Battery powered, self-driving cars have the potential to eliminate tailpipe emissions and avoid accidents caused by human error. But a rapid shift toward these technologies could be perilous for established carmakers like Ford and Volkswagen.

They must invest hundreds of billions of dollars in coming years or risk becoming irrelevant. And they face new competitors like Google and Uber with access to enormous financial resources. Investors have been much more willing to back Silicon Valley companies than the dinosaurs of Detroit or Wolfsburg, where Volkswagen is based.

Car sales are going down everywhere. This is because cars are more complicated to make and thus more costly to produce than even. Even streamlined assembly processes with lots of robots cannot make automobiles affordable for many people. Detroit’s first response was to lease cars which they have been doing for years. But, now it is so easy to rent a vehicle, even for a few hours, that many folks in cities only use an auto for family vacations and pay for the use of a car for a few hours for weekend shopping.

The end result, if nothing else were going on in the auto industry, would be fewer cars being sold. But, the story is more complicated. Self-driving cars and electric cars are truly the wave of the automobile future. Those who get there first with the best technology will win and others will, painfully, fade away. We recently asked if it is time to invest in GM as they seem to be coping with the issue. But, how about Ford. Is Ford a good or bad investment today?

Investing in Ford

Today Ford stock trades for just over a dollar a share. If you bought a share 40 years ago in 1979 you paid about $1.79 and you purchased that share in 1981 you paid about $0.81 so today looks pretty good. On the other hand, Ford traded for $34.79 in May of 1999 and traded in the $17 range as recently as the summer of 2014. Then, your $10 for a share does not look so good. Ford, like GM, has thrived over the last decades when gasoline prices were low and they could sell lots and lots of high-end pickups and SUVs. Those vehicles with their healthy profit margins were life-savers. But, when times change, profits go away. And, now the world is changing.

Earlier this year we asked how to invest in artificial intelligence. In that article we looked at how AI can be applied to products that we use in the real world. Self-driving cars are a prime example but companies like Waymo (Alphabet subsidiary) are more likely to attract investment capital than the “Detroit Dinosaurs” like Ford, GM, or Chrysler.

A serious problem for Ford, as well as other large automakers, is that they will need to find the capital to continue funding research in high tech vehicles at a time when more and more people are just using Uber or renting cars by the hour.

We leave it for you to decide is Ford a good or bad investment but from our perspective, the venerable automaker has its work cut out for itself.

Automakers not named Tesla are having a hard time getting any love in today’s stock market. Ford has made vast improvements in the quality and attractiveness of its vehicles since the recession subsided, and now it is churning profits quarter after quarter. And no one seems to care.

The argument for buying Ford is that while it is selling and making money from SUV’s and trucks it is investing in autonomous driving and electric vehicles which are seen as the future of automobiles.

Ford in Perspective

Ford is the one of the Big Three auto makers what did not go bankrupt like GM or get bought out like Chrysler. Ford Motor Company, F, sells in the $12 a share range. In the last year it has traded below $12 and up to $14. In the last 5 years its high has been up to $17.50 a share and its low has been $9.21. If we go back 10 years we get a high of $18.27 and a low of $1.43 a share at the depths of the Great Recession in late 2008 and early 2009. In the last 40 years the stock traded at $37 a share in 1998 and around $1.90 in the late 1970’s and early 1980 taking 4 subsequent stock splits into account. Ford pays a 4.77% dividend at the current stock price.
And how is Ford doing today? According to M Live Ford’s 2016 earnings are the 2nd-best in history as Ford sent its employees profit sharing checks averaging $9,000 per employee. So, the company is making money and apparently working on the things that will sell cars tomorrow, automatic driving and electric cars.

The Electric Ford

According to Forbes Ford’s push into electric vehicles is coming at the right time. Along with announcing that it will not expand its Mexican facilities Ford says it will expand electric vehicle production.

A significant item in this announcement was that the company would be expanding its electric vehicle production. The U.S. based auto maker announced that it would now be producing a hybrid version of the F-150 truck and sports car Mustang, a plug-in hybrid version of the Transit Custom commercial van and two new hybrid police vehicles. This is significant news as electric vehicles are closer than ever to being commercially viable. With the launch of the new 238 mile range Chevrolet Bolt and the impending launch of Tesla’s Model 3 in 2017, EVs could finally cross over from being a fringe figure on the horizon to a mass market product.

An interesting suggestion from one analyst is that Ford should simply buy Tesla. In this regard Investor’s Business Daily suggests that Tesla will get run over by China, GM, Ford and BMW as these come up to speed and mass produce high quality electric vehicles. Along the way Ford will keep making money and staying up with new trends.

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