Ford Motor Co. CEO Jim Farley gives a thumbs up during a February news conference in Romulus, Michigan, before announcing that Ford Motor will work with Chinese company Amperex Technology to build a battery plant in Marshall, Michigan to be built for fully electric vehicles 13. 2023.
Rebecca Cook | Reuters
DETROIT – Ford engine CEO Jim Farley urged Wall Street on Thursday to forget it Tesla and view its FSD driver assistance systems as the future of the automotive industry, rival investors should instead focus on the Detroit automaker’s “Pro” fleet business.
Farley compared the unit, which roughly doubled its pretax profit to $7.2 billion last year, to wo Deere & Co. was seven years ago. The agricultural machinery manufacturer’s inventory has increased by around 235% since then.
“If you’re looking for the future of the automotive industry, stop looking at FSD Tesla. Check out Ford Pro. “It has half a million subscribers with a gross margin of 50%,” Farley said during a Wolfe Research conference.
Ford Pro consists of the automaker’s traditional fleet and commercial businesses as well as emerging telematics, logistics and other connecting operations for business customers ranging from local plumbers and electricians to large corporations. It also includes parts and services for businesses.
Ford expects the Pro unit’s pretax profit to rise to $8 billion to $9 billion this year, the automaker said earlier this month. That compares with profit expectations for the company’s “blue” traditional business of about $7 billion to $7.5 billion and projected losses in the Model e-EV business of $5 billion to $5.5 billion.
Tesla does not disclose the sales or earnings of its premium driving assistance software, which is marketed as Full Self Driving Beta, FSD or FSD Beta. Many Wall Street analysts have speculated that such software could generate tens of billions of dollars a year by 2030.
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Stocks of Ford Motor, Tesla and Deere & Co. in the last seven years
Ford has said revenue from telematics and other non-traditional subscription services for Ford Pro will increase to $2,000 per vehicle annually, or about $167 per month, in the coming years. Farley reiterated Thursday that 20% of Pro’s total revenue is expected to come from such services by 2026.
Farley reiterated that Ford Pro is undervalued within the automaker. Some on Wall Street agree.
Morgan Stanley’s Adam Jonas called Ford Pro “the company” last weekFerrari“, referring to the highly profitable luxury sports car maker that was significantly undervalued before its spinoff from Fiat Chrysler in 2016.
“I remember a time when Fiat owned Ferrari and I was worth about $4 billion. “Now Ferrari is worth $80 billion today, and the company was completely ignored by investors when it was still part of Fiat,” Jonas said during Ford’s quarterly earnings call earlier this month. “Now Ford has a Ferrari, it’s called the Ford Pro. And I think we can agree that people are ignoring the cash cow.”
Jonas, a long-time Tesla bull, claimed the deal was being overlooked because profits from it were being diverted to fund Ford’s “EV science project.”
Some investors may be skeptical of Farley’s comments. The Ford executive has previously talked about Ford being a growing competitor to Tesla with its vehicles and technologies, but that generally hasn’t happened yet.
Ford is postponing or cutting billions of dollars in electric vehicle spending, including domestic battery production, because of slower-than-expected rollouts of its current models and significant losses on its electric vehicles. The company is in the midst of developing its next-generation electric vehicles, which it promises will be profitable within a year of sales.
Farley said Thursday that while consumer demand for electric vehicles is slower than expected, fleet customers are actually switching to fully electric vehicles faster than the company had expected.
The pro activities are an important part of Farley’s “Ford+” restructuring and growth plan. The unit is led by Ted Cannis, who is considered a successful utility provider for the company.
“We always had a super successful pro business … but there wasn’t a focus on that,” Farley said. “I think people are just starting to understand [it].”
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2024-02-15 19:13:08
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