Former Ford President and CEO Mark Fields recently shared what he thought of Tesla’s growth on CNBC. Currently, Fields is a senior advisor of TPG Capital, and he joined “Closing Bell” to share his thought’s on Tesla’s growth and what he thinks the future of the company would look like, including some thoughts on the stock [TSLA].
Tesla has surpassed all of the other auto manufacturers in terms of market cap, and one of the main questions was if this was about Tesla’s delivery numbers or its potential. When it comes to delivery numbers, it was noted that Tesla, when compared to several other automakers, only has thousands of deliveries a year while they have millions. However, when it comes to technology, the future of mobility, and EVs, Tesla is well ahead of its competitors.
“I think actually a combination of both,” Fields explained. “I think the first is what Tesla is being rewarded with is growth. They grew over a month-over-month basis. Although on a year-over-year basis they were down about 5%, the rest of the auto industry was down, here in the states, almost about 25–30%. I also think there are a couple of other things that investors are looking at.”
Fields also shared his thoughts on Tesla and its competitors regarding software versus manufacturing. “They’re looking at competition and there was the anticipation that the established OEMs would bring products to market, which they are, but when you look at somebody like Volkswagen who’s having a lot of problems with their ID.3 in terms of software management, and that’s something that Tesla has done very well. They haven’t mastered the manufacturing piece, but they have mastered the software piece, which the OEMs still need to do.”
CO2, Electrification, + S&P 500
Fields think that from a CO2 reduction standpoint, Tesla’s new products that are coming, like the Cybertruck, are “incremental products.” They aren’t replacing other products in their lineup, so should grow Tesla’s annual sales.
Addressing the second point, Fields stated that, “It is around electrification going forward.” He thinks that they will be in demand naturally and will also be enhanced by governmental incentives for CO2 reductions. “So I think that it’s a combination of both of those, and I think the stock is heading higher. I think Elon was very, very focused on profitability in the second quarter.”
Fields noted that if Tesla was to be profitable in Q2, then the company would have four profitable quarters in a row and would be eligible to be included in the S&P 500. “If that’s the case, not only will Tesla get the prestige of that, but also I think that a lot of index funds will be driven to include Tesla in their portfolio.” This will, of course, increase the demand for Tesla stock and ensure the stock price goes up even further.
Established OEMs & Electrification
Fields believes that electrification is still a big priority for all the OEMs. “I don’t think they’re going to back off from that. Not only from a regulatory standpoint, but they need it from a competitive standpoint. I think in things like autonomous vehicles, you’re going to see more partnerships as you’ve seen with Ford and VW, GM and Honda — where they’re pooling their resources because, in the case of EVs or electrified vehicles, the technology is ready; there’s a business model around it.”
When it comes to autonomous vehicles, Fields doesn’t think the technology is ready yet and doesn’t think there is a business model set up for it. He said that he thought OEMs would pool their resources from here on out to push that out.
Elon Musk’s Tweets
Another question that was posed to Fields was his thoughts on Elon Musk’s tweets. Specifically, the short shorts tweets and Elon’s playfulness on Twitter. “As a former CEO yourself, would you put out a tweet like that?” he was asked.
“I, personally, wouldn’t put out a tweet like that. I subscribe to the theory that ‘be careful of who you step on on the way up because eventually, you might be on your way down.’ But listen, Elon is Elon, and I can’t crawl inside of his head.” Fields thinks that Elon’s tweets are a reflection of his personality and brand for Tesla and called it a ‘risk for Tesla.'”
Despite all of the sales, Fields shared that, ultimately, Tesla needs to be consistently profitable and needs to be more transparent with its margins when it comes to earnings.
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