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Tesla Vs Ford

Ford launches an $11 billion restructuring plan to transition more of its business towards electric and hybrid vehicles. The plan includes layoffs and investments in AI and partnerships like with Rivian. Tesla faces more competition in EVs but is building new vehicle architectures and pursuing battery innovations. Both companies have risks - Ford needs to adapt more quickly to changing markets while Tesla's CEO is part-time and the company relies heavily on additional equity. Financial analyses show Tesla has weaker current ratios and returns on equity compared to Ford and industry averages. Recent advances from both companies include Tesla's Cybertruck and Supercharger network expansion, and Ford's Mustang SUV and return of the Bronco brand. An investment choice depends on

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Sarah Murphy
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113 views14 pages

Tesla Vs Ford

Ford launches an $11 billion restructuring plan to transition more of its business towards electric and hybrid vehicles. The plan includes layoffs and investments in AI and partnerships like with Rivian. Tesla faces more competition in EVs but is building new vehicle architectures and pursuing battery innovations. Both companies have risks - Ford needs to adapt more quickly to changing markets while Tesla's CEO is part-time and the company relies heavily on additional equity. Financial analyses show Tesla has weaker current ratios and returns on equity compared to Ford and industry averages. Recent advances from both companies include Tesla's Cybertruck and Supercharger network expansion, and Ford's Mustang SUV and return of the Bronco brand. An investment choice depends on

Uploaded by

Sarah Murphy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Ford launches $11 billion restructuring plan

Background - Ford Motor Company

Ford Motor Company is Mullaly’s “One Ford” plan & Mustang Mach-E unveiled
founded in Detroit, Michigan by entry into hybrid vehicle
Henry Ford. market with Escape Hybrid

1903 2007 2019

1913 2018

Model T production via moving Ford launches $11 billion


assembly line restructuring plan
Background - Tesla
Tesla founded & Tesla begins production $35,000 Model 3 becomes
incorporated with Roadster available

2003 2008 2019

2004 2018

Elon Musk joins Tesla Tesla posts first profitable


during Series A funding quarter.
Current Business Strategy- Ford
● Company-wide restructuring
● Layoffs
● AI
● Electric / hybrid vehicles (Rivian)
● Larger vehicles
Current Business Strategy- Tesla

● Build new architecture


● Control battery bottleneck
● Deliver a complete experience
○ Car
○ Upgrades
○ Charging
Risks To Consider...

Tesla
● More competition entering the market
● Part time CEO
Tesla’s R&D spending (2010-2018)
● High R&D expense/ not turning a profit

Ford
● Declining stock performance and sales volume
● Changing market/ needs to adapt
● $11 billion spend on restructuring Ford
Tesla
Elon Musk
Analyzing Financial Positions
Ratio Analysis

Tesla has increased their current liabilities in relation to


their current assets.
Ford has remained relatively consistent.

Both companies show a 0.2 - 0.3 drop from their current


ratio with the exclusion of inventory.

Tesla falls below the industry average of 2.5 for major


automakers, while Ford is more highly leveraged.

Ford’s 2018 ROE falls slightly below the industry avg. of


12% for 2019 Q1. Tesla continues to need large
sources of additional equity.

Both companies fall below the industry average of 5.89%


for 12/31/18.
Altman Z-Score (Bankruptcy Score)

- 1.92

- 0.94

As of December 3, 2019
Balanced Scorecard
Stock Price Performance - YTD

Ford

Tesla
Stock Price Performance - 5 Years
YTD

Ford

Tesla
Recent Advancements to Consider

Tesla
● Tesla Cybertruck
● Remote software updates
● Expanding supercharger infrastructure

Ford
● All electric Mustang SUV
● The Bronco is back
● Junk rating from Moody’s
Where to Invest? It Depends…
What’s your risk tolerance?

Low Risk High

● Established company ● Growing revenue but not


● Pays dividends yet profitable
● $37 billion in cash and ● Highly innovative/ invests
short-term investments on in new technology ($$$)
hand ● Auto & tech company
● Not an electric vehicle only
company

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