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Would Ford Survive Another Recession? Elon Musk Thinks That's Unlikely

Would Ford Survive Another Recession? Elon Musk Thinks That's Unlikely

Elon Musk has little faith that the Big Three will emerge “big” or even “three” from the next economic downturn.

By his calculations, a strong economic headwind could blow Ford Motor Company (NYSE: F) right off track.

“Ford and Tesla made it barely through the last recession,” the Tesla Inc (NASDAQ: TSLA) CEO told Recode's Kara Swisher last week. “There’s a good chance Ford doesn’t make it in the next recession.”

Analysts Answer

Industry experts rejected Musk’s bold forecast. 

"Ford has been around for 115 years. It has made it through recessions and world wars. It is sitting on a ton of cash and pays a beefy dividend,” Michelle Krebs, executive analyst for Autotrader, told the Detroit Free Press.

“Ford will make it through the next recession for sure.”

Edmunds concurred, noting Dearborn's preparation for another recession, and added that Ford’s balance sheet is “the Rock of Gibraltar.”

“Besides, Ford has a history of driving into the ditch about once a decade, then [coming] roaring back stronger than before," host John McElroy told the Free Press.

Ford’s Historic Fortitude

Ford is the only traditional automaker in the U.S. without a bankruptcy record.

Both General Motors Company (NYSE: GM) and Fiat Chrysler Automobiles NV (NYSE: FCAU) were financial failures — each filing for Chapter 11 protection in 2009.

Musk emphasized the difficulty of building and maintaining a carmaker in the Recode interview.

“There have been many attempts to create a car company and they have all failed, even the ones that have had a strong base of customers, thousands of dealers, thousands of service centers, they’ve already spent the capital for the factories, like GM and Chrysler, still went bankrupt in the last recession,” Musk said.

“ ... So, as a startup, a car company, it is far more difficult to be successful than if you’re an established, entrenched brand. It is absurd that Tesla is alive. Absurd.”

Related Links:

Mary Barra Hopes GM Will Be Considered A Tech Company In The Near Future

Goldman Sachs Upgrades Ford To Buy, Restructuring Plan Yields Favorable Opportunities

Photo by Dave Parker/Wikimedia.


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