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The all-electric Ford Mustang Mach-E could be a rival for Tesla vehicles.
David McNew / Getty Images
The latest vehicle to emerge from
Fordin
The iconic Mustang brand is a sporty, all-electric crossover vehicle. And it could be bad news for Tesla.
O
Ford Motor
Mach-E went on sale in late 2020. JP Morgan analyst Ryan Brinkman drove the car on Thursday and liked what he saw. If traditional automakers start building desirable electric vehicles, this could pose a considerable threat to
Tesla,
that has largely dominated that space in the U.S. so far.
After driving the car, which
Ford
(ticker: F) labels an SUV – Brinkman “was completely impressed with the Mach-E while seeing negative implications for Tesla’s very high rating”. The car offers three driving modes: Whisper, Engage and Unbridled. Each offers more aggressive acceleration than the previous one.
The Mach-E compares more closely to a Tesla (TSLA) Model Y. “We don’t intend to argue that one vehicle is necessarily superior to another,” writes Brinkman. But he points out that Mach-E still qualifies for a $ 7,500 federal tax credit. Tesla sold many cars to still qualify for that specific purchase allowance.
Its broadest point is that the Mach-E is a good car, comparable to a Tesla. This is not something that car buyers, so far, could say about many electric vehicle offerings.
Better EVs from Tesla’s competitors can hurt Tesla’s assessment. Tesla negotiates more than 17 times the estimated sales in 2021.
Ford
and other traditional automakers negotiate for a fraction of that multiple. The auto industry is simply not used to this kind of growth stock multiples.
Brinkman, meanwhile, is a remarkable Tesla bear, with one of the lowest target prices on Wall Street. He assesses the sale of shares and his target price is only $ 105 per share. Tesla’s shares totaled more than that amount this week alone, and traded at around $ 880 on Friday.
Brinkman fees
Ford
Hold shares. Your target price for this action is $ 10.
Barron’s is a little more optimistic about Ford than Brinkman, recently writing positively about the automaker, believing that new leadership would result in lower costs and more streamlined vehicle development. More EVs are also needed, such as Mach-E.
Since that article appeared in late November, Ford’s shares have fallen 1%. O
S&P 500
and
Dow Jones Industrial Average,
for comparison, they increased by about 5% and 4%, respectively.
To say that the threat of new competition has not reached Tesla’s stock is an understatement. Tesla’s shares have risen 50% since the end of November. Better-than-expected deliveries and analyst updates helped boost Tesla’s stock even further. The shares gained about 740% in 2020. The shares rose about 25% in the year.
On Friday, Ford shares fell 0.6%. Tesla’s shares jumped 7.8%, closing at a new historical record. Investors seem to love EV shares, regardless of the time period considered. Ford shares fell about 6% in 2020.
Barron’s did not choose, or panned, Tesla shares. Now, about a third of the analysts covering Tesla’s shares list. The average purchase rating index for Dow shares is around 57%. This is slightly better than Ford: approximately 22% of analysts who cover Ford’s shares buy. They have yet to accept the turnaround with new CEO Jim Farley.
Write to Al Root at [email protected]