Ford vs GM

Neither General Motors Co. (NYSE: GM) nor Ford Motor Co. (NYSE: F) has done its investors any favors over the past two years. Both stocks are well down compared to the S&P 500. GM has done somewhat better. With the release of its new long-range electric battery, it has a leg up on Ford again.

GM shares are down 17% over the past two years. It has done moderately well in the United States. Despite struggles in China, the world’s largest car market, it is still a sales leader there. Ford, on the other hand, has crippled sales there and has no path to recovery.

Wall Street is skeptical about the turnaround plans of Ford CEO Jim Hackett. He may keep his job until the end of the year, if Ford’s problems worsen. He has done little to show his master plan will work. There is now concern that Ford’s decade could be slashed.

On the other hand, GM CEO Mary Barra has had a steady hand at the company. She has not articulated any grand plan and seems satisfied with a sure set of steps forward that she has made without an effort to broadcast it to the world.

GM has just released an engine that it has demonstrated has a range of 400 miles, which is longer than Tesla Inc.’s (NASDAQ: TSLA) best. The batteries likely will first find a home in new Cadillac models, and then on to much of the rest of the GM fleet. Barra said upon the release of the battery, “GM is building toward an all-electric future because we believe climate change is real.” She promised GM would invest $3 billion in electric car research and development between 2020 and 2025.

Can GM take on Tesla? Perhaps not in the near term. Tesla has both the lead in U.S. electric car sales and an almost magical brand among car buyers. However, at some point, battery range, and probably a dealer-based service network, will tip some of that balance.

It is reasonable enough to say that Ford has plans as well. Its forays have been very modest, and product announcements less than modest. Hackett has made the mistake of claiming he can almost completely transform Ford in the next decade as he plans to change it to an autonomous and electric car behemoth. One would think that if this can work, Ford would be further along.

Ultimately, Ford has not convinced people that its present is at all promising. That is at the core of skepticism about its future. If Ford cannot get things right today, why think that will change tomorrow. GM does not have a similar challenge.