Please ensure Javascript is enabled for purposes of website accessibility

Ford Isn't the Only Rival That Bought a Tesla Model X

By Evan Niu, CFA - Apr 20, 2016 at 8:08PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Buying a competitor's product is just par for the course.

Model X. Image source: Tesla.

This morning, Bloomberg reported that Ford Motor (F -1.92%) recently went and picked itself up a shiny new Tesla (TSLA -0.74%) Model X. We're talking about a fully loaded Founders Edition, of which less than 100 units were produced before Tesla started making Signature models.

The all-electric SUV has been slow to ramp up, so Ford decided to buy its Model X on the secondary market for a hefty $55,000 premium. All told, the Blue Oval spent $200,000 to acquire its X. That's just a drop in the bucket compared to the $4.5 billion that Ford is committing to its electrification program, which should presumably cover competitive research expenses like acquiring a Model X.

Ford isn't the only one.

Everybody's doing it
Part of Volkswagen's (VWAGY -1.58%) crisis response strategy is to focus its message on EVs going forward. That includes at its luxury brand Audi. A few months ago, a Model X was spotted near Audi's Ingolstadt headquarters with a local license plate. This was very early on in Model X production, before European deliveries had officially started.

Audi indeed purchased an early Model X, but imported it from the U.S. Tesla uses slightly different Supercharger ports in the U.S. and Europe, so Audi engineers have been having trouble using local Superchargers.

Still, none of this should come as a surprise, either. Audi has already announced a Model X rival, the electric e-tron quattro concept that's set for 2018 production. Plus, Audi has already admitted that Tesla nailed it strategically.

Ford's second Tesla
As fellow Fool John Rosevear points out, this is common practice in the auto industry. Automakers will often go out and buy a competitor's product in order to reverse engineer it and learn its deepest, darkest technical secrets. It's a fairly routine competitive practice in general, including in consumer electronics.

Way back in 2014, Ford CEO Mark Fields (who had just been promoted to CEO) confirmed that the company had acquired a Tesla Model S in order to reverse engineer it. "We have driven the Model S, torn it down, put it back together, and driven it again," Fields said on an earnings conference call, "We're very familiar with that product."

You can similarly expect that Ford is also tearing its shiny new Model X asunder, only to reassemble it. While Tesla famously open-sourced its patents in 2014, high-level methods on how to do something are quite different than detailed implementations. The real question is how quickly Ford will act with this newfound knowledge.

Mixed messages
As mentioned above, Ford tore down a Model S two years ago, and there should be little doubt that Ford has the technical know-how to design, develop, and manufacture a compelling EV with sufficient range and acceleration (let's not talk about price quite yet).

And yet, the company still hasn't done so. Perhaps more important, Ford isn't intending on doing one quite yet, recently saying that a Ford EV with 200 miles of range isn't in the wings and it's still mostly sticking to a compliance car strategy for the time being. Still, we're undoubtedly getting closer and closer to the day that Ford is willing to take the plunge. The company has committed to launching 13 new EVs to its portfolio by 2020, which is only a few years away.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ford Motor Company Stock Quote
Ford Motor Company
F
$13.27 (-1.92%) $0.26
Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$756.00 (-0.74%) $-5.61
Volkswagen Aktiengesellschaft Stock Quote
Volkswagen Aktiengesellschaft
VWAGY
$19.95 (-1.58%) $0.32

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
349%
 
S&P 500 Returns
122%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.