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Why Tesla's Still Underperforming Lucid and Ford

By Daniel Foelber – Nov 16, 2021 at 8:03AM

Key Points

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These three electric vehicle stocks are smoking hot right now.

In case you missed it, Tesla's (TSLA 3.94%) market capitalization passed $1.25 trillion after share prices increased over 55% in a month. To put that into context, consider that Tesla added over $350 billion in market cap, which is more than the entire value of Toyota and General Motors combined, in just one month. 

However, in the last week and a half or so, Tesla stock has fallen over 17% and is back under the $1 trillion market cap threshold as investors react to CEO Elon Musk selling some of his Tesla shares. Even at its peak, Tesla stock had still underperformed up-and-coming electric vehicle (EV) start-up Lucid Group (LCID -0.51%) and Ford (F 4.81%) so far this year. Here's why all three stocks are outperforming the market, and which one is the best buy now.

A Tesla Model S cruising on an open road through a mountain range.

Image source: Tesla

The industry leader is showing no signs of slowing down

Whether Tesla is overvalued or not is up for debate, but there's no denying the company has never been stronger. Tesla's Q3 results were nothing short of phenomenal, blowing expectations out of the water. Higher revenue, strong margins, and consistent and growing profit are just some of the reasons why Tesla stock jumped 44% in October. What's more, there's a good chance that Tesla will continue to drive even more profits in the future. The stock would still look overvalued according to traditional metrics such as the price to earnings (P/E) ratio (Tesla's P/E is currently 399), but consistently generating positive net income is a step in the right direction.

Aside from its strong car sales, Tesla's energy business is growing quickly as well, which is timely considering the ever-growing push toward residential solar energy.

Lucid Group means business

Shares of Lucid Group are up more than 300% this year as investors cheer the advent of mass production and deliveries of the Lucid Air Dream Edition.

TSLA Chart

TSLA data by YCharts

Before Oct. 30, there was doubt that Lucid would be able to deliver its first vehicles to customers before year's end. Now that it has hit that goal, all eyes are on whether Lucid can deliver the 20,000 Lucid Airs it's guiding for in 2022.

Instead of going toe-to-toe with the likes of GM, Ford, Toyota, and other legacy automakers that are rolling out affordable EVs, Lucid is focusing its attention on a very small subset of the luxury EV market. The Lucid Air Dream Edition Range and Performance models sport price tags of $169,000, justifying the cost through a combination of high horsepower, fast charging, and record range from a smaller and more efficient battery pack. 

Like Tesla, industry watchers may raise their eyebrows at Lucid's $67 billion market cap -- which is admittedly high for an EV company that is barely getting cars off the production line (not to mention years away from turning a profit). But Lucid deserves credit for delivering on its promises and innovating some downright impressive technology. What Lucid has going for it is a strong management team, a really good product, and enough cash to get through 2022. If Lucid continues showing progress by developing lower-priced trims of the Lucid Air and getting the Lucid Gravity SUV off the ground, then the company could become one of the market leaders in the luxury EV space over the next five to 10 years.

Ford is diving headfirst into EVs

It wasn't long ago that Ford stock was a consistent market underperformer. Not anymore. The stock has more than doubled so far in 2021 as investors cheer the company's ability to balance its strong existing business while investing heavily into EVs.

Ford's Q3 numbers blew expectations out of the water as it sold more cars in the U.S. than any other company in September and October. The company is doing a good job navigating the global chip shortage and restructuring its debt for lower interest rates, and even reinstated its dividend and raised its full-year guidance.

Demand for both the Ford Mustang Mach-E SUV and the Ford Lightning electric pickup truck is incredibly strong. To meet rising reservations, Ford is investing $11.4 billion in a Tennessee and Kentucky mega campus that will produce electric F-Series trucks and its own batteries. Production is expected to begin in 2025. In the meantime, Ford is increasing production of the Ford Lightning at its Michigan plant in 2022. 

The best buy now

Relatively new to the EV scene, Lucid Group and Ford have done excellent jobs carving out their respective niches in a growing industry. Lucid invested heavily in its technology and manufacturing to control as many aspects of the design and production process as possible. That way it retains its technological edge over its peers, can justify its expensive cars, and can better compete with new EV companies, as well as legacy automakers that ramp up their EV budgets in the years ahead. Similarly, Ford is aiming to be the market leader in electric pickup trucks, leveraging its early mover's advantage and brand recognition.

Although there is some overlap between the Tesla Model S and the Lucid Air, the Tesla Model Y and the Ford Mach-E, and the Tesla Cybertruck and the Ford F-150 Lightning, Lucid and Ford have enough differentiation to not get in Tesla's way.

Understanding your own risk tolerance is an important step in determining which electric car stock is right for you. Relatively unproven but off to a good start, Lucid Group seems to be an excellent high-risk, high-potential-reward growth stock. Tesla and Ford are more established -- Tesla is a pure-play EV investment, while Ford is more diversified and an overall better value. No matter which stock you choose, there's no denying that EV stocks have generally handily beaten the market, a trend that could very well continue in the years ahead as new product offerings, charging networks, and aftermarket services mature.

Daniel Foelber owns shares of Lucid Group, Inc. and has the following options: short December 2021 $20 calls on Lucid Group, Inc., short February 2022 $20 calls on Lucid Group, Inc., short January 2024 $20 calls on Lucid Group, Inc., short November 2021 $22 calls on Lucid Group, Inc., and short November 2021 $23 calls on Lucid Group, Inc. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

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