According to media reports, on February 15th, Ford CEO Jim Farley urged Wall Street investors to shift their focus away from Tesla and its Full Self-Driving (FSD) assistive driving system, instead directing attention to Ford's "Pro" fleet business, which he believes is the future of the automotive industry. He noted that the department's pre-tax profit doubled to $7.2 billion last year.
Farley stated, "If you're looking for the future of the automotive industry, stop looking at FSD and Tesla. Look at Ford Pro, which has 500,000 subscribers and a gross margin of up to 50%." Farley compared his Pro business unit to Deere & Co. seven years ago, a comparison that has seen the agricultural equipment manufacturer's stock price increase by about 235% since then.
The Pro business is a significant part of Farley's "Ford+" restructuring and growth plan. It encompasses Ford's traditional fleet and commercial businesses, as well as emerging remote information processing, logistics, and other connected operations services for commercial customers ranging from local plumbers and electricians to large enterprises. The division's operations also include supplying parts and services to businesses.
Ford expects the Pro division's pre-tax profit to increase to $8 to $9 billion this year. In contrast, profit expectations for Ford's "Blue" traditional business are around $7 to $7.5 billion, while its Model e electric vehicle business is expected to incur losses of $5 to $5.5 billion.
In contrast, Tesla has not separately disclosed revenue or profit for its advanced driver-assistance software (FSD or FSD Beta). Wall Street analysts predict that such software could generate hundreds of billions of dollars in annual revenue by 2030.
Ford anticipates that in the coming years, remote information processing and other non-traditional subscription services will bring in approximately $2,000 per vehicle annually or around $167 per month for Ford Pro. Farley emphasized that the Ford Pro business is undervalued internally at Ford, a sentiment echoed by some analysts on Wall Street.
However, some investors may be skeptical of Farley's remarks. The Ford executive had previously discussed Ford becoming an increasingly formidable competitor to Tesla in vehicles and technology, but overall, this goal has yet to be realized.
Due to slower-than-expected adoption of electric vehicles and significant losses in the electric vehicle business, Ford is postponing or cutting billions of dollars in electric vehicle spending, including domestic battery production. The company is currently developing its next-generation affordable electric vehicles and promises to achieve profitability within a year of their launch.
Farley noted that while consumer demand for electric vehicles is lower than expected, the speed at which fleet customers are adopting electric vehicles is actually faster than the company anticipated.
