It's not often your biggest rival in business does a solid for you, but that is exactly what Ford (F) -) CEO James Farley says Tesla (TSLA) -) CEO Elon Musk has done for the company in recent quarters.
About a week after Elon Musk's "mini disaster" during Tesla's third-quarter earnings call sent the company's stock tumbling, Ford shares also dropped after withdrawing its 2023 guidance and warning that its own electric vehicle business is doing worse than expected.
Related: General Motors just pulled the plug on Elon Musk's ultimate vision for Tesla
Macroeconomic factors have affected automakers across the board, but investors are growing increasingly worried about the EV sector specifically as consumer adoption is taking longer than anticipated, leading to increased losses from the sector for companies like Ford who make both EV and ICE vehicles.
Earlier this week General Motors (GM) -) and Honda Motor announced that they are dropping the partnership aimed at developing a line of lower-priced EVs, while GM also said it wouldn't be able to build 400,000 EVs by mid-2024 like it had previously announced.
TheStreet/Shutterstock
Meanwhile, Toyota Chairman Akio Toyoda said this week that "people are finally seeing reality," when it comes to EVs and that consumers aren't ready to provide the demand car makers need to make mass producing electric vehicles viable.
On Thursday, Ford came to the same realization.
"A great product is not enough in the EV business anymore. We have to be totally competitive on cost," Farley said during the company's earnings call. But Tesla and Elon Musk have provided a silver lining for the company.
"Tesla actually gave us a huge gift with the laser focus on cost and scaling the Model Y. They set the standard, and we are now making real progress on our second and third cycle EVs that are in the midst of being developed today, as we get closer to the introduction," Farley said.
Investors have driven Tesla shares markedly lower in the week since the company missed delivery expectations by 20,000 vehicles and reported that total gross margins fell to about 18% from more than 25% in the year ago period.
Get investment guidance from trusted portfolio managers without the management fees. Sign up for Action Alerts PLUS now.
