Ford Stock (NYSE:F)
The recent partnership between Ford and Tesla has significantly boosted the stock prices of both businesses and sent shockwaves through the stock market. Investors are thrilled about this unexpected alliance because it combines the resources and expertise of two industry titans in the automotive industry. In this article, we will examine the Ford-Tesla partnership in greater detail, as well as the causes of the recent stock price increase and its effects on the automotive industry as a whole.
Beginning in 2024, Tesla will permit owners of electric cars made by Ford Motor to use its vast network of superchargers in the United States. Investors adore the concept. That is true for many reasons.
Elon Musk, CEO of Tesla (NASDAQ:TSLA), and Jim Farley, CEO of Ford (NYSE:F), announced the charging partnership Thursday night on Twitter Spaces. The two answered some questions and spoke for about 30 minutes about the deal and EVs.
At one point, Musk stated that using a Tesla charger for a Ford driver “will not be cost-prohibitive,” adding that a simple adapter is all that is required. Farley stated that he was open to companies collaborating in other areas, such as software for electric vehicles.
The price of Ford stock was up nearly 7.3% to $12.21 at midday on Friday. To $196.50, Tesla stock had increased by 6.5%. The Nasdaq Composite increased by 2.1%, while the S&P 500 and Dow Jones Industrial Average increased by about 1.2% and 0.9%, respectively.
America’s auto industry is renowned for its fierce competition. In Detroit, Ford and General Motors frequently refer to one another as the “other” automobile manufacturer without using each other’s names. Ford and Tesla don’t operate in that manner. Farley praised Tesla for its leadership in EVs and said, “It’s super hard what Tesla has done.” Musk said he respected Ford.
The announcement, according to Battle Road Research analyst Ben Rose, “evokes the adage: The enemy of my enemy is my friend.” “Tesla and Ford view GM and Hyundai-Kia in North America as shared enemies…As it starts to ship new models, GM will have to deal with a lot of inquiries regarding fast charger accessibility.
The stock price increase is not due to a detente between Ford and Tesla. For Ford, more dependable chargers make it simpler for people to purchase Ford EVs. The American charging infrastructure lags behind that of other nations.
The adoption of EVs in the US may be hampered by a lack of charging infrastructure.
According to BNEF, the new energy research division of Bloomberg, the United States has about 37,000 of the fastest chargers. About one-third of those are owned by Tesla.
This equates to approximately 55 EVs on American roads for each fast charger. Comparatively, there are fewer than 40 in Europe and about 13 in China. China has about five EVs per charger, counting slower chargers like those American drivers might encounter at a commuter train station.
For its part, Tesla benefits greatly from free advertising. Over the course of a year, owners of Ford EVs may spend hours staring at the Tesla logo. Additionally, they will download the Tesla app and familiarize themselves with Tesla products. For Tesla, that is not a bad deal.
Significantly, Tesla also profits more from its charging infrastructure. “Win/win,” declares Gerber. Ross Gerber, CEO of Kawasaki Wealth and Investment Management. “Tesla’s supercharging network turns into a legitimate company.”
The Alliance Between Ford and Tesla Raises Stock Prices. Investors Are Pleased
There is no doubt that the partnership between Ford and Tesla has had a significant impact on the stock market. Since the announcement, the stock prices of both companies have soared, sending investors into a frenzy. Let’s examine more closely why investors are so enthusiastic about this collaboration.
Enhanced Portfolio of Electric Vehicles
The potential to expand their electric vehicle (EV) portfolios is one of the main factors enticing investors to the Ford-Tesla partnership. With its cutting-edge technology and market dominance, Tesla has long been a trailblazer in the EV sector. Ford partners with Tesla to gain access to their cutting-edge EV technology, enhancing their own electric vehicle offerings and enhancing their ability to compete in this quickly expanding market.
Access to charging is Ford’s success. Of course, the automaker provides access to the BlueOval Charge Network, which consists of 84,000 chargers operated by partners and includes access to over 10,000 fast chargers akin to Tesla’s superchargers. Approximately 1,800 fast chargers with public access will be added by Ford dealers by the beginning of 2024, according to Ford.
Of course, Tesla will need to watch that it doesn’t get to the point where Tesla drivers are stuck in traffic behind Ford drivers.
Increasing Market Coverage
Additionally, the partnership between Ford and Tesla creates new opportunities for market penetration. Ford has the chance to take advantage of Tesla’s devoted customer base and increase its presence in the EV market thanks to its significant market share in the traditional auto industry. Similar to how Ford can use its global distribution network to expand its market share and make its EVs more widely available, Tesla can do the same. Investors will find this opportunity alluring because the widened market reach promises greater sales potential and increased revenue for both businesses.
Investors value Ford and Tesla’s cooperative strategy because it presents an original method of risk reduction. The automotive industry is rapidly changing as a result of new technology and shifting consumer preferences. Ford and Tesla can share the risks brought on by these disruptions and successfully navigate the ambiguous landscape by working together. The mechanism for sharing risk gives investors comfort and assurance, which raises stock prices.
Competitive advantage and innovation
Investors appreciate the value of innovation, which is at the core of the Ford-Tesla partnership. Ford and Tesla can advance research and development efforts and push the limits of automotive technology by combining their resources. Both businesses will benefit from this increased emphasis on innovation by staying one step ahead of rivals, securing their positions in the market, and developing a long-lasting competitive advantage. Stock prices rise as a result of investors’ increased confidence in the company’s long-term growth potential due to its commitment to innovation.
Strategic Partnerships Indicate Industry Change
The partnership between Ford and Tesla is a potent representation of the industry-wide change taking place in the automotive industry. In order to stay relevant in a changing world, traditional automakers are realizing the importance of adopting electrification, autonomous driving, and sustainable practices. This collaboration demonstrates the industry’s top players’ readiness to work together and adjust to changing market demands. Investors are encouraged and inspired by this because they see it as a sign of a forward-thinking strategy.
Featured Image: Unsplash @ FourFour