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The fully electric Ford Mustang Mach-E could be a competitor to Tesla vehicles.
David McNew / Getty Images
The latest vehicle to emerge
Fordsay
iconic Mustang brand is a fully electric, sporty crossover vehicle. And that could be bad news for Tesla.
The
Ford Motor
Mach-E began shipping late in 2020. JP Brorgan analyst Ryan Brinkman drove the car on Thursday and more than he saw. If traditional car manufacturers start building desirable electric vehicles, it could pose a major threat
Tesla,
which so far has largely dominated space in the US.
After driving the car – what
Ford
(ticker: F) notices an SUV – Brinkman “walked away under the impression of the Mach-E while also seeing negative consequences for Tesla’s sky appreciation.” The car offers three driving modes: Whisper, Engage and Unbridled. Each offers more aggressive acceleration than the previous time.
The Mach-E compares best to a Tesla (TSLA) Model Y. “We do not want to argue that one vehicle is necessarily better than the other,” Brinkman writes. But he points out that the Mach-E still qualifies for a $ 7,500 federal tax credit. Tesla sold too many cars to still qualify for that particular purchase subsidy.
Its broader point is that the Mach-E is a good car, comparable to a Tesla. This is not yet something that car buyers can say about many offers for electric vehicles.
Better EVs from Tesla competitors could possibly fit into Tesla’s valuation. Tesla will trade more than 17 times the estimated sales in 2021.
Ford
and other traditional car manufacturers trade for a fraction of the multiple. The automotive industry is just not used to that kind of growth stock multiples.
Brinkman, in turn, is a notable Tesla bear with one of the lowest price targets on Wall Street. It evaluates stock sales and its price target is only $ 105 per share. Tesla shares added more than that amount this week alone and traded around $ 880 on Friday.
Brinkman rates
Ford
shares Hold. Its share price target is $ 10.
Barron’s is a bit more positive towards Ford than Brinkman, and recently wrote positively about the automaker, believing that new leadership will result in lower costs and more streamlined vehicle development. More EVs are also needed, such as the Mach-E.
Since the article appeared at the end of November, Ford’s share has been down 1%. The
S&P 500
and
Dow Jones Industrial Average,
by comparison, it is about 5% and 4% higher, respectively.
To say that the threat of new competition did not hit Tesla shares is an understatement. Tesla shares have risen 50% since the end of November. Better-than-expected deliveries and analysts’ upgrades helped drive Tesla shares further. Shares rose by approximately 740% in 2020. Shares have risen about 25% so far.
Ford fell 0.6% on Friday. Tesla shares jumped 7.8% and closed at a new high of all times. Investors seem to like EV shares regardless of the time frame. Ford’s share fell by about 6% in 2020.
Barron’s not Tesla stock selected or paned. Currently, about a third of analysts who cover Tesla’s share price buy. The average buy-to-share ratio for the Dow is around 57%. It’s a little better than Ford: about 22% of analysts who buy Ford stock price shares. They have yet to buy the turnaround under new CEO Jim Farley.
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