Why Tesla’s Revenue Will Overtake Ford’s in 6 Months

This story is meant to be a reflection on past growth and a prediction of Tesla’s future growth, not a critique of Ford. Having said that, the reason Ford is even in the story is that it offers a company to compare Tesla to, and Ford has been the least worried US conventional car manufacturer in my view. Of the big three, he was the only one who didn’t need help in the 2008 financial crisis. I’m going to look at 4 metrics: market capitalization, earnings, revenue, and unit sales.

Tesla and Ford market capitalization

The profitability of Tesla and Ford

Tesla and Ford Revenue

Electric Vikings had similar ideas. I started this article before this video came out, but he was quicker to post his insights, so congratulations to him!

Tesla and Ford unit size

Unit size will be the last of Tesla’s 4 metrics to overtake Ford. In 2021, Tesla produced 930422, More than 9 times their total Just 4 years ago in 2017 (101,025). As mentioned earlier when discussing revenue, Tesla now has the factories that are built to produce 3.7 million cars annually. I expect volume to increase by about 15% a quarter of the 305,000 total production announced a few days ago for the first quarter of 2022. That gives us 351,000 for the second quarter, 403,000 for the third, and 464,000 for the fourth (that’s 1.5 million for 2022, a 62% increase from 2021), 534,000 for the first quarter of 2023, 614,000 for the second quarter, 706,000 for the third quarter, and 812,000 for the fourth quarter of 2023 (which is 2.7 million for 2023, or a 77% increase from 2022).

On the other hand, Ford saw its sales decline from 6.6 million in 2017 to 3.9 million in 2021. Ford gets about 60% of its unit sales from North America, about 21% from Europe, and 19% from China. Both Europe and China have very high gas and diesel costs, as well as strong government incentives to use electricity. It will be difficult for Ford to maintain unit size with stiff competition for the upcoming electric vehicle in these two regions. In the United States, higher fuel prices and supply chain difficulties are likely to reduce sales. Ford has some powerful electric vehicles coming out, but the volumes are too low to move the needle. I expect quarterly unit sales to decline by about 50,000 a quarter over the next two years. So that’s 950,000 in the first quarter 2022, 900,000 in the second quarter, 850,000 in the third, 800,000 in the fourth, 750,000 in the first quarter of 2023, 700,000 in the second quarter, 650,000 in the third, and 600,000 in the fourth quarter of 2023.

If done this way, it will be in 15 months, or the third quarter of 2023, that unit sales will surpass Tesla and Ford.

Conclusion

The interesting thing for me is that each of the four scales intersect at a different time.

  1. Market value was similar from 2016 to 2019, then in 2020, the market decided that Tesla was worth a lot more.
  2. Ford made good profits for years while Tesla was constantly losing money as it was building scale. In 2020, Tesla became profitable, and in 2021, it showed it could make a profit similar to Ford even though its revenue is much lower (if it rolls back the one-time gains, the $9 billion from Rivian). Also of concern is that 47% of Ford’s profit comes from Ford’s credit, which is based on Ford’s vehicle resale values.
  3. Tesla’s revenue last year was about a third of Ford’s worldwide, however I expect Tesla to be catching up within 6 months, by the fourth quarter of this year!
  4. Unit sales take a little longer, since Tesla’s cars sell for a higher selling price than Ford’s, but for the numbers I expected, Tesla will be making and selling more cars than Ford in just over a year.

So, to oversimplify, I’m outpacing market capitalization in 2020, earnings in 2021, and expecting to outpace revenue in 2022 and vehicle unit sales in 2023.

What is your opinion? Comment below where you agree or disagree.

Disclosure: I am a shareholder in Tesla [TSLA]Globalism [BYDDY]New [NIO]and XPeng [XPEV]. But I am not providing here any investment advice of any kind.

 

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