Most mega mergers fail, but I was fortunate to have once worked with a CEO who executed one of the greatest corporate combinations of all time, creating a company that still ranks in the top tier of the Fortune 500. What set him apart from executives like Ford CEO Jim Farley and GM CEO Mary Barra was his singular focus on execution; he wanted to be judged and remembered for the results he achieved, not boastful claims to the media about what he planned to accomplish.
Understandably, the CEO had no interest in doing media interviews, but he garnered great press nonetheless. He consistently appeared in stories ranking CEOs who delivered shareholders the biggest bang for their compensation bucks.
I’m bad with numbers, but even I can easily figure out that Farley and Barra, who respectively received $21 million and $29 million in compensation in 2021, aren’t worth a fraction of the money they’re paid. If electric vehicles are the future, Ford and GM are far behind the eight ball, badly trailing a brash upstart who built a lucrative EV business because he saw the automotive forest for the trees.
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Farley and Barra are Elon Musk wannabes.
Wall Street seems to agree with me. Despite all their unfounded sm--k, particularly Barra’s audacious claim that she will be selling more electric vehicles than Elon Musk’s Tesla by mid-decade, here is the investor scorecard on Tesla, Ford, and GM: As of this writing, Tesla’s market capitalization, which represents the total value of the company, is $905 billion. Ford has a market cap of about $62 billion, and GM’s market cap is $56 billion.
It seems evident that automotive investors don’t pay attention to shameful puff pieces like this one the Detroit Free Press published on Monday featuring yet again Farley’s boastful EV claims or this one featuring Barra’s. For all their lofty talk, Farley and Barra are still EV dilettantes who might not even appreciate themselves just how far behind they are in the race.
Tesla was founded in 2003 to be an electric vehicle manufacturer, and that’s been the company’s singular focus for nearly two decades. As recently as October 2019, GM under Barra was backing the Trump administration’s efforts to prevent California from requiring more stringent emission standards. By then, Musk had already racked up seven years of EV car sales.
I’m not a car expert; I don’t know torque from shmorque. But I have common sense, and logic overwhelmingly suggests there’s ample reasons to be wary of Farley and Barra.
There’s general agreement that electric vehicles are more complex to manufacture than internal combustion engine vehicles. An EV is essentially an iPad with four wheels, and successfully melding software with automotive hardware is a formidable challenge.
Musk, to his credit, swung for the fences, and developed proprietary software that’s still a work in progress. Teslas have been subject to more than a dozen recalls, some for serious safety issues. But Tesla has nearly a 20-year head start to figure things out. While Musk gets all the media attention, it seems abundantly clear that he’s attracted a highly focused and motivated team of unsung engineers and other experts capable of innovating round the clock.
I imagine Ford and GM might have some talented engineers getting up to speed on electric vehicle development, but as former Detroit Lions quarterback Matt Stafford can attest, an A-team player can’t reach their full potential playing for B-team leaders. Stafford played 12 seasons for the Lions but couldn’t win a Super Bowl until he was traded to a team with far better management and leadership. The Lions reference is apt because the team is owned by Sheila Ford Hamp, a descendant of the Ford family fortune.