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USA: Is Tesla The Next Ford?

Tesla (TSLA) has been a dynamic company to follow since before it went public in 2010. It is one of the latest and most promising of the many companies that have taken a shot at all-electric cars. In spite of being unprofitable by standard measures and having short interest at over 50% of float, its stock price, which is currently around $36, has nearly doubled since the IPO. Recently I was thinking about a comparison I heard between TSLA’s CEO Elon Musk and Ford Motor Co. (F) founder Henry Ford. Musk has also been compared with a modern-day Howard Hughes and served as some inspiration for the character of Tony Stark in the recent “Iron Man” movie series. Musk’s latest release, the TSLA Model X, was the topic of my previous article, which talks a little about TSLA’s marketing challenges and triumphs. In addition, a fellow SA contributor compared TSLA with Apple (AAPL) not long ago. While the comparisons are interesting in many ways, they are by no means a singular reason buy TSLA shares. I prefer to rely on more fundamental tools of evaluation, however I have to admit that when it seems like there is a dearth of just that, sometimes less direct analysis can yield insight and add more color to the picture. The previous comparisons made me want to explore how TSLA looks when compared with Ford (F).

Exploring the idea made me wonder if the Model S or Roadster could really be the Model-T or A of the 21st century. And if as we watch TSLA develop, it is really like watching a modern day F speeding through its adolescence as a company and into maturity. However comparing the two is problematic, considering that F began nearly a century before TSLA, while TSLA has barely 10 years under its belt. While it is easy to draw parallels, it is not quite apples to apples when the divide is so great. So I thought maybe if I would try to compare the first decade or so of F with the TSLA; it might be a little more relevant. Some of what I found could be considered reasons why TSLA may or may not turn into the next F, and some of it is just plain interesting. Most of the contemporary information in the following comes from what I already know of the two companies from investment analysis and research. Most of my historical knowledge of F is limited to what I have studied of Henry Ford in management texts (Ford is considered a somewhat foundational figure in the management field for his use of assembly line production amongst other things), so some of the information regarding F is derived from the all-knowing (facetious) Wikipedia.



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