Ford CEO Jim Farley is urging Wall Street to shift its focus from Tesla and its Full Self-Driving (FSD) technology to Ford Pro, the automaker’s fleet business. Farley believes that Ford Pro is the future of the automotive industry, with half a million subscribers and a 50% gross margin. The unit offers customers access to traditional fleet and commercial services, as well as emerging telematics, logistics, and connected services.
Ford Pro’s pretax earnings are projected to reach $8 billion to $9 billion this year, compared to $7 billion to $7.5 billion in its traditional “Blue” business and $5 billion to $5.5 billion in its Model e EV business. It is expected that Ford Pro’s revenue from telematics and other nontraditional subscription services will increase to $2,000 per vehicle per year by 2026, a 20% increase from the current revenue.
Analysts predict that Tesla’s FSD software will generate tens of billions in revenue by 2030. However, Farley argues that investors are overlooking the potential of Ford Pro within the company. He points to the undervaluation of Ferrari when it was owned by Fiat Chrysler, stating that now it is worth $80 billion. He believes that Ford Pro is Ford’s “Ferrari” and that people are ignoring its profitability.
Some investors may be skeptical of Farley’s comments, as Ford has not been a significant competitor to Tesla in terms of vehicle and technology offerings. Ford has experienced slower-than-expected adoption of current models and significant losses on its electric vehicles, leading to delays and cuts in EV investments. However, the company is confident that its next-generation EVs will be profitable within a year of sales.
While consumer demand for electric vehicles is slower than expected, fleet customers are embracing them faster than anticipated. This trend further strengthens the importance of Ford Pro in Farley’s growth strategy for the company, known as “Ford+.” The unit is led by Ted Cannis, who has a long history with Ford.
In conclusion, Ford CEO Jim Farley believes that Wall Street should prioritize Ford Pro over Tesla and its FSD technology. Ford Pro’s strong subscriber base, high gross margin, and potential for increased revenue make it a promising aspect of the company’s future. While there may be skepticism from investors due to Ford’s previous struggles in the EV market, the company is confident that its next-generation EVs will be profitable. With the faster-than-expected adoption of electric vehicles by fleet customers, Ford Pro plays a crucial role in Farley’s growth strategy for the company.