If they can properly pivot into the electric car market, a lot.
Ford has all the infrastructure that Tesla is attempting to build now (aside from the batteries, but that is something that Ford could easily partner with another manufacture to get). They know how to mass produce cars (granted right now, ICE cars). That's not an easy feat. They have a large manufacturing and maintenance base that, frankly, Tesla can't replicate. The bet is that Tesla will be the first successful company to market, or that they will hold some patents which will prove valuable in the future. The market is not betting that they'll beat Ford or GM.
I highly recommend Wired's article about GM's long-term bet in developing the Bolt. It talks about many ways that developing an electric car is not just a matter of adding batteries to your existing expertise in car manufacturing.
e.g.:
> Nearly everything changes when you opt for a fundamentally different power train, so GM’s greatest advantage—more than a century of experience building cars—was all but moot. Car structure was different, since they were building around a battery, not an engine. The brakes, steering, and air conditioner were powered differently. New systems, from electromagnetics for the motors to onboard and off-board charging, each came with its own learning curve. The engineers didn’t have established tests to follow. Just turning on the car required finding the perfect sequence of electrical signals from more than a dozen modules. “Oh my God, it took us forever to get the first Volt to start,” Fletcher says.
Though there is more to a card than just the power train. Maybe that explains some of the quality issues Tesla is having with non power train parts such as doors, leaky roofs, etc.
That's an interesting thing to notice. Most of their issue do seem to be more car related than drive terrain. Guess that goes to my point though, being a car manufacturer is much more than making the car.
<< Ford sells that many F-Series trucks in the U.S. about every three weeks. >>
This is why Ford is unlikely to succeed at pivoting into the electric car market. The power and pull inside their company doesn't want them to. It will take superhuman leadership to overcome that force.
An electric f150 is kind of the dream actually. Electric is great for fleet vehicles and it has all the low end torque your frame can handle. Plus trucks have plenty of space to put batteries, under the bed, between the bed and the cab, that can be nice and rectangular. Electric drive train means more effective ground clearance for a given ride height too because you don't need a drive shaft or exhaust. Regenerative brakes are probably better than engine braking too, at least from a wear and tear perspective.
Start with a hybrid Ranger billed as "torque+" marketing slogan "it'll tow a mountain"
Also the ability to run 240v + 120v right off the inverter for the pack would be a huge thing for contractors. I know many then end up hauling a genset out just because quite a few sites don't have dedicated power.
That makes no sense. Companies seek to be viable in the future. If Ford or GM feel that an electric car is on the horizon and that car will eat their (ICE) lunch, they will pivot.
By your logic Tesla would have been locked out of the VC/investment market due to Big Oil. Money flows like water.
> Companies seek to be viable in the future. If Ford or GM feel that an electric car is on the horizon and that car will eat their (ICE) lunch, they will pivot.
I guess you could say the same for Kodak, Blockbuster, and Borders?
“The reason is that good management itself was the root cause. Managers played the game the way it was supposed to be played. The very decision-making and resource-allocation processes that are key to the success of established companies are the very processes that reject disruptive technologies: listening carefully to customers; tracking competitors’ actions carefully; and investing resources to design and build higher-performance, higher-quality products that will yield greater profit. These are the reasons why great firms stumbled or failed when confronted with disruptive technological change.”[0]
I've read the book. None of those companies would even acknowledge their competition. Ford/GM/all other ICE companies acknowledge both Tesla, and the fact that there is a clear runway on oil.
IMO GM is doing a better job of it. While they do have a compliance car (Spark EV), they've also got the Volt and Bolt, and both will be 50 state cars.
Ford has primarily focused on hybrids and there EV offerings are either fleet-only or compliance cars.
> None of those companies would even acknowledge their competition. Ford/GM/all other ICE companies acknowledge both Tesla, and the fact that there is a clear runway on oil.
The bolt. Billions of dollars into self driving technology.
Oh wait sorry this is HN. Ya, those idiots at ford will die to the great Elon. hahahahaha any company older than 25 years is worthless old school idiocy and will die within 5 years of a startup coming in.
Individuals within a company seek to be viable in the future, which often leads them to reject innovation that might endanger their role.
History is littered with companies that refused to pivot into new technology until far later than they should have, because they were too heavily invested in the old way. American car companies suffered from this in the 70s, where they got thrashed by competition from small imports for quite a while before they could be convinced to stop concentrating on land yachts.
Companies seek to outperform themselves relative to the last quarter and year. Long term strategy like this takes a backseat, if it gets attention at all. It certainly doesn't get the luxury of a whole company pivot that could tank short term value.
Need proof? Look at all of the American companies that got caught with their pants down shipping nothing but bigger SUVs when the price of oil shot up back in 2008.
Ford has much more private interests (the Ford family) than other car companies so tends to think more long-term. Remember they weathered 2008 without needing a bailout.
They've also ditched the high-end SUV market right as that market exploded all over the world, thus missed out on massive profits because they no longer sold an Expedition. They openly admit to ceding the market to GM in their annual letters to shareholders specifically because they don't see gas-guzzling SUVs as long-term investments.
They also lead the market in fleet and industry-oriented products. They offer both technology and core-products designed to keep the incredibly lucrative fleet buyers happy.
In this regard, Ford is akin to Microsoft: their consumer products aren't mind blowing, but their corporate products are so well entrenched that they will be a practical ATM for the next decades. Ford sells six times as many F150s as Toyota sells Tundras and they own the entire small cargo van market.
If you were running one of those companies, would you sell SUVs that make you 10k in profit each or an equal number of small cars that make 2k in profit each?
There are a lot of examples of companies which, even when directed to do so by their CEO, were unable to pivot to technologies rising up from smaller markets. The term has been overloaded to hell, but that's disruption.
I would highly recommend the book "The Innovator's Dilemma." It provides case studies of disruptive innovations across many different industries -- from farm tech to disk drives.
The electric Focus is competitive with the Nissan Leaf, at least on paper.
I think the economics aren't really there yet for them to bother with an electric platform (vs retrofitting electric drive into an existing platform). If they thought it made sense, they would be able to be producing at large volumes in a few years.
Ford is unique because it's controlled largely by the Ford family still, all of whom having a vested interest in the long-term profitability of Ford. If someone demonstrates to them that pivoting to electric vehicles is the best long-term strategy for the company, even at the expense of short-term profitability, they will do it.
Also, don't discount the importance of the cashflow from pickups. The only reason Chrysler and Dodge still exist is because of their anchorage to Jeep and RAM. Ford could eliminate their entire car division and still retain like 80% of their profits.
Aside from batteries, supercharger network, and any true desire to actually build nice electric cars. I drove an electric Ford Focus for 2 years, and it was an absolute terrible afterthought of an electric car. It was downright dangerous on wet surfaces with front wheel drive and batteries in the rear, not to mention the horrendous user experience that is Ford Sync. I drive a Tesla now and couldn't be happier.
>not to mention the horrendous user experience that is Ford Sync.
Well that's what you get for buying a car that has Microsoft software running in the infotainment system. The MS-designed Sync system had all kinds of terrible reviews at the time, and it was so bad that it brought Ford way, way down in the "initial quality" surveys, from #1 down to near the bottom IIRC. Do you not do any research before spending a giant amount of money on a car? I spent several months researching my last purchase, a Mazda (I didn't actually spend several months continuously researching it, but I was doing research and test-drives for several months before committing).
To be fair to Ford, though, my understanding is that the latest generation dumped Microsoft and switched to QNX, and should be much improved. While they were using MS, there was no way in hell I'd buy one of their cars. After they switched, I did look into a Focus, but was deterred by all the reports of problems with their DSG transmission.
It was a 2 year lease, $239/mo - and California gave a $2500 rebate also, so cost and risk were low. I wanted to try electric and couldn't afford a Tesla at the time.
My point is I don't think Ford is even remotely taking electric vehicles seriously. With a little better engineering the Focus electric could have been a decent $35k electric car.
The article addressed Ford because of the market cap issue, but, out of the major american car manufacturers, I think GM is a much better match for tesla.
Ford (and all the other car companies) has also huge liabilities - a huge supply chain and R&D costs around combustion engines, and costly dealerships that revolve around servicing a hugely complicated contraption made up of hundreds of mechanical parts. Much of this will be of zero value in the near future.
>a huge supply chain and R&D costs around combustion engines
You mean largely trouble-free engines that run on ultra-cheap gas?
ICE has environmental issues, of course, but the idea that electric is universally superior is questionable. There's no range anxiety with gas and any backyard mechanic can fix most issues. Your locked down $100,000 IoT car is a completely different beast.
>Much of this will be of zero value in the near future.
Says who? If anything everyone is bearish on electric since gas prices have fallen and how range and recharge times will always be less convenient. Electric might replace gas but it won't be in the near future and nothing stops Ford from launching an electric line of its own. Electric cars are a solved problem if you can convince people to pay the premium and deal with the range anxiety and long recharge times. Ford has already announced an electric Mustang and F-150 on top of the $30,000, pre-rebate, 2017 Focus you can buy today. Tesla has no monopoly on electric tech. The barrier to entry is non-existant for other car companies.
edit: saying that the government will ban ICE isn't a market statement its a regulatory hope and for most nations a far off proposal. The idea that Tesla can only succeed with the government literally making their competitors illegal isn't actually a pro-Tesla argument. You guys are much less convincing than you think you are.
It is foreseeable that ICEs will become banned, at least in Europe. Right now there is still too much lobbying by the traditional car makers, but long term there is no other choice for reaching climate goals.
That would never work in the US. It would be both impractical and politically impossible. Most people don't have 35k to drop on an electric car, and even if they did the infrastructure doesn't exist.
Gas isn't "ultra-cheap" in most other parts of the world, especially Europe and Japan. Norwegians are buying Teslas at an absurd rate. Watch for Europe to switch to EVs sooner; their main roadblock is the charging infrastructure. Unlike here in America, where suburbanites all have garages that can be easily retrofitted with a charging port, Europeans don't have that luxury usually. They're a lot like the eco-conscious pro-EV city dwellers here in America who park on the street and have no garage.
Combustion engines in vehicles like the F series trucks aren't going away any time soon. You need generational leaps in battery technology and safety to compete with those trucks. The whole "rugged, dependable" thing that they play on the television is not just for show. I've got a former co-worker who buys a new F-350 supercrew every couple of years before selling it and the depreciation is less than a lease for a midsize sedan.
Do you understand the difference between want and need?
He uses the thing as a commuter vehicle and to tow boats every now and then. The reason he gets a new one is that the dashboard computer systems on these things get updated from year to year and he prefers to stay up with the most current technology.
For most vehicles, 100K miles is nearing end-of-life. For an F series truck, 100K miles isn't even the halfway point.
To a much lesser degree. An electric engine is a lot simpler, mechanically, than an ICE. To the point that, I think, major malfunctions will result in replacement of the engine instead of fixing engine components. Given good refurbishment logistics, this is much more efficient.
Ehhhh. I work with batteries and have worked with electric engines in the past. When an ICE vehicle breaks down, or doesn't work, or goes fast, or goes slow, we know why. With batteries and electric engines, when stuff doesn't work... nobody really knows why.
Copied from another comment I made on HN:
Nobody really understands lithium-ion batteries. One production run might have substantially higher or lower capacity. Some batteries might explode. Some batteries are high discharge and some are low discharge. The "explanation" for all of these things is 'heat'.
Imagine that happening to any other industry (for example the auto industry.)
- "Why did my car just explode!?" "Heat"
- "Why does this car last a tenth the lifetime of this car?" "Heat"
- "Why does this car go a thousand times faster than any others?" "Heat"
- "Why is this entire production run of cars not working?" "Heat"
People say "heat" for two reasons: 1) because nobody understands li-ion batteries and 2) because yes, the real answer does have something to do with heat.
Batteries are one of the most important industries and critical to every company on HN. But the state of the art of batteries is putting together random metals with a bunch of random chemicals and watching which ones don't explode.
Imagine talking to the CEO of Boeing: "We just did our millionth test, engines made of cheese and wings made of coconut shells. It crashed during takeoff, of course. We haven't had any improvements in over a decade, but we're sure we'll get there eventually - we've spent billions on research so far. Wanna come watch test 1,000,001? We're trying engines made of cheese and potato-chip wings next!"
The reasons you mentioned are precisely the reason why an ICE based car selling company can't suddenly wake up one day and build electric cars.
Engineering takes time, Tesla has spent a lot of time building and testing battery tech that works. And they are using it across multiple applications.
If you get reliable electronics in, then without frequent oil changes, and tubeless tire. A electric quite literally is a zero maintenance car.
Hmm. The battery stuff is hard, yes, but only one company has to figure it out. Battery companies sell to everyone. All the battery breakthroughs so far have benefited every EV player. The actual meat-and-potatoes of Tesla's battery tech is actually from Panasonic, who has no problems selling cells to whoever wants to buy.
And EVs are absolutely not zero maintenance, that's just a fantasy. Even in dream-world where we have tires that never need to be replaced and no oil changes, batteries are always going to be a large part of the car's cost and only last a few hundred charge cycles.
The basic premise of an electric "engine" is simpler than that of an ICE, but when you actually make the car, it's nowhere near as simple on paper. Just look at the issue people have had with getting Tesla's repaired... the "mechanics" don't even know that you have to keep the battery charged.
Also, don't ignore the fact that we have 100+ years of experience with ICE.
>>the "mechanics" don't even know that you have to keep the battery charged.
I've been through the CRT -> Flat screen television phase in India.
Arguments were typically like these. How will TV repairmen fix these new TV's which have move like plug and play internals. Therefore new flat screen TV's won't sell?
In the end it didn't work out well for TV repairmen. If its easier to identify and swap the malfunctioning part, you need lesser and lesser skilled professional to service these goods. You can dumb down the process to a point anybody can do it.
There is such a thing as retooling your existing infrastructure. Nobody is saying that Ford's offering will be a homogenous Ford vehicle... hell, neither is Tesla.
Ford has all the infrastructure that Tesla is attempting to build now (aside from the batteries, but that is something that Ford could easily partner with another manufacture to get).
If that is done so "easily," why is Tesla building a Gigafactory?
The bet is that Tesla will be the first successful company to market, or that they will hold some patents which will prove valuable in the future.
Will that actually result in growth for Ford, however? Electric vehicle sales in Ford may displace sales of non-electric vehicles; in other words, the net effect might not be more than zero. This would not really represent growth for Ford, in that case.
You are right about some of their resources, however I think it is a mistake to glibly discount the importance of the battery supply and manufacturing (and by extension, the charging infrastructure) -- that is arguably the hardest and most important part of an electric vehicle, and with Tesla's Gigafactories, that could represent an important advantage of Tesla.
No, that isn't what I said -- you are moving the goal post now from "a lot" of growth, to "holding on to their marketshare".
As matter of fact, that was my whole point: Rather than growing "a lot" they may end up just holding on to their marketshare. Whether that is a mark against them or not is for you to decide, when researching investments.
> No, that isn't what I said -- you are moving the goal post now from "a lot" of growth, to "holding on to their marketshare".
Ok true, but Ford is way past "post-ipo". Growth is not the metric to measure them by (they will grow, but no where near as much as Tesla). That's pretty much agreed upon by market analysts.
I completely agree with you that this doesn't represent real growth for Ford. Auto sales have essentially reached peak already; people only need so many cars. Honestly, this is what I find so ridiculous about Tesla's valuation. A valuation that puts them as worth more than Ford then needs Tesla to be selling more vehicles than Ford to justify that valuation.
All of the existing manufacturers have better infrastructure than Tesla and are getting into the hybrid, electric, and autonomous car marketspace. Even if Tesla survives long enough to make a profit I see no way this company ever justifies it's current valuation. Long term I expect huge price drops in Tesla stock.
Strictly on the car front (which largely ignores Tesla's real growth potential) ...
Ford also maintains an extensive dealer network which can disincentivize some painful adjustments that otherwise might need to be made to be more aligned with future sales, etc. People talk about direct sales for Tesla usually in a negative connotation due to institutionalized friction (re: lawsuits / political favoritism), but I think it's a strong asset in a savvy marketplace, and can illustrate how established infrastructure isn't always for the best. One less mule for the cart to pull, IMO.
I also think there are some signs that existing manufacturing practices can be / need to be rewritten around an all elective drivetrain. For instance, Tesla plans to operate its lines at full-speed using some new "invasive" robotic procedures that the full-glass roof of the model 3 will afford. This has dramatic labor and capital consequences for an automaker with a diversified fleet. Might be costly to rebuild the machine that makes machines.
Dealership networks are fiefdoms in a benevolent kingdom. While they get a say, ultimately you go with the will of the manufacturer or you find another car to sell.
We're also making the assumption that charge-battery-drive-the-car is the future
Battery power is an evolution of car tech but it isn't a revolution. Tesla is building wired telephones when the majority of the market is using wired telegraphs. A substantial improvement to be sure, but to suggest a company such as Ford is not able to grow is very short sighted-- they aren't standing still either. Tesla could increase production and sales by an order of magnitude and still have a minuscule market share.
Of course Tesla will grow, but they don't have a monopoly. The future value of Tesla is certainly greater than today's value, but to discount everyone else because we are analyzing this through a specific lens of perception is a folly.
I have heard many times that the traditional car companies are heavily outsourced aside from the drivetrain. If I haven't been misinformed there (quite possible either way!) and this is true, then outsourcing that would leave Ford not adding much value themselves.
Even if it would work out for them, Tesla is pushing really hard to be a major battery supplier, so they could end up benefitting either way.
>I have heard many times that the traditional car companies are heavily outsourced aside from the drivetrain.
It's true, but I don't think it matters. Traditional automakers rely on suppliers for all kinds of parts on cars: headlights, wipers, tires, glass, airbags, and many electronic modules (auto-dimming mirrors, blind-spot radars, etc.). However they do tend to always keep the body/chassis and the drivetrain in-house (sometimes they'll outsource the transmission, like to ZF).
I don't see how this would affect them moving to EVs. Going from ICE to EV means two giant changes: the chassis (to make room for an entirely different layout, esp. because of the batteries), and the drivetrain. Well, the automaker controls both of those. All those other things, like glass, headlights, electronic safety add-ons, etc., are going to be the same either way. You don't need a different blind-spot monitoring system or windshield wipers or tires just because the drivetrain is electric.
Moving to EVs, they either outsource the drivetrain (as the comment I replied to was suggesting, and as GM is doing with the Bolt) or start doing EV drivetrains in house. Either way, they lose the advantage of their long experience with ICE drivetrains.
Sure, but they don't lose their advantages with chassis design (crashworthy design and testing is hard), manufacturing at scale, logistics, etc. It's not like there's a ton of serious EV competitors out there anyway; there's only Tesla (which can't manufacture at huge volumes), and a few other traditional automakers that have also dipped their toes into EV production.
Lots of design knowledge around vehicles, both from an aesthetic standpoint and in a number of other subsystems. But the bigger point is actually that GM, Ford, and the other major car manufacturers are really giant project management and logistic organizations. They are far from perfect corporations, but don't undersell what they do.
The piece of the puzzle that Ford doesn't currently have is charging stations.
Tesla building its supercharger network was a brilliant move because it means that Teslas are comparable to most petrol-fuel vehicles (as far as where you can go), and everybody else isn't.
If I buy a Ford, can I drive it to see my family in Northern Minnesota[1]? Because I know that I can take a tesla.
That's a really big deal.
I know there are 3rd parties in the US trying to compete with tesla's superchargers (a very close friend of mine was an engineer at probably the largest one until they went bankrupt), but as far as I can tell they're nowhere close to Tesla.
[1]Originally I said North Dakota, but it looks like even Tesla doesn't have chargers there yet. BOO! Well luckily I have plenty of family in Northern Minnesota too!
You may want to clarify the non-sequitur there. Yes, Ford doesn't have it's own network of "chargers" (300+ mile recharge in 5 minutes or less), but you know there's a solid network available; in the few places where chargers are lacking, you can easily take extra power units with you (disposably cheap at that).
That said, Tesla is pursuing the angle of enabling customers to install their own charging station requiring negligible maintenance, and no supply; charing networks are only needed for longer trips which most customers don't need. That is a game-changer for many industries.
There's a big gap in those parts for gasoline, too. Once a few years back I camped out near Fields Station waiting for the store to open 'cause I didn't have enough gas in my Jeep to make it to Burns.
Good point, I bring an extra gas can in the bed of the truck but I ended up getting a few gallons in Frenchglen from the store, probably could have made it with the extra I had but didn't want to chance it. It's a lot cheaper and easier to bring extra gas then a spare battery!
GM has for the most part done a good job so I am really surprised how much Ford ceded this segment to them. GM announces EV sales at end of the week and I am really curious how well the Bolt is doing at its still in limited number of states but will be in all by fall (September I think).
I really don't think there is any difficulty in making EVs now, its finding enough to support the market. While 200 is great for a base range I find it the absolute minimum for any pure EV and to be honest I won't go pure EV till I see 400+ (Drive a Volt now). Not all want/need two cars and even many families are constrained based on size/packaging of the car which led to my surprise when the 3 was a sedan which is not a growing market.
> Ford has all the infrastructure that Tesla is attempting to build now
* no battery production facilities
* no charging infrastructure
* no vertical integration (unlike Tesla, Ford has to sell through the dealershits - I see it as a big disadvantage)
> They know how to mass produce cars
Yes - but can they produce the car the public will want in three years from now, when affordable all-electric, high-performance, autonomous Model 3s will redefine what modern car means?
> They have a large manufacturing and maintenance base that, frankly, Tesla can't replicate
I admit that they have some hurdles ahead, but what would stop Tesla from being more efficient at manufacturing than Ford? It is one of their objectives - and their track record is pretty good, to say the least.
Sorry for not explaining the reasons, I thought they were obvious. First, dealers cut into margins; second, they are not interested in selling vehicles that require very little service; third, they won't be able to provide great customer experience - no one likes negotiating with dealers.
Tesla has already figured out how to mass produce cars. The move between 200k cars and 200,000,000 cars is hard, but not rocket-science hard, and they can always hire the right people to help. But can Ford figure out how to make cars that drive themselves at 80mph on highway? Having driven in Ford cars, I don't believe they can. They can barely figure out how to make a radio control panel that doesn't suck.
That's true, but underscores how treacherous comparisons between big companies based on market caps are. By every metric other than investor confidence in a single narrative (except maybe R&D spending?), Ford dwarfs Tesla and will continue to do so for the foreseeable future.
I don't think anyone has any trouble telling a story in which Tesla is ultimately a more valuable company than Ford. And I agree that's a big deal. But this comment thread suggests the market cap comparison is some kind of milestone. It's hard to articulate what that milestone would be.
The point is not really how much Ford is expected to grow, but how much Tesla is expected to grow. That is, it seems like the only way for Tesla to grow to reach Ford's metrics in terms of profitability would be perfect execution (plus Mars, Jupiter and Venus being aligned).
I'm a huge fan of Tesla and think that they will succeed, but saying that the stock is "priced for perfection" is putting it mildly.
Realistically they more often invest on their perception of others perception of the promise of future value. How those perceptions get linked together is interesting but it is not nearly as objective as you imply.
