Is Ford Motor Company’s $5.9 Billion Bet Beating Tesla at Its Own Game?

Ford borrowed more than ten times as much money as Tesla from the Department of Energy to build cleaner vehicles. Will that big bet pay off?

Apr 6, 2014 at 1:42PM

C Maxsolarenergi

Photo credit: Ford Motor Company 

While President George Bush was an oil man, he still wanted American automakers to build cleaner cars. That's why his administration created the Advanced Technology Vehicle Manufacturing loan program, or ATVM. In the fall of 2008 his administration put $25 billion into the hands of the Department of Energy to hand out to automakers to steer the industry toward making cleaner cars.

Bumps in the road
As it turned out just four automakers received loans totaling $8.3 billion. Of the four just two large automakers received loans with Nissan receiving $1.4 billion while Ford (NYSE:F) received a cool $5.9 billion. Both are not only repaying on schedule but are really making great strides to build more efficient vehicles. Where the loan project didn't work out quite as planned was with the other two loans. Electric vehicle maker Tesla (NASDAQ:TSLA) initially borrowed $465 million, but quickly repaid the loan. Meanwhile, Fisker received $528.7 million and then went bankrupt.

It's easy to see that history and call the loan program a failure. However, that isn't necessarily the case. Tesla was able to use the funds it borrowed to provide it with the liquidity to see its award-winning Model S launch and become a commercial success. The only reason the company paid off its loan nine years early was because a soaring stock price (thanks to the success of the Model S) enabled it to raise a billion dollars and pay back the loan. While there is a case to be made that it should have held on to the government's money, it's hard to fault Tesla for paying the loan back early. Meanwhile, Ford and Nissan have both used the funds to develop cleaner vehicles.

Model S Rollout

Photo credit: Tesla Motors Flickr page

Ford's transformation
Ford in particular has really transformed its business over the past few years to build a more fuel efficient fleet. It's using lighter weight materials like aluminum to cut the weight and improve the fuel efficiency of the next generation of its popular Ford F-150. Ford is also using renewable materials like wood fibers to replace fiberglass and cut weight in an effort to improve the fuel efficiency of the 2014 Lincoln MKX. That's just part of the story, as Ford is also focused on building the next generation of electric vehicles to compete directly with companies like Tesla.

For example, Ford C-Max Solar Energi Concept is a first-of-its-kind sun-powered vehicle. It delivers the best of a plug-in hybrid without relying on the electric grid for fuel. Instead of getting its juice from an electric outlet this car is powered by the sun. It uses a special concentrator that acts like a magnifying glass, which directs the intense rays to the solar panels on its roof. The end result is that a day's worth of sunlight can produce the same performance as its conventional C-Max Energi plug-in hybrid that needs to be plugged into the grid. So, not only will the C-Max Solar Energy Concept get an estimated combined 100 MPGe, but it will reduce the greenhouse gas emissions by four metric tons per car is its energy is completely green.

Ford Solar

Photo credit: Ford Motor Company 

Last year Ford was the second largest seller of hybrid cars in America behind Toyota (NYSE:TM). With new innovations like the C-Max Solar Energi Concept Ford can continue in its drive to become America's top green automaker. It's a feat that might not have been possible if it wasn't for the $5.9 billion it borrowed from the Department of Energy.

Investor takeaway
Ford is quickly becoming a top green automaker. It's making great strides and could potentially be the first automaker to deliver a mass-market car that's a completely energy self-sufficient vehicle. That move could allow it to beat Tesla at its own game and richly reward investors in the process.

Boost your 2014 returns with The Motley Fool's top stock
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Matt DiLallo has the following options: long January 2016 $10 calls on Ford. The Motley Fool recommends Ford and Tesla Motors. The Motley Fool owns shares of Ford and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers