At Surgevesting, we are always evaluating our holdings to ensure that they align with our long-term strategy of investing in innovation and future-focused companies. Over time, this has led us to make strategic changes in our portfolio. One such change was our decision to exit our position in Ford (F) and increase our focus on Tesla (TSLA). While Ford remains an established player in the automotive industry, our decision came down to a simple yet powerful principle: innovation over tradition.
Ford: A Legacy Company in a Rapidly Changing Industry
Ford has a storied history as one of the pioneers of the automobile industry, and for decades, it has been a leader in traditional vehicle manufacturing. The company has been making strides in the electric vehicle (EV) space with models like the Mustang Mach-E and the F-150 Lightning, which show that Ford is capable of adapting to a changing market. However, the company is still deeply tied to its internal combustion engine (ICE) business and faces a monumental challenge in transitioning away from it.
The legacy costs of maintaining traditional manufacturing lines, dealership networks, and a supply chain rooted in ICE vehicles mean that Ford’s transformation into a fully electric and technology-driven company will be slow and expensive. In contrast, Tesla was born electric, with none of the legacy baggage that Ford and other traditional automakers must deal with. This allows Tesla to move faster, innovate more freely, and scale in ways that Ford simply cannot match at this stage.
Tesla: A Leader in Technology and Innovation
Tesla isn’t just a car company; it’s a technology company. This distinction is why we believe Tesla is positioned for long-term growth that far outpaces legacy automakers like Ford. Tesla’s focus on AI, robotics, and autonomous driving makes it much more than a producer of electric vehicles—it’s a company at the forefront of revolutionizing transportation, energy, and even living spaces.
While Ford is working to catch up in the EV space, Tesla has been leading the charge for over a decade. Tesla’s Full Self-Driving (FSD) software, for example, is a major differentiator. While it’s still under development and not without controversy, Tesla is the only automaker with an active fleet that’s continually collecting data and improving its self-driving algorithms. This gives Tesla a significant edge in the race toward autonomy—a technology that will redefine the auto industry in the coming years.
In addition, Tesla’s advancements in battery technology, solar energy, and energy storage give it exposure to multiple high-growth industries beyond just automotive. Ford, by comparison, is largely limited to the car business, which restricts its growth potential in the rapidly diversifying world of clean energy and tech.
The Financials: A Tale of Two Stocks
Let’s look at the numbers. While Ford has a much lower stock price, Tesla’s valuation reflects its potential to dominate not just the EV market, but multiple tech-driven industries. Tesla’s gross margins are significantly higher than Ford’s, thanks in part to its direct-to-consumer model, which cuts out the dealership middlemen, and its dominance in the premium EV space.
While Ford has been offering attractive dividends, which appeal to income-focused investors, Tesla offers something Ford cannot: growth. Tesla's stock has historically been volatile, but the overall trend has been upward as the company continues to expand production, enter new markets, and push the envelope in technology. In contrast, Ford’s stock performance has been relatively stagnant, struggling to break away from the cyclical nature of the traditional auto industry.
Moreover, Tesla’s leadership in scaling manufacturing efficiently through gigafactories around the world allows them to respond more quickly to market demand. Their focus on vertical integration further supports their ability to maintain high margins and avoid the supply chain disruptions that have plagued legacy automakers, including Ford.
A Vision for the Future
At Surgevesting, we prioritize companies with vision—those that are looking not just to adapt to the future but to create it. Tesla embodies this philosophy. Whether it’s their development of autonomous vehicles, AI-driven robotics, or their mission to transition the world to sustainable energy, Tesla is innovating in ways that go far beyond what Ford is currently capable of.
Ford, while making steps in the right direction, is still largely reactive in its approach to change. Tesla, on the other hand, is proactive—setting the pace and forcing others to follow. The speed at which Tesla can innovate and execute its plans makes it an ideal fit for our strategy of investing in disruptors and game-changers.
Why We Hold Tesla Over Ford
Ultimately, we chose to increase our Tesla position and move away from Ford because we believe Tesla represents the future of not only the automotive industry but also multiple other industries that will be transformed by technology and sustainable solutions.
Tesla’s ambition, combined with its proven ability to innovate at scale, gives us confidence in its long-term value. While Ford’s legacy and current moves into the EV space are commendable, the sheer scale and speed of Tesla’s innovation in technology, AI, and energy make it the better choice for us at Surgevesting. In short, we want to be invested in the future, and right now, that future looks a lot like Tesla.
The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
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