This year, traditional automaker Ford beats modern EV maker Tesla on Wall Street. Ford's shares have gained 45.9% for the last three months of 2021 and 124.91% year to date, compared to 22.05% and 31.35% for Tesla. And it could beat Tesla on Main Street in the future due to its price advantage over the EV pioneer, a key factor for EVs to reach the mass market.

Ford's lead on Wall Street over Tesla comes when Ford and other traditional automakers are rolling out several hybrid and electric vehicles. This fall, Ford rolled out a family of hybrid and electric vehicles at competitive prices, like the 2022 Escape Hybrid, the 2022 Maverick, the first-ever standard full hybrid truck in America, and the all-electric 2022 Mustang Mach-E.

Ford plans to invest $11.4 billion to build new EV factories in Tennessee and Kentucky in partnership with SK innovation, and $90 million in Texas for job training and career readiness initiatives for the current and next generation of technicians.

"This is our moment – our biggest investment ever – to help build a better future for America," said Jim Farley, Ford president and CEO. "We are moving now to deliver breakthrough electric vehicles for the many rather than the few. It's about creating good jobs that support American families, an ultra-efficient, carbon-neutral manufacturing system, and a growing business that delivers value for communities, dealers and shareholders."

GM, Volkswagen, Toyota and other traditional automakers have been taking similar initiatives, rolling out their hybrids and all EV models and investing heavily in battery and EV technologies.

Why did it take so long for traditional automakers to jump into the EV race? The answer is in a Harvard Business report published in 2015.

According to the report, Tesla wasn't as disruptive as Wall Street believed it to be back then.

"Think of it this way: all-electric vehicles accounted for just 119,710 of the 16.5 million sold in the U.S. in 2014 — seven-tenths of one percent of the market."

That's a too-small market to signal a shift in consumer preference from traditional vehicles to EVs.

"Established carmakers are paying little attention to EVs not because they are clueless, but because few people want EVs. (And they aren't completely ignoring EVs; consider the all-electric Nissan Leaf and Chevy Volt, each of which outsold Tesla in 2014)," explained the report. “Nevertheless, Tesla is betting that preferences will change — that someday millions of people will want electric vehicles."

Tesla's bet seemed too risky for traditional automakers in the early days. Thus, they laid back, waiting to see how things would unfold. But as consumers began dumping classic autos for EVs, Tesla's bet seemed less risky. Thus, the recent rush of traditional automakers to join the race, seeking to "colonize" a market Tesla pioneered. And they are doing it by scaling up production, which gives them a cost advantage over Tesla, which translates into a price advantage at the selling points.

Ford's Mustang Mach-E E4X retails at $56,400 compared to $62,190 for Tesla's Model Y, according to caranddriver.com.

Price advantage is the critical factor for new products to reach the "early majority" along the Rogers Curve, a well-known model of new product diffusion in the marketing literature, and cross the "tipping point" where the product reaches the mass market.

The early majority consists of "value shoppers" looking for high-quality products at reasonable prices. This means that to reach this stage, companies must mass-produce the product, gaining economies of scale, as Ford and other traditional automakers have been doing with EVs.

The company that will win the EV race isn't necessarily the company that pioneered the EV, but the company that will scale fast enough to make EVs affordable to the masses. That's why Ford, a "colonizer" of the EV market, stands a good chance of beating Tesla, which pioneered the market by commercializing the EV technology.

Sam Boughedda, an equities trader at AskTraders, subscribes to this possibility.

"Ford obviously has some catching up to do with EV production in comparison to Tesla," he said. "However, Ford is investing heavily in the EV market and plans to increase EV production to 600,000 vehicles by 2023. With the F-150 Lightning set to be released in spring 2022, we believe Ford will definitely begin to close the gap on Tesla and in Main Street's eyes next year."

Robert R. Johnson, a professor of finance at the Heider College of Business at Creighton University, sees Ford being a better investment than Tesla.

"Investors are certainly betting that Tesla will be the big winner in the electric car sweepstakes," he said. "In fact, Tesla is really sucking all of the air out of the automobile industry from an investor's standpoint. Given all of the attendant problems with Tesla management, its huge debt load, and atmospheric valuation, and quality control issues, I believe that the long-term outlook for Tesla is less certain. From an investment standpoint, I believe a much more prudent investment is GM or Ford rather than Tesla."

He pointed to the risk Tesla investors are taking by betting on the popular narrative that Elon Musk is a genius, which isn't the case with the other major automakers. He also pointed to the advantage of mainstream automakers over Tesla regarding corporate governance. They leave important decisions to management teams rather than to the emotional intelligence of Musk.

Johnson is reminding investors of the words of Mark Twain.

"History doesn't repeat itself, but it does rhyme," meaning that the EV market is likely to be highly competitive in the future, as was the case with the traditional automobile industry in its early days. "Tesla may have the lead today, but it is a long game," he added.

Panos Mourdoukoutas owns shares of Ford.

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