A great deal has happened in the car industry this year. Among the most important events were the United Auto Workers (UAW) strike and the growing competition among car companies for electric vehicle (EV) sales. As the winners and losers are sorted out, one sign of changing fortunes is that Tesla Inc. (NASDAQ: TSLA) is worth 20 times more than Ford Motor Co. (NYSE: F) based on market cap. That is a breathtaking difference.

Among the reasons for the gulf in value is that Tesla’s stock is up over 120% in 2023, and Ford’s is down 11%. The S&P 500 is up 20% over the same period. Tesla’s market cap is $765 billion. Ford’s is just below $40 billion. Yet, Ford is by far the larger of the two in terms of revenue.

Why Ford Is Hurting

Several things have hurt Ford badly. A new UAW contract will cost Ford several hundred million a year. The increase in pay and benefits is much higher than would have been expected two years ago. The union had the upper hand as it began to strike plants. UAW members believed the U.S. car companies and their management had made too much over the past decade while they had made too little.

Ford cannot afford both the UAW contract and its future product management aspirations. Ford said it would push back about $12 billion in EV investment. Certainly, this is partly due to a lack of demand for EVs. Another reason is to slow corporate spending overall. This lack of demand for Ford EVs has been obvious. Ford has sold only a few thousand EVs this year in the United States. Its ambitious plan to have a 600,000 EV production run rate this year has been pushed back until the end of 2024. (See the 15 worst-selling electric vehicles this year.)

Tesla cut prices several times this year. It has been trading margins for market share. However, Tesla remains profitable, while Ford’s EV operations have not been. Tesla now produces over 400,000 vehicles a quarter. Its market share was supposed to drop quickly as legacy manufacturers hit the market with their EVs. That has not happened. Tesla will soon come to market with its Cybertruck, a pickup aimed at the largest segment of the U.S. vehicle market.

For Ford, the EV market has become a billion-dollar sinkhole. For Tesla, its success is confirmed by each quarter’s production figures.

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