Ford Motor, founded 100 years before Tesla, is paying the price for a sudden role reversal: It’s now the one struggling to produce a new model on time, at scale and without losing money.
Ford shares fell as much as 10%, their biggest daily drop since July 2016, after the automaker projected lower-than-expected profit for this year and reported that 2019 ended with a quarterly net loss.
Costs linked to launching revamped F-150 pickups will hurt upcoming results and extend an earnings slump partly blamed on the botched rollout of its signature SUV, the Explorer.
The disappointing forecast and faulty introduction of a crucial vehicle are reminiscent of the struggles investors watched Elon Musk go through for years.
Tesla almost went out of business, the billionaire chief executive officer has said, because of the “production hell” the electric-car company went through ramping up output of its Model 3 car.
Now, a week after Mr Musk accelerated the introduction of his new Model Y crossover for the second time in as many quarters, Tesla had a market capitalisation just shy of $160bn (€145bn).
Ford was valued at just a quarter of that — $36.4bn.
“We can’t miss a beat now in the product launches,” Ford chief executive Jim Hackett said on an earnings call, just after chief financial officer Tim Stone summed up the company’s financial performance as “not OK”, in an interview.
Ford management “went to the desert to get to the bottom” of what went wrong with the Explorer, Mr Hackett added. “I have zero questions that we have identified what was at risk there, what bad decisions we made, what things we have to change. That’s all in the rearview mirror and now it’s about executing,” he said.
Tesla shares more than doubled this year, an ascent that left some on Wall Street in awe and others aghast.
The stock gave back some of those gains in the latest session, dropping as much as 11%.
Mr Musk’s next-largest US foe, General Motors forecast flat earnings for 2020. Its market value peaked at about $67bn in October 2017 and has crept below $50bn.
Ford trades at a steep discount to Tesla despite continuing to handily outperform Musk’s company on several metrics.
For one, Ford shipped more than 5.4 million cars and trucks to dealers worldwide last year, more than 14 times the 367,500 vehicles Tesla delivered to customers.
But the direction those respective numbers are heading trouble Ford’s investors and excite Tesla’s.