If a picture is worth a thousand words, then financial graphs should be priceless -- or at least worth a couple thousand words. Right now in the auto industry, two of the most important things are electric vehicle (EV) growth aimed toward the future, and sales of trucks aimed at powering current profits to develop that future.
Here are two graphs that show an intriguing race for Detroit automakers Ford Motor Company (F -1.15%) and General Motors (GM -0.33%), and just how dominant Tesla (TSLA -2.04%) currently is.
Pickup wars!
When it comes to profits, Detroit automakers' bread and butter has long been their full-size trucks and SUVs. It's why Ford has essentially stopped producing any passenger vehicles in the U.S. aside from the Mustang.
One of the biggest draws for investors and Wall Street over the decades has been the annual race between Ford's and GM's pickup trucks, as those historically drove incredible profits and kept the lights on during dark times.
But just how close is the race so far in 2023? What's shocking is how close it's been for a long time.
Chart by author. Data source: Automotive News.
Through the first half of 2023, GM narrowly edged out Ford in total pickup sales -- 451,967 to 449,510, respectively. But Ford chalked up a 21% increase, compared to the prior year, versus GM's more modest 3.6% gain, according to Automotive News.
Additionally shocking is how close those two rivals are historically. Consider this: From 2005 through 2022, only counting full-size trucks (the F-Series, Silverado, and Sierra), Ford sold 13,113,442 full-size trucks and GM sold 13,185,781, according to GoodCarBadCar.net.
The two biggest rivals, in the segment that hauls the most profits historically, have been at a near photo finish for 18 years -- it's shocking neither has ever managed to gain an edge.
King of the hill
If you've merely glanced at auto industry headlines over the past decade, there's little doubt you know Tesla dominates the U.S. electric vehicle industry. But reading headlines and seeing the actual sales figures are two very different things.
Not only does Tesla dominate the sales volume in the U.S., it holds four of the top nine selling models through the first half of 2023. No other automaker claims even two.
Chart by author. Data source: Automotive News. Tesla sales estimated by Automotive News and Experian registration data.
Part of the driving force in Tesla's first-half dominance was the estimated 76% jump in Model Y sales, fueled by price cuts and incentives.
While Tesla's pricing strategies and added incentives have been a thorn in the side of competitors, this graph shows it's certainly boosted the Model Y compared to its other models, with estimated gains of 35% for the Model 3, 16% for the Model X, and a potential 5.9% decline in the Model S.
There are, however, two additional things for investors to consider. It's important to note that while Tesla is still dominating the industry, Experian's registrations from January through May show Tesla's market share of the EV market declined to 60.5%, from the prior year's 67.4%. Despite the narrowing market share, it's also important to note the year-to-date sales boost has driven a rally in Tesla's stock.
What should investors watch?
These two charts represent totally different aspects of the automotive industry: the current profitability train via pickup trucks, and the future pipeline of sales through EVs. They also show how shockingly close Detroit rivals have been over the decades, and Tesla's sheer dominance in the early innings of the EV wars.
In terms of investing takeaways, the fact that Ford and GM heavily dominate the most profitable, and also most loyal, segment in the industry gives them a massive advantage as long-term investments. The trick for the Detroit rivals going forward will be turning these massive vehicles into profitable EVs. GM's proprietary battery platform, Ultium, is just now launching in more models and could give the company a leg up as it aims to scale EV sales from $10 billion this year to $90 billion by 2030. As far as mainstream automakers go, Ford and GM are dominating the perfect segment to drive profits to develop the future, making them both good bets going forward for long-term investors.
As far as long-term EV investments go, Tesla may still be the clear and obvious choice. Noting that nobody outside of Tesla is profitably making EVs currently is a great starting point. Further, despite its narrowing market share to 60.5% of the U.S. EV industry, let's consider that figure is still unheard of. Remember that Ford's total market share of the broader U.S. auto industry was less than 14%. Tesla has created a brand, quality vehicles, and even with growing competition and narrowing market share, it's still completely dominate and years ahead in terms of profitability.
What will be even more intriguing in the future is when these two paths meet. They're on a collision course with Ford's F-150 Lightning electric truck gaining momentum and GM's Chevy Silverado EV launching soon. How this collision will shake up the EV wars will determine just how auto investors' portfolios look in the coming decades.
