 7:07 PM ^
Usually buy 1-2 year old cars and then drive them for 8 years so every time I buy a car I get sticker shock. An ICE SUV is $35+ new. My cousin-in-law just bought a model X I looked it up and it was over $100k. My first house was only $160k!!!
who can afford new cars these days?!
January 13th, 2022 at 3:43 PM ^
Can I ask why you think electric cars will do less than an ICE?
The Tesla vehicles can accelerate faster than 2 seater super cars.
The Rivian is showing to be one of the most capable off road vehicles out there as a stock vehicle, and still runs to 60 in 3 seconds.
The Ford Lightning has a Frunk that allows for the first time to have locked luggage, and as mentioned in previous comment, can act as a house generator for days.
For most americans, 90%+ of your driving will be covered by charging done at your house.
Electric cars also have lower maintenance issues than an ICE
The main drawbacks of the electric vehicles are charge times, charge networks, cost, and range.
I agree that these are current detriments to electric car mass acceptance, but there have been major gains in these areas just in the most recent news.
Just wondering if what your thoughts are on why we will meet our highest mass acceptance in 5 years (edited, reread your statement) and why ICEs are and will be superior vehicles. No snark here, just want to know what your thoughts and concerns are.
January 13th, 2022 at 3:53 PM ^
There will definitely be a market saturation. It's happening as we speak. I don't agree that EV will have little or no interest. With the correct infrastructure, it will certainly be a cheaper alternative than buying gas for your car. And that infrastructure is being implemented on an enormous scale as we speak. I'm and Architect in Boston and design plenty of parking garages. New city regulations are being implemented to mandate 25% of all new public parking structures to have EV spaces with 100% being EV ready.
Just like everyone wasn't sure about turning in their beloved blackberries for Iphones, the tide is certainly shifting. Time to get in or fall behind.
January 13th, 2022 at 4:05 PM ^
Our power grid can barely handle a bunch of people running AC in the summer at once. Or a stiff wind. Some of the power grid hasn’t been touched in over 50 years. And yet we’re expecting things to be peachy when everyone is plugging in multiple cars at 5 o’clock at night?
I’ve talked to multiple engineers who work on batteries for EVs and they just laugh at how woefully unprepared our infrastructure is to handle this.
January 13th, 2022 at 4:16 PM ^
most EV charging is done overnight when the load on the grid is lowest. There is a reason power companies have off peak pricing.
January 13th, 2022 at 4:25 PM ^
Was going to say the same thing. In San Diego if you register your car with the utility you can 0.10 /kwh from midnight to 6AM which is 2-3X less than you normally would spend on electricity. It's also 5-8 times cheaper than gassing your car at current prices.
January 13th, 2022 at 4:40 PM ^
There is also the problem that home charging your car tends to be terribly inefficient. If we all drove up to the power plant to charge, it would be great. But so much energy gets dissipated as heat by the time the electricity gets into the battery of the Tesla parked in your average garage. My daughter's professor at Kettering did some work on this, which I don't have at my fingertips, but the concept is pretty intuitive.
January 13th, 2022 at 5:22 PM ^
If you believe it, short Tesla. You'll be rich!
But I think you'll be very poor if you do.
January 13th, 2022 at 3:21 PM ^
All I know is I refuse to buy a Ford out of protest of their management of the Lions. Also I work for a direct competitor lol.
January 13th, 2022 at 3:35 PM ^
Lucky for you, market cap has very little correlation to vehicle quality, so you can safely buy something else without worry!
January 13th, 2022 at 3:22 PM ^
As long as insanely wealthy people keep making an insane amount of money i know that all is right in the world
January 13th, 2022 at 5:36 PM ^
Poor people are not going to electrify the global vehicle fleet.
Create something of high value and I don't care how much you make.
We can't have just bureaucrats in charge of everything.
January 13th, 2022 at 3:35 PM ^
I think Toyota/Honda/Stellantis are playing wait and watch. Both Toyota and Honda have history of hybrid production. Stellantis just announced a bunch of EVs as well.
Ford has a huge opportunity, mainly due to F150. If Lightning turns out to be a good replacement of that, then they have a captive market to sell to. I think that future potential is pushing its stock higher.
Someone compared Ford stock to Tesla. Interesting comparison. Tesla basically built the EV market as we see it now. They had no other competition when they started. The $1T market cap has a combination of "First mover/only player" premium, carbon tax credits swaps, potential for solar roof/battery walls etc and "Tesla is cool" vibe.
I hope both these companies prosper.
Disclaimer: I drive a gasoline powered F150 (2013) and work in Oil and Gas :D I would buy a Tesla/EV, but the prices are not where I want them to be. Yet.
January 13th, 2022 at 4:49 PM ^
I know first hand Toyota has been extremely slow to the EV game. They still spend an insane amount of money and resources on fuel cell development. Whether that will ever pay off for them is a different topic, but in the short term they also have been much more focused on hybrids and plug-in hybrids.
VW and Ford clearly committed harder and earlier than some competitors, so I completely agree with your takes. Bought Ford stock a year ago and only wish I had bought more.
January 13th, 2022 at 5:02 PM ^
Global car sales ~ 80 million. Global EV sales ~ 6.4 million in 2021. In a decade that 6.4 number is mandated/expected to grow to 40 million (50%)?? Add in the heavy haulers. Battery supply chain could get squeezed much harder than the chip shortage. That's a concern. Time will tell.
January 13th, 2022 at 5:14 PM ^
Related??? pic.twitter.com/aKmfiFjRyu
— Mike Levine (@mrlevine) January 13, 2022
I'm not sure why the picture won't post but this tweet has a map of all the (expect it's missing 200 GWH from gigafactory Texas) battery plants expected to come online in the next 3 years in the US.
January 13th, 2022 at 5:15 PM ^
I mean, I get your point, but that's really an apples and oranges comparison. Not to mention that a large part of the current chip shortage is Covid related.
January 13th, 2022 at 5:55 PM ^
My bad. Unclear statement. I am concerned that the raw material shortage could lead to a battery supply chain disruption that would be worse than the chip shortage these automakers are facing/have faced in the past two years.
I am sure folks who work in planning and sourcing have been working to mitigate such problems. I am just spitballing.
January 13th, 2022 at 6:56 PM ^
You are not wrong. Current electric car chemistries use a lot of Cobalt and Nickel. Cobalt is mainly mined in Africa. There are supply chain and humanitarian reasons to change from this chemistry. There are also safety reasons, as the chemistry can create oxygen as a byproduct during abuse, which creates it's own fuel during a thermal event and the chemistry is susceptible to thermal propagation. That was the issue with the bolt.
To solve this, most EV manufacturers are moving to different chemistries. The main one right now is Lithium Iron Phosphate, where the materials to make them are much more readily available around the world, and the chemistry is much safer and cheaper. They aren't as power dense at the cell level, but can be packed in tighter together without the safety concerns. They also don't lose their capacity with cycling as much as the NMC technology currently used. China is almost moving all to LiFe. Tesla, Ford, and others plan to too.
They add weight and can have struggles at low temperature, so the technologies still have work to do. There are some clever ideas out there to try to fix those issues.
There have been huge leaps in the ICE technology in the past 15 years. If you compare horse power in vehicles 15-20 years ago, the increase has been incredible when you look at what HP was in the previous 20-30 years.
Electric vehicles look like they will have a similar leaps in technology over the next 5, 10, and 15 years. It's a very cool, strange time for the automotive industry.
January 13th, 2022 at 7:28 PM ^
The patent story around Lithium Iron Phosphate (LFP) is pretty wild and allowed China to develop the technology the last 20 years. Now that it can be developed and implemented in the US I see a lot of companies going in this direction. Works great in the freezing cold too!
January 13th, 2022 at 7:32 PM ^
Thanks for the explanation. Appreciate it. Yes, hopefully, there will be technological advancements that will bring down the battery prices drastically with safer operations. I am hoping to get an EV as my next car. Hopefully.