What Does the Ford and Tesla Partnership Mean for Tesla Stock? (TSLA)

by | Last updated May 25, 2023 | Market News, Trading | 0 comments

There’s been a barrage of headlines about the growing partnership between Ford (F) and Tesla (TSLA). Today Tesla CEO Elon Musk and Ford Chief Executive Jim Farley announced that Ford electric vehicle owners will be able to use the more than 12,000 charging stations in the US and Canada.

The two automotive executives announced this on a Twitter Spaces livestream together, with Musk saying he doesn’t “want the Tesla Supercharger network to be like a walled garden,” going further on the call to say that Tesla Superchargers can help the electric vehicle industry “in the same way that maybe Android is helpful to the phone industry as sort of a general standard.”

Shares of Tesla (TSLA) have been rising in recent days, perhaps as news of this partnership began to leak. It’s possible traders are beginning to discount a potential new revenue stream as Tesla collects fees from other automakers to use the Supercharger network:

While some Tesla bulls are reacting gleefully to the news, others aren’t so excited. Many see the wide Tesla Supercharger network as one of Tesla’s significant advantages over the better-established legacy automakers.

Gordon Johnson of GLJ Research said on CNBC earlier today that “now that you can buy a Ford car and have access to Tesla’s network, that literally gets rid of one of the only moats Tesla had left.”

And others see the move as potentially hurting the exclusivity and luxury that Tesla owners enjoy, as @HiddenOG on Twitter remarked:

Everybody except $TSLA owners who will now get to compete with $F owners to charge their cars are rejoicing

@HiddenOG on Twitter

Mark Speigal, a noted Tesla permabear, noted that this Supercharger deal could be a psychological aid to give potential buyers of Ford electric vehicles to confidence to buy one:

Funny that the market doesn’t yet realize how bad this $F charger deal is for $TSLA:

The VAST MAJORITY of charging is done @ HOME (so little Supercharger revenue) but “knowing it’s there” will give millions of buyers the comfort to buy a superior electric Ford INSTEAD of a Tesla!

@StanphylCap on Twitter

As usual, Ford’s stock price was pretty quiet on the news. It takes a lot to move a boring stock like Ford (F):

With Ford (F) at the bottom of its 2023 range and the potential for any company involved with Tesla to make a massive move, we’re taking a look at a long straddle in Ford stock.

Ford stock currently has an IV Rank of 4.4, meaning implied volatility in Ford options has only been lower 4.4% of the time over the last year. In other words, buying options in Ford is relatively cheap right now.

The muted response in Ford (F) shares following the deal’s announcement leaves open the risk that the options will slowly decay as the stock doesn’t move, but there’s enough tailwinds between the Tesla catalyst, it being at recent support, and the options being historically cheap, that we think it’s worth a swing at the bat.


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