The auto industry is entering rough terrain. In early April, the United States slapped a 25% tariff on imported vehicles, and just days ago, it rolled out another 25% duty on auto parts that don’t comply with United States-Mexico-Canada Agreement rules. These new tariffs are set to drive up costs for automakers by tens of billions of dollars, costs that could ultimately hit consumers through higher car prices. The demand for vehicles is likely to soften, while supply chain chaos is expected to increase. As such, several automakers have cut back, paused or entirely scrapped their guidance.
In this uncertain backdrop, are industry giants — Ford F and Tesla TSLA still smart buys? Both these companies have different approaches to the future of mobility — one rooted in traditional strengths, the other a symbol of electric vehicle (EV) disruption. Let’s dive into their fundamentals, growth drivers and key risks to see which one, if any, deserves a place in your portfolio today.
The Case for Ford
Ford released its first-quarter 2025 results on Monday, beating earnings expectations and posting $1 billion in EBIT, well above forecasts that expected it to just break even. This strong result was driven by progress in cost-cutting and strong pricing in North America. Excluding roughly $200 million in tariff-related costs, the company reported its third straight quarter of year-over-year cost improvement.
U.S. pickup sales reached their best first-quarter levels in over two decades, and demand for hybrid vehicles remained strong. The Model e division saw U.S. retail sales grow 15% year over year. Ford is launching new models like the Explorer, Capri, and Puma Gen-E in Europe, which could help support global demand.
Ford is also on track to deliver $1 billion in net cost reductions this year, excluding tariff effects. The company has taken steps to minimize tariff exposure, such as shifting vehicle and parts shipments to bonded carriers and exploring ways to increase U.S. content. Though Ford expects a $2.5 billion impact from new tariffs this year, it aims to offset $1 billion of that through strategic moves.
The automaker has paused full-year guidance for now, citing uncertainty around future tariffs and consumer behavior, but it plans to give an update during its second-quarter earnings call.
The Ford Pro business continues to shine, with solid demand and the successful launch of the new Super Duty. Ford’s investments in U.S. manufacturing and battery capacity, along with its shift toward software and services, ensure long-term growth potential. It is in a strong financial position, with over $27 billion in cash and $45 billion in total liquidity at the end of March. Add in a commitment to return 40–50% of free cash flow to shareholders, and Ford makes for a reasonable choice in the auto space, even in a challenging market.
Earnings Estimates for Ford
Zacks Investment Research
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The Case for Tesla
Tesla, long considered the pioneer of the EV revolution, is navigating a challenging period. Deliveries have declined across key markets amid intensifying competition from both traditional automakers and new EV startups. Its brand image has also suffered, partly due to CEO Elon Musk’s increasing political involvement, which raised concerns about his focus on Tesla’s day-to-day operations. The company missed earnings expectations in the first quarter of 2025. It is resorting to price cuts to boost sales, and that is weighing on its automotive margins.
Musk has since pledged to scale back his role in the U.S. Department of Government Efficiency and redirect his attention to Tesla. Still, it remains uncertain whether this shift can repair the company’s operational momentum. Ongoing global tariff uncertainty and weakness in China remain concerns, prompting Tesla not to reaffirm its 2025 delivery guidance. Musk had already walked back his 2025 vehicle growth target from 20-30% to more modest expectations on the fourth-quarter earnings call. But now he has refrained from reiterating even that modest growth. Tesla plans to revisit its 2025 delivery volume guidance in its second-quarter report.
Notably, Tesla’s energy generation and storage segment is a growing bright spot. More profitable than its core EV business, this unit continues to scale, although it’s not yet large enough to offset the pressure on vehicle sales.
Financially, Tesla remains well-positioned. It held $37 billion in cash as of March 31, 2025, and maintains a low debt-to-capital ratio of just 7%, providing flexibility for investment in future initiatives.
Looking ahead, Tesla is focused on next-generation technologies. The company plans to roll out robotaxi services in Austin this June and is developing Cybercab, an autonomous, two-seat vehicle slated for production in 2026. It’s also advancing work on its humanoid robot, Optimus. While these projects are ambitious, they are still in early stages and face significant execution risks.
Ultimately, Tesla’s near-term outlook hinges on stabilizing its EV operations while making credible progress on its long-term innovation pipeline.
Earnings Estimates for Tesla
Zacks Investment Research
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Comparing F & TSLA Valuation
Tesla is trading at a forward sales multiple of 8.38X, above the industry’s 2.3 as well as its own median of 7.73X over the last five years. Tesla has a Value Score of F. Meanwhile, Ford has a Value Score of A, with its forward sales multiple at 0.26X, below its 5-year average of 0.31.
F Looks Undervalued, TSLA is Pricey
Zacks Investment Research
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Conclusion
Both Ford and Tesla are navigating industry headwinds and neither of these stocks are really worth buying at the moment. But Ford seems to be holding up better. F, with its focus on cost reductions and commercial fleet strength, offers a more stable path forward, although the near-term upside may be limited. Its commitment to returning free cash flow to shareholders, high dividend yield and superior liquidity augur well.
Tesla, on the other hand, is facing rising pressure across its core EV business while chasing ambitious, longer-term bets. Although its financial foundation remains strong, execution risks and brand challenges cloud the near-term outlook. Until there’s clearer evidence of recovery in its core operations or traction in new initiatives like robotaxis, the stock looks vulnerable.
In today’s uncertain auto market, stability matters—and right now, Ford appears better positioned than Tesla to weather the storm.
Tesla currently carries a Zacks Rank #5 (Strong Sell), while F is #3 Ranked (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
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