Tesla vs. Ford Stock: Which is Better?

The automotive industry is constantly changing, and technology continues to advance to a point that seemed impossible a few years ago. While some investors find the volatile atmosphere in auto trading exhilarating, jumping into auto stocks is a dangerous venture for the average American.

Many experts predict that the EV growth rate in 2024 will be a sluggish year because private consumption is sluggish and interest rates continue to be high, but every year this year and the next 10 years, more people will buy EVs than ever before. However, for this year, one major EV company is hoping to rebuild management, and another (conventional) automobile company is expecting to raise the stakes.

Despite recent pitfalls, current investors seem to trust Chief Executive Officer Elon Musk (CEO), and if Mr. Musk can get out of his own path, it seems that cautious investors are also interested. Tesla's stock price rose 12% after Tesla announced disappointing first-quarter financial results on 4/23, and this seems to be because Mr. Musk promised delivery of affordable EVs, robo-taxis, and more cars in 2024.

Theoretically, now is a good time to buy Tesla's big deal. Stock prices are falling, but their potential growth rate is (probably) still very high. Since Tesla has a huge market capitalization, it is in a position to withstand storms and poor management in the EV industry compared to other automobile brands, and is poised to gather immeasurable billions of dollars from future initiatives such as autonomous driving, AI applications, and humanoid robot technology. Of course, no one knows when these innovations will be realized.

This is also an attractive time for conventional automobile companies. They must face the prospect of shutting down factories over the next 10 years if they don't adapt to future electric vehicle manufacturing.

Ford has promised to invest 50 billion dollars in EV models by 2026 and will produce 2 million EVs per year by then, and it has already become a major player in electric car games. According to US News & World Report, Ford sold the second-largest number of EVs (70,608 units) in the US after Tesla in 2023, and achieved an 18% increase in sales compared to the previous year.

However, Ford has also had problems recently. According to Fast Company, Ford's EV division announced a loss of 1.3 billion dollars in the first quarter, which suggests that monetization may still be a long way off. The cause of the loss is said to be growth pain and upfront investment, but even so, suffering a loss of 100,000 dollars every time an electric car is sold does not look good.

According to Motley Fool magazine contributor Parkev Tatevosyan, the earnings of both companies have been steadily increasing over the past 3 years (Tesla has a better growth rate than Ford), but if you take a quick look at Tesla's valuation value, there is a possibility that stock investment decisions will go either way.

Despite the fact that Tesla stock is one of the worst performing stocks in the S&P 500 index this year, it is still overpriced despite model price cuts and unit shipments falling short of expectations. According to Investors Business Daily, excluding the sharp rise in stock price-earnings ratio (PE) on 4/30, Tesla's predicted PER for 2024 and 2025 as of 5/5 was 73.7 and 54.2, respectively, when going back 18 months before the record high, which was a record high from any month-end announcement value. For companies that have stagnated and are in a difficult situation, it is too rich and risky.

After all, if you're going to buy stocks, Ford is better. Competition isn't constantly intensifying, and believing that Tesla can somehow dodge everyone and dominate the market is far too dangerous. Many of the issues facing Musk and his company aren't temporary; they feel like the beginning of something more permanent.