Why Ford Won't Be Competing With Tesla

Ford's (NYSE: F  ) one electric car, the Focus Electric, has received very good reviews. But it's a very slow seller: It's expensive, and Ford hasn't seemed interested in pushing very hard to get sales going.

In fact, Ford said this week that the company won't be doing anything to update the electric Focus for 2014. The company seems to be cooling on the whole idea of electric cars -- a blow to fans who hoped the Blue Oval would step up to challenge Tesla Motors (NASDAQ: TSLA  ) and its superstar Model S.

In this video, contributor John Rosevear looks at what Ford is thinking -- and at why electric cars, which are such a hot topic elsewhere, have a lukewarm audience at Ford headquarters these days.

Even if Ford steps back from the electric-car arena, there are good reasons to think that the Blue Oval still has big growth opportunities ahead. The Fool's premium Ford research service gives you freshly updated guidance to Ford's prospects in coming years. Just click here to get started now.

Read/Post Comments (10) | Recommend This Article (5)

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  • Report this Comment On June 18, 2013, at 8:52 PM, hunter3203 wrote:

    It sounds like Ford is being smart. Battery prices are simply too high to make EVs a mass market vehicle.

  • Report this Comment On June 18, 2013, at 9:37 PM, fpl1954 wrote:

    It's pretty obvious Tesla won't be competing with Ford. Ford sells more cars in a week than Tesla sells in a year. There literally isn't enough lithium available on earth to power as many cars as Ford sells in a year. The world was going to run out of lithium just for the laptop market by 2020 until massive deposits were located in Afghanistan in 2002. Also, current battery technology doesn't support a battery pack the average citizen can afford. Until we have a battery technology that can support mass production at a reasonable price, Ford can't go electric. They surely will once it's possible. Ford has been researching this heavily for decades, but they make a consumer product, it has to be cost competitive, and nobody has a solution - yet.

  • Report this Comment On June 18, 2013, at 9:49 PM, markwb wrote:

    FPL1954, your kidding right? There is enough Lithium between Thunderbay and Red lake Ontario for 1 billion Tesla Model S batterys... not kidding look it up. What is needed is an excuse to scale up and make it economical.

    Maybe the Canadian Government will even pump in some incentives like they did to get the Oil sands up and running ( 50 billion over 15 years).

  • Report this Comment On June 18, 2013, at 10:23 PM, luckyagain wrote:

    Ford is probably looking at the car market only 4 or 5 years in the future and does not see a big market. It took Toyota over 10 years to develop the market for the Prius. Maybe Ford will regret their decision not to pursue the electric car market. The same thing back in the 1970s with the small car market and the Big 3 let the Japanese have it.

  • Report this Comment On June 18, 2013, at 11:09 PM, Velek wrote:

    I have a position in Tesla, but I'm still crossing my fingers that it will make it at the same time.

    In high tech, there is a history of newcomers eating established company's lunches. Look at Google search and Android against Microsoft, Apple, and Palm, for example.

    It would seem that Tesla's real competition will be BMW and other high end carmakers. But even there, BMW's new I3 still won't have the abilities of the Model S.

    Electric car tech is just on the cusp of being usable. I'm wondering if Tesla could be the first to break in. I see them around all the time, but I'm within a few miles of their HQ.

  • Report this Comment On June 18, 2013, at 11:33 PM, fingerlakes54 wrote:

    Lithium is a salt--and is very common. It works real good for me after being on the internet for a few hours.

  • Report this Comment On June 19, 2013, at 2:37 AM, jamesdan567 wrote:

    Lithium is an alkali metal.

    ocean waters contain another 230 billion tons of lithium. FYI. Long before lithium supplies are depleted, non lithium batteries will have taken hold of the market.

    Ford did not make that statement under oath. I would be quite surprised if Ford just hands the EV market to Tesla. I would not bet on that, and I am a big fan of Tesla. Ford is far more likely to be lying.

    As Tesla rolls out higher performance and lower cost EV's (6 diff versions) over the next 5 years, Ford and others are forced to compete whether they want to or not. Unfortunately for them, an ICE car cannot compete with an EV even today.

    The S is rated 95MPG versus a 745i at 22MPG. This 400% gap is going to get larger over time, not smaller.

  • Report this Comment On June 19, 2013, at 2:40 AM, jamesdan567 wrote:

    Battery prices in context of khw per kilogram are declining. gasoline prices are rising. Full 100% EV adoption worldwide is inevitable and resistance is futile

  • Report this Comment On June 19, 2013, at 5:40 AM, TdotSteve wrote:

    Electric vehicles are relatively straightforward in terms of development, compared to a gas burner. You have a battery, a motor, a control system, and a cooling system. Most everything else (brakes, steering, etc.) is essentially the same. Making an electric vehicle comes down to an integration project.

    The Focus Electric is nice, essentially a regular Focus with the engine and fuel tank swapped out with the electric drivetrain. Ford does not make electric motors or batteries - those come from suppliers - just cars. Ford just puts it all together and sells it.

    The point is, Ford and other automakers will design and market more electric vehicles when doing so becomes a highly profitable moneymaker. At the moment the motors and batteries are so expensive that they cost considerably more than a conventional powertrain - thousands more. But everyday consumers are not (yet) willing to pay that much of a premium for the privilege of driving an EV.

    Tesla customers are not in the same class as Focus buyers, or Nissan Leaf or Chevy Volt for that matter, and the market for EVs is too small to justify a lot of profitable competition. Calling the next Tesla car the "Model S" does not mean in any way it will sell like Ford's "Model T", or anything else Ford sells for that matter. It remains to be seen whether Tesla will suceed in the long term. Ford has a 110-year head start, and knows how to build affordable cars.

    But again, if and when electric motors and batteries or fuel cells or whatever become highly profitable for automakers at the mass-market level, you can bet Ford will be there in a matter of months with a competitive product.

  • Report this Comment On June 19, 2013, at 6:39 AM, TMFMarlowe wrote:

    @jamesdan567, I may not be hot on their stock as an investment, but I like Tesla as a company and I wish them great success. But I think your strident arguments would benefit from a little bit of perspective: Even if everything goes according to Tesla's most optimistic plans, Tesla's total all-time sales as of the end of NEXT year (a little under 60,000) will still be lower than the number of F-Series pickups that Ford sold in the US last MONTH (a little over 71,000).

    Or put another way, the idea that the whole global auto industry is going to have to follow Tesla or collapse is rather far-fetched at this point. The most optimistic case for Tesla has it at about 500,000 - 550,000 annual sales, or around a third of BMW's sales last year, by the end of this decade.

    By the way, I don't think Ford is "lying". I completely believe that they have no plans to build a from-scratch BEV right now. The Focus Electric is an R&D project that happens to get them off the regulatory hook in states that require a ZEV. But I bet they have some designs on the virtual shelf ready to go if and when the business case for a more full-blown commitment makes more sense.

    And if you don't think that companies like VW/Audi (which is playing with all sorts of electrification ideas) and GM (which wants to be a leader here, and which would love to make a bold game-changing statement with Cadillac) aren't watching Tesla closely and waiting to jump in... then you should probably spend more time studying the dynamics of the industry you've invested in.

    John Rosevear

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