Elon Musk believes that there is a “good chance” Ford will not survive the next recession. Whenever it inevitably arrives. During an interview with Recode Musk was discussing the challenges of setting up a automotive manufacture from scratch. The Tesla CEO cited the difficulties Chrysler, General Motors, Ford and Tesla faced during the 2008 recession.
Musk did not detail why he believes Ford will fail when the next recessional wave hits. Other than to say:
“There’s a good chance Ford doesn’t make it in the next recession,”
A Ford executive hit back on Twitter pointing out Tesla’s production problems and quality control issues.
Ford currently enjoys booming sales of its F-150 Pickup Truck. Ford sells around 6.6 million vehicles to global markets. In 2008 it was making 14 million vehicles.
When the 2008 recession hit, the company nearly went under, the following year it posted an annual loss of $14bn.
Ford survived because it offloaded loss-making assets on top of brutal cost-cutting measures.
In addition, the company had billions in reserve to cover losses as a result of mortgaging all of its assets for loans.
The risky strategy helped Ford to survive. However, Elon Musk added:
“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. Ford and Tesla made it barely through the last recession,” said Musk.
It is difficult to know what Elon Musk’s motivation is to target Ford for future failure. Failure could strike Tesla just as randomly as Musk’s postulating.