Ford And Tesla: A Tale Of Asymmetric Vehicular Value

On Wednesday of last week, Buzzfeed published an article showing that Tesla’s (NASDAQ:TSLA) market capitalization may surpass that of Ford’s (NYSE:F) in the very near future. Today, Monday, Tesla’s market cap overtook Ford’s for the first time. Currently, both companies are valued at around $46 billion.

The Buzzfeed reporter mentioned a really interesting set of statistics compiled by Barclays Capital managing director and US automobile researcher Brian Johnson. Divide each company’s market cap by the number of cars sold in 2016 and you arrive at some interesting results. Tesla, sold 84,000 vehicles last year, which means it’s “worth” approximately $600,000 for every vehicle it sold in 2016. Ford, on the other hand, sold 6.7 million cars, meaning it’s “worth” about $7,000 for each car it sold last year.

Of course, the bet here is on the continued growth of Tesla. However, even though most indicators are positive, it’s still unknown whether Tesla will be able to deliver on the huge backlog of vehicle orders for its lower priced Model 3 announced last year. Tesla has beaten estimates by shipping 25,000 vehicles in Q1 and anticipates shipping at least another 25,000 in Q2. However, the 600,000 vehicle waiting list for the Model 3, at which the auto company will begin to chip away when it begins production in July of this year, still looms large.

Although I remain bullish on Tesla’s prospects and genuinely hope the company succeeds in successfully commercializing electric vehicles, I also have to remind myself that it’s the second half of this year where the company’s potential butts up against reality. When rubber meets road, there’s always the risk of burnout.

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